article · African Development Review
An examination of 34 African economies between 2010 and 2021 shows that public infrastructural development and industrialisation both significantly advance economic complexity across the continent. Beyond their individual contributions, industrialisation actively moderates and strengthens the positive impact of public infrastructure on economic complexity. Additional drivers that positively influence economic complexity include trade openness, foreign direct investment inflows, international tourism arrivals, and institutional quality. In contrast, the observed contribution of human capital remains muted across the analysed economies. These insights indicate that regional economies can diversify and advance their productive capabilities by simultaneously expanding infrastructure networks, accelerating industrial activities, welcoming foreign investment and trade, and strengthening governance institutions.
Economic complexity reflects a nation's capacity to manufacture sophisticated, diverse goods and achieve sustained growth. Understanding what drives complexity helps decision-makers across Africa allocate limited public resources effectively. The findings demonstrate that public investments in infrastructure yield the strongest gains in economic sophistication when paired directly with industrial expansion, transparent governance, and policies that encourage international trade and foreign capital.
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Abstract This study examined the effects of public infrastructural development and industrialization on economic complexity in Africa, and how industrialization is moderating the effect of public infrastructural development on economic complexity. The study adopted the pooled ordinary least squares, the dynamic system generalized method of moments and the dynamic bias‐corrected least squares dummy variable estimators with a panel of 34 African economies over the period 2010–2021. The findings revealed that public infrastructural development and industrialization contribute positively and significantly toward enhancing economic complexity in Africa. We also found that industrialization substantially moderates and enhances the influence of public infrastructural development on economic complexity. Furthermore, the results show that trade openness, foreign direct investment inflow, international tourism arrival and institutional quality are potent factors enhancing Africa's economic complexity, while the role of human capital remains muted. These findings suggest that African leaders and policy‐makers can foster economic complexity across the continent by embracing policies that prioritize increased infrastructural development, industrialization, trade openness and foreign direct investment inflow while improving the quality of institutions within the region.
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DOI: 10.1111/1467-8268.12734
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