Effects of public infrastructural development and industrialization on economic complexity in Africa: Emerging insight from panel data analysis

Ekene ThankGod Emeka, Jonathan E. Ogbuabor and Emmanuel Nwosu

African Development Review, 2024, vol. 36, issue 1, 97-110

Abstract: This study examined the effects of public infrastructural development and industrialization on economic complexity in Africa, and how industrialization is moderating the effect of public infrastructural development on economic complexity. The study adopted the pooled ordinary least squares, the dynamic system generalized method of moments and the dynamic bias‐corrected least squares dummy variable estimators with a panel of 34 African economies over the period 2010–2021. The findings revealed that public infrastructural development and industrialization contribute positively and significantly toward enhancing economic complexity in Africa. We also found that industrialization substantially moderates and enhances the influence of public infrastructural development on economic complexity. Furthermore, the results show that trade openness, foreign direct investment inflow, international tourism arrival and institutional quality are potent factors enhancing Africa's economic complexity, while the role of human capital remains muted. These findings suggest that African leaders and policy‐makers can foster economic complexity across the continent by embracing policies that prioritize increased infrastructural development, industrialization, trade openness and foreign direct investment inflow while improving the quality of institutions within the region.

Date: 2024
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