Original Research

Economic complexity to boost the selected sub-Saharan African economies

Thobeka Ncanywa, Itumeleng P. Mongale, Ombeswa Ralarala, Thabiso E. Letsoalo, Brian S. Molele
Journal of Economic and Financial Sciences | Vol 14, No 1 | a567 | DOI: https://doi.org/10.4102/jef.v14i1.567 | © 2021 Thobeka Ncanywa, Itumeleng P. Mongale, Ombeswa Ralarala, Thabiso E. Letsoalo, Brian S. Molele | This work is licensed under CC Attribution 4.0
Submitted: 26 March 2020 | Published: 13 May 2021

About the author(s)

Thobeka Ncanywa, Department of Economics, Faculty of Management and Law, University of Limpopo, Polokwane, South Africa
Itumeleng P. Mongale, Department of Economics, Faculty of Management and Law, University of Limpopo, Polokwane, South Africa
Ombeswa Ralarala, Department of Economics, Faculty of Management and Law, University of Limpopo, Polokwane, South Africa
Thabiso E. Letsoalo, Department of Economics, Faculty of Management and Law, University of Limpopo, Polokwane, South Africa
Brian S. Molele, Department of Economics, Faculty of Management and Law, University of Limpopo, Polokwane, South Africa


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Abstract

Orientation: Economic complexity is a measure of productive capabilities indirectly by looking at the mix of sophisticated products that countries export. The economic complexity index proposed a proxy for diversity and ubiquity of products in the export basket.

Research purpose: This study seeks to determine if economic complexity can influence the inequality measured by the Gini index in some selected sub-Saharan African countries.

Motivation for the study: The need for the study emanates from the notion that that economic complexity can reduce income inequality hence it is imperative to investigate this relationship in the sub-Saharan African region where most countries produce few sophisticated goods that are also labour-intensive. Inadequate literature within the African continent has also contributed to the formulation of this study.

Research approach/design and method: This study employed the autoregressive distribution lag (ARDL) model to analyze a panel data set, which includes eight sub-Saharan African countries for the period 1994–2017.

Main findings: We found that economic complexity can reduce income disparities.

Practical/managerial implications: Sub-Saharan African countries should shift their productive capabilities and resources from primary to sophisticated products in the manufacturing and services sector to increase economic complexity and reduce inequality.

Contribution/value-add: The study makes an important contribution to the debate about the relationship between economic complexity and income inequality in the sub-Saharan African context and it is envisaged that it will inform the actions of the decision-makers to drive future productivity and prosperity in the region.


Keywords

economic complexity; inequality; panel auto-regressive distributive lag; sub-Saharan Africa; GINI; exports

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