Economic Report on Africa 2007

Accelerating Africa’s Development through Diversification

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Profound changes are increasingly occurring in all areas of the world economy. While the industrialized and emerging economies are able to contain the multiple external and internal shocks generated by these changes, Africa on its part is still struggling to cope with them. The analyses reported in the present edition of the Report review the world economy and map out prospects for development in Africa through the institution of structural reforms to diversify and modernize the economy, enhance competitiveness, promote trade, accelerate growth and reduce poverty.



6 The way Forward: Policies for Achieving Diversification

Two key reasons emerge from the evidence and discussions in the previous two chapters of this report, as to why diversification should become a central pillar in Africa’s development efforts. First, diversification is important to strengthen growth in Africa because from the second half of the 1980s, Africa’s growth has been mostly accounted for by factor accumulation. Beyond a certain point, factor accumulation becomes binding under certain demographic and physical conditions, making other sources of growth critical. Consequently, the positive contribution of diversification to TFP is central to any efforts to achieve higher and sustainable growth in Africa.


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