TITLE:
Factors Driving Industrialization in Africa: A Panel Two-Stage Least Square Approach
AUTHORS:
Cosmos Amoah, Josephine Jehu-Appiah
KEYWORDS:
Human Capital, Industrialization, Financial Development, Foreign Direct Investment, Trade Openness
JOURNAL NAME:
Modern Economy,
Vol.13 No.2,
February
24,
2022
ABSTRACT: The study examined the factors that influence
industrialization in Africa using annual panel data from 1990 to 2018. To avoid
problems of endogeneity, we employed the Two-Stage Least Square (TSLS) approach
to estimate the significant determinants of industrialization. We found that
foreign direct investment, total natural resources, and financial development
significantly and positively predicted industrialization. Trade openness had a
significant and negative effect on industrialization. Human capital and
inflation were not significant determinants of industrialization. We also
demonstrate that a significant aspect of an economy’s ability to industrialize
is the synchronization of public policies in its external engagements. To
leverage the importance and contributions of industrialization, governments of
various African economies should strive to augment foreign direct investment,
preserve and explore more natural resources, and intensify financial
development.