Diversification and Sophistication as drivers of structural transformation for Africa: The Economic Complexity Index of African Countries

African countries have achieved impressive growth performance during the recent years despite the multiple crises the western world is experiencing. However, this growth has not been inclusive for several reasons. It has been driven mainly by the extractive industry at the detriment of the industrial and manufacturing sectors. These sectors contribution has even stagnated during the last fifteen years to least than 10% of the continent’s GDP. Because much of the efforts were put in the extractive industry, and the industrial sector including the manufacturing were neglected for long time, it has resulted that most African countries productive structure have remained weakly sophisticated and diversified. The productive structures have not benefited from the recent growth observed across the continent. Since Adam smith (1776), it is recognized that the level of wealth of a nation depends mainly on the lever of knowledge that the society holds. This is translated in the nation’s productive structure and the products it make. By exporting mainly commodities and raw materials that do not require any advanced technology, African countries have not yet been able to structurally transform their economies. Yet, it is acknowledges in the literature that development and growth are a process of structural transformation whereby resources were transform from lower productivity activities to higher productivity activities. And this transformation has not yet been observed in African societies. This paper attempted to measure the level of complexity of African economies by adopting the same approach recently introduced by Hidalgo et al. (2007) and Hidalgo and Hausmann (2009). We generated a large database that includes detailed information related to technology intensiveness of African countries exports, their revealed comparative advantages, indicators related to diversity, ubiquity, and economic and product complexity. We found that not only African economies are not complex. Their exports are weakly diversified and weakly sophisticated. This could contribute to explain why the recent growth has not been inclusive. This study is a starting point and could be extended to deeper macro-econometric analysis which will provide policy recommendations to African countries on which areas they should focus their efforts in order to really transform their economies and create sustainable prosperity for the majority of their population.