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2009 AEC- Determinants of Inter-Country Variations in Industrial Performance in Africa Evidence from Cross Country and Panel Regressions

10-Nov-2009

Can inter-country variations in the industrial performance of African countries be explained by differences in openness and economic reform? Are economic reform and liberalization more salient than investment in human capital and technological change for Africa’s industrial development? Using three indicators of industrial performance, this paper investigates whether differences in trade openness, economic reform or investment in skills and technological change are responsible for the skewed industrial performance of African countries. Preliminary results from cross-country and panel regressions suggest that neither economic reform nor technological capability is an important explanation for the differences in the industrial performance of African countries. To the contrary, investment in education and training seems to be a more important explanatory variable. This implies that human capital may be an important source of growth of totalfactor productivity for African firms. The empirical results also suggest that there may be idiosyncratic or African-specific factors that explain the region’s weak industrial performance. The robustness of some of the paper’s empirical results is evaluated by a case study of the Nigerian textile industry

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