The objective of this article is to assess the effect of private investment on vertical export diversification in Sub-Saharan Africa (SSA). To achieve this, econometric estimates were made using the Moments-Multiquantile Regression (MMQR) method on the one hand. To verify the robustness of the MMQR estimates, the ordinary least squares (OLS) method grouped with Driscoll and Kraay standard errors was also used. The estimates were made using panel data for the period 2009 to 2022, covering 47 SSA countries. The results of this study show that private investment has a positive impact on the vertical diversification of exports. It is therefore important for the authorities in SSA countries to encourage a climate conducive to private investment, promote the diversification of investment sectors, and develop infrastructure.
References
[1]
Acemoglu, D., Johnson, S., & Robinson, J. A. (2003), An African Success Story: Botswana. In D. Rodrik (Ed.), InSearchofProsperity:AnalyticalNarrativesonEconomicGrowth (pp. 80-119). Princeton University Press.
[2]
African Union Commission (2020). AfricanTradeStatisticsYearbook2020. African Union. https://au.int/en/documents/20201118/african-trade-statistics-2020-yearbook
[3]
Akoto, L. (2020). Financial Development and Export Diversification in Sub-Saharan Africa. InternationalJournalofEconomicsandFinance,12, 1-15.
[4]
Ali, R., Alwang, J., & Siegel, P. (1991). Is Export Diversification the Best Way to Achieve Export Growth and Stability? A Look at Three African Countries. PolicyResearchWorkingPaperSeries.
[5]
Appiah-Otoo, I., & Song, N. (2022). The Impact of Fintech on Economic Growth: Evidence from China. Sustainability,14, Article 6211. https://doi.org/10.3390/su14106211
[6]
Asante, G. N., Takyi, P. O., & Mensah, G. (2024). The Impact of Financial Development on Economic Growth in Sub-Saharan Africa. Does Institutional Quality Matter? DevelopmentStudiesResearch,10, Article 2156904. https://doi.org/10.1080/21665095.2022.2156904
[7]
Avom, D., Carmignani, F., & Guérineau, S. (2020). Exchange Rate Regimes and Export Diversification in Sub-Saharan Africa. JournalofInternationalDevelopment,32, 692-716.
[8]
Aye, G. C. (2009). Export Diversification and Economic Growth: Evidence from Nigeria. AfricanJournalofBusinessManagement,3, 381-389.
[9]
Ben Hammouda, H., Karingi, S., Njuguna, A., & Sadni Jallab, M. (2009a). Diversification: Towards a New Paradigm for Africa’s Development. African Trade Policy Centre (ATPC) Work in Progress No. 72, UNECA.
[10]
Ben Hammouda, H., Oulmane, N., & Sadni Jallab, M. (2009b). D’une Diversification spontanée à une diversification organisée. Revueéconomique,60, 133-155. https://doi.org/10.3917/reco.601.0133
[11]
Carrillo-Pulgar, W. G., Vallejo-Mata, J. P., Tixi-Gallegos, K. G., Sánchez Cuesta, P. A., & Romero-Alvarado, J. (2025). Does Fiscal Decentralization Drive CO2 Emissions? A Quantile Regression Analysis. JournalofRiskandFinancialManagement,18, Article 235. https://doi.org/10.3390/jrfm18050235
[12]
Chamberlin, E. H. (1933). TheTheoryofMonopolisticCompetition. Harvard University Press.
[13]
Driscoll, J. C., & Kraay, A. C. (1998). Consistent Covariance Matrix Estimation with Spatially Dependent Panel Data. ReviewofEconomicsandStatistics,80, 549-560. https://doi.org/10.1162/003465398557825
[14]
Elbadawi, I. A. (1999). ExternalAid:Policy,PerformanceandProspects. African Economic Research Consortium (AERC).
