Towards better GVC participation in Africa: Does infrastructural development matter?

Abstract

Global Value Chain (GVCs) offer vast opportunities for industrialization, economic diversification, and structural economic transformation. However, despite various efforts to become notable actors in the GVC, many African countries remain positioned at the lower end of the GVC spectrum. Hence, this paper investigates the potential of infrastructure to catalyse GVC participation and elevate African countries to a level comparable to developed nations. Relevant data from 38 African countries spanning 2005–2021 are analysed using the Pooled Ordinary Least Square (POLS), and the System Generalised Method of Moments (SGMM) methods. The results provide overwhelming evidence of infrastructural development's crucial role in improving forward and backward GVC participation in Africa. Specifically, information and communication technology (ICT), electricity, and water infrastructure significantly promote forward and backward GVC participation. The results are robust to alternative analytical methods. African governments, therefore, need to pursue pro-infrastructural development policies and increase infrastructural spending to improve GVC participation.