What the Law of Comparative Advantage Misses in Africa: A New Measure of Economic Complexity

Abstract

Africa is often referred to as if it were a country. This perspective flattens the understanding of a complex and highly varied set of 54 countries with widely different GDP growth rates and underlying economic complexities. More economically complex countries are able to sustain external commodity price shocks, a factor Ricardo did not consider in his famous law. A method is developed in this paper to better assess a country's economic complexity, modeled after the Herfindahl Index which is widely used in measures of market structure. Data from the MIT/Harvard Atlas of Economic Complexity is used to construct a new economic complexity index that can better track a country's move towards improved business environments. This paper argues that high GDP growth, particularly in African countries, may mask exports of a single crude commodity which is subject to volatile price changes, and hence rocky macroeconomic output.

The role of mobile and broadband penetration in entrepreneurial activity for the sub-Saharan African region

“…However, the role of ICT in fostering financial inclusion and growth in developing countries is not very promising (Danquah et al, 2017;Urban, 2021). Indeed, it has been noted that the complex interplay between infrastructure, mobile phone ownership and usage, entrepreneurship and chronic poverty in Africa requires further investigation (Richardson, 2016;Bosma et al, 2020). Although several prior studies have investigated the effect of ICT infrastructure on economic growth in general, there is little literature available regarding the relationship between ICT and entrepreneurship, from a mobile and broadband perspective, in developing countries, particularly in an African market context (Urban, 2021).…”