[15]
Essehou, Y., & Igue, C. B. (2022). Industrialisation et diversification des exporta-tions en Afrique subsaharienne: Évidence d’un seuil de développement économique. Revued’AnalysedesPolitiquesÉconomiquesetFinancières,5, 1-25.
[16]
Feng, Y. (2004). Democracy, Governance, and Economic Performance: Theory and Evidence. ComparativePoliticalStudies,37, 167-193.
[17]
Fielding, D. (1997). Aggregate Investment in South Africa: A Model with Implications for Political Reform. OxfordBulletinofEconomicsandStatistics,59, 349-369. https://doi.org/10.1111/1468-0084.00070
[18]
Fosu, A. K., & Abass, A. (2018). Domestic Credit and Export Diversification: Evidence from Africa. JournalofAfricanEconomies,27, 377-396.
[19]
Fousséni, T. (2019). Foreign Direct Investment and Export Diversification in Sub-Saharan Africa: Evidence from Panel Data Analysis. AfricanDevelopmentReview,31, 469-482.
[20]
Greene, J., & Villanueva, D. (1991). Private Investment in Developing Countries: An Empirical Analysis. StaffPapers-InternationalMonetaryFund,38, 33-58. https://doi.org/10.2307/3867034
[21]
Grossman, G. M., & Helpman, E. (1989). Product Development and International Trade. JournalofPoliticalEconomy,97, 1261-1283. https://doi.org/10.1086/261653
[22]
Grossman, G. M., & Helpman, E. (1991). InnovationandGrowthintheGlobalEconomy. MIT Press.
[23]
Hausmann, R., Hidalgo, C. A., Bustos, S., Coscia, M., Chung, S., Jimenez, J., Simoes, A., & Yildirim, M. A. (2014). TheAtlasofEconomicComplexity:MappingPathstoProsperity. MIT Press.
[24]
Heckscher, E. F. (1919). The Effect of Foreign Trade on the Distribution of Income. EkonomiskTidskrift,21, 497-512. https://doi.org/10.2307/3437610
[25]
Helpman, E., & Krugman, P. (1985). Market Structure and Foreign Trade:Increasing Returns, Imperfect Competition,andthe International Economy. MIT Press.
[26]
Hendrix, C. S. (2017). Kicking a Crude Habit: Diversifying Away from Oil and Gas in the 21st Century. Working Paper. https://doi.org/10.2139/ssrn.2912333
[27]
Herzer, D., & Nowak-Lehnmann D., F. (2006). What Does Export Diversification Do for Growth? An Econometric Analysis. AppliedEconomics,38, 1825-1838. https://doi.org/10.1080/00036840500426983
[28]
Houngbedji, G. (2022). Economic Diversification and Resource Dependence in Sub-Saharan Africa.
[29]
Imbs, J., & Wacziarg, R. (2003). Stages of Diversification. AmericanEconomicReview,93, 63-86. https://doi.org/10.1257/000282803321455160
[30]
Kamgna, Y. (2007). Diversification économique et croissance en Afrique. CERDIWorkingPaper.
[31]
Kraay, A. (2003). Do High Interest Rates Defend Currencies during Speculative Attacks? JournalofInternationalEconomics,59, 297-321. https://doi.org/10.1016/s0022-1996(02)00021-1
[32]
Krugman, P R. (1980). Scale Economies, Product Differentiation and the Pattern of Trade. AmericanEconomicReview, 70, 950-959.
[33]
Lahimer, N. (2009). Investment and Economic Growth in Developing Countries: The Role of Gross Fixed Capital Formation. Journal of Economic Development, 34, 111-124.
[34]
Lewbel, A. (2012). Using Heteroscedasticity to Identify and Estimate Mismeasured and Endogenous Regressor Models. JournalofBusiness&EconomicStatistics,30, 67-80. https://doi.org/10.1080/07350015.2012.643126
[35]
Lin, J. Y. (2011). New Structural Economics: A Framework for Rethinking Development. TheWorldBankResearchObserver,26, 193-221. https://doi.org/10.1093/wbro/lkr007
[36]
Lin, J. Y., & Treichel, V. (2014). MakingIndustrialPolicyWorkforDevelopment.InNewStructuralEconomics:AFrameworkforRethinkingDevelopment. World Bank.
