Exports diversification and knowledge sharing from south-south and south-north economic cooperation: evidence from the Central and West Africa
Houdou Ndambendia, Ministère de l'Economie, de la Planification et de l'Aménagement du Territoire
In this paper, we address the issue of knowledge sharing from FDI inflows and imports from thenorth and south on exports diversification of selected African economies. Applying GeneralizedMethod of Moments (GMM) and Random-Effects Probit with control of endogeneity, we findthat FDI inflows and imports from the north and the south affect differently horizontal andvertical exports diversification. Indeed, FDI inflows have the strongest effect on verticaldiversification whereas imports impact strongly horizontal export diversification. Moreover,imports from the south have the strongest impact on horizontal exports diversification whereasonly FDI from the north significantly affect exports diversification irrespective of its nature. Inaddition, we find no evidence of knowledge sharing through education, meaning that lack ofeducation significantly reduce the marginal effects of FDI inflows and imports on exportsdiversification. However, taking knowledge separately, we find that higher education is requiredto vertically diversify an economy. As policy recommendation, further human capital investmentand set up of incentive mechanisms to attract FDI are needed to truly diversify economies ofselected countries.