Sub-Saharan African Countries

Figure 7.7 Percentage of Nondiscriminatory NTMs in Selected Sub-Saharan African Countries

100

Share of all NTMs (%)

90 80 70 60 50 40 30 20 10 0 SSA-15 countries Benin Burkina Faso Côte d’IvoireCameroonCabo Verde EthiopiaGhanaGambia, TheLiberia MaliMauritania NigerNigeriaSenegal Togo

Source: Kee and Nicita 2016. Note: A “nondiscriminatory” NTM is one that is not targeted at specific countries. Data are the latest available between 2011 and 2015, varying by country. The “SSA-15” countries are Benin, Burkina Faso, Cabo Verde, Cameroon, Côte d’Ivoire, Ethiopia, The Gambia, Ghana, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, and Togo. NTMs = nontariff measures; SSA = Sub-Saharan Africa.

within Sub-Saharan Africa and beyond. Efficient regional sourcing of intermediate goods and services can foster more participation of African firms in GVCs.

NTMs and tariffs that restrict trade between African countries are a selfimposed barrier. They make diversifying Sub-Saharan African economies no easy task. Hidalgo et al. (2007) show that a country’s current export structure determines how easy it will be to diversify its production base to highervalue products. They use the metaphor of a forest representing the product space (the same for all countries in the world). Each tree is a product, and firms are monkeys that can climb higher on a tree to improve their value added (intensive diversification) or jump to another tree with higher value (extensive diversification). Firms in LMICs find it easiest to grow through intensive diversification, building on capabilities they already possess. But they need inducements to diversify through the extensive margin (as these countries become middle-income and upper-middle-income countries or simply in response to even lower-cost competitors), given that jumping to higher-value trees is a costly and risky business.

Diversification at the extensive margin may indeed require physical infrastructure, specific know-how, knowledge of the tastes and standards in the targeted markets, and accessible and affordable intermediate goods and services. Hausmann and Rodrik (2003) call these initial investment