[37]
Linder, S. B. (1961). AnEssayonTradeandTransformation. Almqvist & Wiksell.
[38]
Lucas, R. E. (1988). On the Mechanics of Economic Development. JournalofMonetaryEconomics,22, 3-42. https://doi.org/10.1016/0304-3932(88)90168-7
[39]
Lugeiyamu, G. (2016). Export Diversification and Economic Growth in Sub-Saharan Africa: Evidence and Policy Implications. Journal of African Development, African Finance and Economic Association (AFEA), 17, 83-103.
[40]
Machado, J. A. F., & Santos Silva, J. M. C. (2019). Quantiles via Moments. JournalofEconometrics,213, 145-173. https://doi.org/10.1016/j.jeconom.2019.04.009
[41]
Matallah, S. (2020). EconomicDiversificationandGovernanceChallengesinMENAOilExporters:AComparativeStudy. Annual Conference Paper.
[42]
Mehlum, H., Moene, K., & Torvik, R. (2006). Institutions and the Resource Curse. Economic Journal, 116, 1-20. https://doi.org/10.1007/978-3-540-79247-5_13
[43]
Melitz, M. J. (2003). The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity. Econometrica,71, 1695-1725. https://doi.org/10.1111/1468-0262.00467
[44]
Mudayen, M. et al. (2025). Gross Fixed Capital Formation and Diversification Dynamics in African Economies. Working Paper, African Development Bank.
[45]
Munemo, J., Bandyopadhyay, S., & Basistha, A. (2007). Foreign Aid and Export Diversification in Developing Countries. EconomicsBulletin,6, 1-9.
[46]
Niass, M. (2024). Natural Resources and Export Supply Portfolio in African Countries: Evidence from Fixed-Effects Panel Data Models (2000-2015). African Economic Research Consortium. https://deas.repec.org/p/aer/wpaper/833c768a-09a0-4fb8-aa14-c32511b6961.html
[47]
North, D. C. (1990). Institutions,InstitutionalChangeandEconomicPerformance. Cambridge University Press. https://doi.org/10.1017/cbo9780511808678
[48]
OECD (2005). Chapter 1: The Importance of Private Investment for Development. OECDReview,No.2, 19-23.
[49]
Ohlin, B. (1933). InterregionalandInternationalTrade. Harvard University Press.
[50]
Olasehind, O. et al. (2023). PrivateInvestmentandEconomicDiversificationinSub-SaharanAfrica:PanelEvidenceandPolicyImplications. Working Paper, African Development Bank.
[51]
Osakwe, P. N. (2007). ForeignAid,ResourcesandExportDiversificationinAfrica. United Nations Conference on Trade and Development (UNCTAD) Discussion Paper No. 166.
[52]
Owolabi et al. (2023). In SSA, Financial Inclusion Expands Access to Credit and Investment, while Intra-African Trade Creates Market Opportunities. Together, They Enhance Diversification, but Outcomes Differ Depending on Whether Economies Are Resource-Dependent or More Industrialized. African Economics and Development, 45, 120-145.
[53]
Palenfo, E. H. et al. (2023). Trade Openness and Manufacturing Industrialization in Sub-Saharan Africa: Exogenous versus Endogenous Effects. JournalofEconomicIntegration,38, 345-370.
