Africa is widely known to be an exporter of primary products such as unprocessed agricultural goods, mining products, and oil, complemented, in recent years, by tourism services. As such Africa mainly participates in Global Value Chains (GVCs) as an upstream supplier of primary inputs, with minor roles for manufactured goods and other industrial or services products. Yet in recent decades as the World has become more economically integrated and seen significant increases in trade volumes through GVCs, Africa has not remained unaffected and is slowly beginning to assume more varied roles in GVCs.

Due to the large volume of global trade in intermediate inputs, the contribution of a particular country or region such as Africa to global production and trade is best assessed in value-added (VA) terms, that is by netting out the share of exports that consists of foreign intermediates and the share of imports that consists of re-imported domestic intermediates. Such an analysis requires large databases that map production relationships between all countries and sectors in the World Economy.

This data story uses the updated EORA 2021 Global Supply Chain Database to elucidate recent trends in African GVC participation. This database depicts trade in intermediates between all countries since 1990 at a 26-sector disaggregation, based on country-level Supply and Use Tables (SUTs) and international trade data (COMTRADE), harmonized through a global Input-Output Model.

To simplify the presentation of results, the world is divided into 11 mutually exclusive geographical and economic regions, shown in the table below with the number of constituent countries indicated in parentheses.

Code Region
AFR Africa (53)
ASE ASEAN (10)
CHN China (3)
ECA Europe & Central Asia (31)
EUU EU (28)
LAC Latin America & Carribean (43)
MEA Middle East (15)
NAC North America (3)
OCE Oceania (14)
ROA Rest of Asia (11)
SAS South Asia (8)

1 Value Added in Production

The EORA 2021 database is fully based on collected administrative data up until 2018, with IMF forecasts and interpolation filling gaps in administrative data due to publication lags up to 2021. Figure 1 shows the shares of different world regions in global output and VA in 2018. Africa (AFR) contributed 2.3% to global output in that year and 2.5% of global VA, signifying the greater role of the continent as a supplier rather than a consumer of intermediate inputs.

The flow of VA between different regions for that year can be represented in a matrix, shown in Figure 2, where each column shows the sources of VA in the output of that region.

Figure 2 shows that in most regions according to this classification, production is relatively self-contained, with ASEAN (QSE) and Europe and Central Asia (ECA) having the highest shares of foreign VA in production at around 35%. In Africa’s production, about 20% of VA is foreign, a large share of 7% comes from the EU followed by China with 2.7% and North America with 2%. Africa on the other hand contributes 2.7% to the output of ECA, 1.2% to EU output, 1.5% to Oceanian output, and between 0.7 and 1% to Chinese, ASEAN, and Middle Eastern output.

1.1 Africa’s Changing Role in Global Production

Figure 3 shows the changing VA shares in global production since 1995, and vividly expounds the rise of China, as well as ASEAN, the Middle East and South Asia.

Plotting Africa’s share in global production over time, Figure 3.1 shows that there has been an increase in both gross and VA terms from about 1.8% at the end of the 1990s, with the VA share rising faster than the gross share.

Figure 4 shows the African shares in foreign production by region. The data are noisy as the share is small, and there appears to be a structural break in the data in 2015, but overall the figure shows a gradual rise in the African contribution to international production starting after 2000.

Figure 5 shows foreign shares in African production, which overall also show a rising trend. The salient development in Figure 5 is the rising role of China, which contributed less than 1% to African production as late as 2010, but since then has been increasing its presence rapidly to 2.8% in 2018, and further to a projected 5.6% in 2021, second only to the EU, which has a stable share at around 7% since 2016.

1.1.1 Excursus: China vs. EU’s Role in Global Production

While the rising role of China in African production appears to be very rapid in recent years, it is part of a broader trend of rising Chinese engagement in the World. The EORA nowcast for 2021 shows higher Chinese shares in ASEAN, Latin American and Middle Eastern Production compare to Africa. Against this development the EU is fairing relativlely well in maintaining its shares of VA in most World Regions.

1.2 Sector-Level Considerations

EORA 26 provides an account of global production in the following 26 sectors (codes added):

Code Sector
AGR Agriculture
FIS Fishing
MIN Mining and Quarrying
FBE Food & Beverages
TEX Textiles and Wearing Apparel
WAP Wood and Paper
PCM Petroleum, Chemical and Non-Metallic Mineral Products
MPR Metal Products
ELM Electrical and Machinery
TEQ Transport Equipment
MAN Other Manufacturing
REC Recycling
EGW Electricity, Gas and Water
CON Construction
MRE Maintenance and Repair
WTR Wholesale Trade
RTR Retail Trade
AFS Hotels and Restraurants
TRA Transport
PTE Post and Telecommunications
FIB Finacial Intermediation and Business Activities
PAD Public Administration
EHO Education, Health and Other Services
PHH Private Households
OTH Others
REI Re-export & Re-import

Figure 6 shows Africa’s contribution to global production by sector in the year 2018, analogous to Figure 1. According to EORA, Africa contributed approx. 7% to global agricultural production, 6.5% to global mining production, and nearly 5% to global fishing. Among the manufacturing sectors, Africa accounted for around 3.5% of global foods and beverages, 2.8% of petro-chemicals, 2.4% of wood and paper, 2% of metal products and other manufactures, and 1.8% of global textile production.

Among the other sectors, there are notably high VA shares of Africa in recycling and re-export and import businesses, although these sectors are difficult to capture statistically and the numbers should be taken with great caution. In terms of shares in gross and VA terms, it is interesting to note that Africa’s contribution to global manufacturing is typically 30-50% higher when measured in VA terms, with especially strong discrepancies in petrochemicals and metal products where the VA share is near twice as large.

