The Role of Digitalisation on Economic Diversity in Africa

The global economy has experienced numerous economic crises over the past two decades, from the global financial crisis to the COVID-19 pandemic, and the Russian-Ukraine war. These crises have had a severe impact on economies that have less resilience towards external shocks, particularly African economies. The advancement of technologies, particularly the 4IR, offers opportunity for African economies to diversify their economic resources to build economic resilience and promote social and economic development. The study employed panel data spanning between 1990 and 2023 across 39 African economies that consist of North African and sub-Saharan African economies. In addition, the study used the panel mean group (PMG) estimation technique to evaluate the short-run and long-run dynamics of the link between digitalisation and economic diversity. The study used the PCA method to construct the digitalisation index. In addition, the study employed the Fei-Ranis model to construct the economic diversity index from agriculture, industry and manufacturing value added. The results indicate that there is significant disparity in terms of economic diversity and digitalisation across African countries. In addition, the results show that digitalisation has a significant impact in the long run but not in the short run. Thus, this study recommends that the adoption of ICT must be enhanced in most African economies so that innovation can be achieved in all economic sectors in order to boost the economic diversity of African countries.
Link: https://link.springer.com/chapter/10.1007/978-3-031-77363-1_16