[54]
Pesaran, M. H. (2006). Estimation and Inference in Large Heterogeneous Panels with a Multifactor Error Structure. Econometrica,74, 967-1012. https://doi.org/10.1111/j.1468-0262.2006.00692.x
[55]
Rehman, M., Abbas, J., Samour, A., & Tursoy, T. (2024). Impact of Financial Inclusion, Economic Growth, Natural Resource Rents, and Natural Energy Use on Carbon Emissions: The MMQR Approach. Environment,DevelopmentandSustainability,27, 14143-14173. https://doi.org/10.1007/s10668-024-04513-9
[56]
Ridwan, M. et al. (2024). Applications of Robust Panel Estimation Techniques in Resource-Dependent Economies. In Proceedingsofthe29thInternationalPanelDataConference.
[57]
Rodrik, D. (2013). ThePast,Present,andFutureofEconomicGrowth. Global Citizen Foundation Working Paper.
[58]
Rogneda, V., Urazbaeva, A., & Voytenkov, V. (2025). Determinants of Export Diversification: The Case of Russian Regions. EasternEuropeanEconomics,63, 260-296. https://doi.org/10.1080/00128775.2023.2265919
[59]
Romer, P. M. (1990). Endogenous Technological Change. JournalofPoliticalEconomy,98, S71-S102. https://doi.org/10.1086/261725
[60]
Sachan, R. et al. (2025). Investment, Innovation, and Export Diversification: Evidence from Emerging Economies. Working Paper.
[61]
Samen, S. (2010). APrimeronExportDiversification:KeyConcepts,TheoreticalUnderpinningsandEmpiricalEvidence. Growth and Crisis Unit, World Bank Institute and World Bank.
[62]
Sampene, A. K., Li, C., & Nsiah, T. K. (2024). Catalyzing Renewable Energy Deployment in the Mercosur Economies: A Synthesis of Human Capital, Technological Innovation and Green Finance. EnergyStrategyReviews,53, Article 101388. https://doi.org/10.1016/j.esr.2024.101388
[63]
Samuelson, P. A. (1948). International Trade and the Equalisation of Factor Prices. TheEconomicJournal,58, 163-184. https://doi.org/10.2307/2225933
[64]
Seck, A. (2024). Défisetoptionspolitiquespourpromouvoirladiversificationéconomiqueetledéveloppementdechaînesdevaleurrégionales. UNECA Knowledge Hub.
[65]
Sultana, N., & Rahman, M. M. (2024). PanelDataEconometricsandtheApplicationofRobustEstimatorsinDevelopmentStudies. Research Article/Working Paper.
[66]
Tadesse, B., & Shukralla, E. K. (2013). The Impact of Foreign Direct Investment on Economic Diversification in Resource-Rich Countries. ResourcesPolicy,38, 653-662.
[67]
Traore, M., & Saim, M. (2025). Does Export Diversification Really Matters for Economic Growth? Agerian Review of Economic Development,12, 101-110. https://doi.org/10.35156/1433-012-001-008
[68]
UNCTAD (2019). KeyStatisticsandTrendsinInternationalTrade2019. United Nations Conference on Trade and Development.
[69]
United Nations Conference on Trade and Development (UNCTAD) (2022). EconomicDevelopmentinAfricaReport2022:RethinkingtheFoundationsofExportDiversificationinAfrica. United Nations. Retrieved from UNCTAD.
[70]
Wood, A., & Mayer, J. (2001). Africa’s Export Structure in a Comparative Perspective. CambridgeJournalofEconomics,25, 369-394. https://doi.org/10.1093/cje/25.3.369
[71]
World Trade Organization (2022). WorldTradeStatisticalReview,2022.
[72]
Yan, H. (2024). Financial Development, Violence, and Resource Curse: How Mineral Resources Are Contributing towards Growth of Resource-Rich Countries. Journal ScienceDirect,89, Article 104546. https://doi.org/10.1016/j.resourpol.2023.104546
[73]
Zakariyaou, A., Abessolo, Y. A., & Alhadj Malloum, S. (2020). Diversification des exportations et croissance économique en Afrique subsaharienne: Une analyse en termes de sophistication. GlobalJournalofHuman-SocialScience:Economics,20, 1-15.