ATI

Growth with DEPTH

Growth with DEPTH is an analytical framework that provides pathways for economic transformation in Africa. It makes the case that while economic growth is important, it is insufficient to drive Africa’s economic transformation. African economies must tackle the five dimensions of DEPTH.

Diversification

Export competitiveness

Productivity increases

Technology upgrading

Human well-being

Diversification

Diversification measures an economy’s capability to produce and export a widening array of goods and services.

Acquiring the capability to produce a widening array of goods and services is essential for economic transformation. However, today most African economies are confined to a narrow range of commodity production. The importance of diversified production applies equally to exports. But most African economies rely on the exports of a small number of primary products.

Diversification in the African Transformation Index

African average score

38.3 /100

Score change
-5.9

since 2000

 
Indicators
The Diversification dimension measures diversity in production and exports through four indicators.

Manufacturing: Manufacturing value added during a given period as a percentage of GDP.

Services: Services value added during a given period as a percentage of GDP.

Export concentration: The combined share of the country’s five highest-earning exports of total export earnings.

Export sector diversification: Share of manufacturing and service exports in total exports.

Findings

In the first decade of the 21st century, African countries experienced improvements, which reversed in the latter decade following the collapse of the commodity supercycle. Countries with the most success in diversifying their economies by improving the structure of their production and exports include Tunisia, Morocco, Senegal, South Africa, and Mauritius.

Global context

The first edition of the African Transformation Report in 2014 measured Africa’s progress in achieving economic transformation. It compared the continent’s progress with eight early transformers in Asia and South America: Brazil, Chile, Indonesia, Malaysia, Singapore, South Korea, Thailand, and Vietnam. These countries were chosen because they provided valuable lessons for the transformation of African economies. The latest edition updates the comparisons.

Pathways for improved Diversification
Shifting from commodity dependence to value addition

Reorienting production and export structures and strengthening technological and industrial capabilities towards higher value-added products have been successful pathways to diversified economies for early transformers in Asia and Latin America, as well as for some countries in Africa.

Lessons from early transformers

India aggressively implemented diversification policies that spurred an agribusiness transition, including sustained investments in technology, infrastructure, entrepreneurial capabilities, national research systems, extension services, and stronger supply and value chains. The Shared Mobile Infrastructure Program expanded mobile phone networks to rural areas, extending the reach of digital extension services such as the Kisan Call Centers to rural farmers. Farmers could then receive agricultural extension services via mobile phones, hastening the adoption of modern agricultural technologies. These initiatives boosted smallholders’ productivity and increased agricultural SMEs’ capacity to integrate with other activities, such as logistics and manufacturing, forming a value chain that increases incomes beyond the agricultural sector.

Examples from Africa

In Tunisia, an upgrading program, Programme de Mise à Niveau, helped firms develop a competitive advantage, diversifying the economy by modernizing the industrial sector with technical assistance, training, subsidies, and infrastructure upgrades. The country also promoted private sector-led export policies that attracted trade and investment partnerships, plugging the domestic economy into regional and global manufacturing value chains.

Mauritius shifted from a commodity-driven economy reliant on sugar cane to a more diversified economy with larger contributions from processed products and services, including textiles, financial services, and tourism.

Eswatini reduced its dependence on agriculture and focused on improving value addition in manufacturing and services. The country took advantage of the African Growth and Opportunity Act and Multi-Fiber Act of 2004 to deepen the country’s domestic supply chains for textiles and garments and the processing of other non-extractive goods, reflecting an increasing diversification of the country’s exports.

Diversification

Export competitiveness

Productivity increases

Technology upgrading

Human well-being

Discover more from the ATI

ATI Scorecard

Explore the data behind the economic transformation progress of 30 African countries between 2000-2020.

Growth with DEPTH

Explore the ATI in DEPTH and see how African countries performed on each dimension between 2000-2020.

Methodology

Learn more about our methodology, sources, and how we calculate the index.

Country Profiles

To explore the results of the index in greater detail and provide context and analysis, the ATI report includes 11 case studies.

Downloads

Our Research & Analysis on Diversification
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