Linking Infrastructure and Industrialization to Economic Resilience: A Sustainable Pathway for Africa

Abstract

ABSTRACT This study pursues a dual inquiry. First, it investigates the unconditional effect of industrialization on Africa's economic resilience. Second, it examines the role of infrastructure in moderating the effect of industrialization on economic resilience in Africa. In this study, economic resilience is defined by macroeconomic stability, market efficiency and governance. The analysis utilizes a sample of 45 African countries from 2005 to 2023. The fixed effects (FE) regression model is used as the baseline to control for unobserved heterogeneity, while the system generalized method of moments (SYS‐GMM) estimator is employed to address potential endogeneity, unobserved heterogeneity (omitted variable bias) and reverse causality in dynamic panel data settings. To broaden the scope for policy relevance, industrialization is analysed through two key components: industrial value added (% GDP) and manufacturing value added (% GDP). The finding reveals that at certain statistically significant thresholds, some infrastructural dynamics emerge as critical moderators that African economies can leverage to enhance industrialization efforts and strengthen economic resilience. The corresponding policy recommendations align with discussions around the African Continental Free Trade Area (AfCFTA) and the African Union's Agenda 2063, emphasizing two key priorities: first, strategically investing in sectors with high industrial potential across the continent; and second, strengthening public–private partnerships (PPPs) to foster inclusive, resilient and sustainable regional economic development.