Analogous to the aggregate analysis it remains to ascertain to which sectors Africa contributes most within specific regions and the contribution of different world regions to production within African sectors. Figure 7 shows the largest 30 sectors in other world regions to which Africa contributes in VA terms. The first sector is private households in eastern Europe and Central Asia, to which Africa contributes 3.4%. This appears unintuitive and might reflect in flaw in the data for ECA. The following items are more intuitive to understand: Africa contributes around 3% to the EU and North American petrochemical industries, and 2-3% to ROA metal products, EU and middle-eastern food and beverages, middle-eastern manufactures, and South Asian wood and paper products.

Most of the African input to these sectors are primary inputs from agriculture, fishing and mining sectors. When omitting these three primary sectors, the African share in most of these foreign sectors drops below 1%.

Figure 8 shows foreign VA shares in African production, which is 20-40% in the manufacturing sectors, but only 5-15% in the services sectors. The largest foreign contributing region is the EU, which contributes 10-15% of the value of African manufactures.

1.3 Regional vs. Intercontinental Integration

A salient aspect of Africa’s international trade is that trade flows with the rest of the World are often greater than inner-African flows. In that sense the continent is much less economically integrated that most other World Regions. This can also be explored from the production side by considering the ratio of foreign VA in African production vs. other African countries VA. Another possibility is to consider the exports perspective and compute the ratio of African VA in foreign production over other African countries VA in African production. I compute both ratios, referring to the former as “Inputs” and the latter as “Outputs” ratio.

Figure 9 shows both ratios since 1995. The “Inputs” ratio shows that while ROW inputs remain substantially greater than African inputs, African neighbors are becoming gradually more important for production on the continent. In particular, the ratio has come down from 10 in the early 2000s to 6.13 in 2021. In terms of “Outputs” Africa is becoming relatively more important for ROW production than for production in other African Countries. Here the ratio rose from 11.3 in 1995 to 16.8 in 2021.

1.3.1 Sector-Level Heterogeneity

These aggregate results again mask considerable sectoral heterogeneity. Figure 9.1 provides equivalent sector-level charts. It is notable that in core manufacturing sectors such as petrochemical, metal products, textiles, and other manufacturing, Africa remains substantially (>=10x) more important for ROW production than for African production (blue line), and similarly, ROW inputs are 8-10x larger than African inputs. This suggests a broad-based failure of regional integration in manufacturing. In contrast to manufacturing, ROW seems <10x more important than African neighbours in mining and certain service sectors like public administration and private households.

1.4 References

Lenzen, M., Kanemoto, K., Moran, D., & Geschke, A. (2012). Mapping the structure of the world economy. Environmental Science & Technology, 46(15), 8374–8381.

Lenzen, M., Moran, D., Kanemoto, K., & Geschke, A. (2013). Building eora: a global multi-region input–output database at high country and sector resolution. Economic Systems Research, 25(1), 20–49.

Leontief, W. W. (1936). Quantitative input and output relations in the economic systems of the united states. The Review of Economic Statistics, 105–125.



2 Value Added in Exports

The focus on production in VA terms is important as it partly expounds regional ‘production functions’ in VA terms, regardless of whether the output is consumed domestically or exported. The exports perspective focuses on a country or region’s contribution to ROW through exports, which are either used as intermediate inputs for downstream production abroad or consumed as final goods. Most GVC analysis focuses on the decomposition of exports in VA terms, as GVCs are only possible with produce that is being exported.

2.1 Vertical Specialization

Am important measure of a country’s integration into GVCs, pioneered by Hummels et al. (2011) is the value-added share in exports that was imported, also termed the foreign content of exports or Vertical Specialization (VS). Figure 10 shows that in Africa VS has remained steadily between 10 and 12 percent of exports, with minor shifts in the distribution of sources e.g. the rise of China at the expense of other regions.

Figure 11 shows the own-value added share (=1-VS) by region, indicating that Africa, together with North America, are the most self-contained regions as far as foreign VA in exports is concerned. In Africa, this not surprising, as a large share of African exports is made up from primary products, whose only foreign content stems from machines imported to help generate them. In comparison, the ASEAN region has a very high foreign content of around 35%.

The low aggregate VS in Africa masks some considerable heterogeneity at the country and sector level. Figure 12 shows that some island states like Seychelles and Cape Verde have VS levels of 40% and higher. Most Africa countries have a VS between 10 and 20%, for example Kenya at about 18% and Rwanda at 13%. Some larger states like Nigeria, Namibia, Botswana, Zambia and Sudan have low levels of VS between 5 and 10%, and Ethiopia appears to have very low VS at only around 2%, although the data here must be treated with great caution.

2.2 Re-Exported Exports

VS is the primary measure of backward GVC participation, stemming from foreign inputs into domestic production. Another kind of GVC participation considers the contribution of domestic exports to foreign exports i.e. the share of domestic exports that is used to produce export products abroad, also called exports to re-exports ratio (E2R). This measure, first explored by Daudin et al. (2011), is obtained by dividing the contribution of a country to all other countries’ exports by the country’s own gross exports. Figure 13 shows the E2R ratio of African gross exports by destination region, which includes exports re-exported by other African countries. It is evident that E2R has doubled from 10% in 1990 to 21% in 2020. This is mainly on account of more African exports being re-exported by China, North America, and, to a lesser extent, Latin America, ASEAN, and other African countries.