Effects of export diversification on economic vulnerability: the case of WAEMU countries

This study examines the extent to which export diversification in WAEMU countries can help them absorb internal or external shocks in a context of global uncertainty. Countries are vulnerable to shocks linked to the exploitation of natural resources. An autoregressive with staggered lags (ARDL) model was used, covering the period from 1996 to 2018. Our results show that, export concentration and natural resources positively affect the economic vulnerability index. However, the inclusion of the interactive variable, natural resources and export concentration, transforms this positive effect into a negative effect, indicating that the positive association between export concentration and economic vulnerability is attenuated with greater dependence on natural resources. A lower export concentration could be an important factor in mitigating economic vulnerability, enabling WEANU countries to achieve stable and sustainable growth. This implies that governments will have to address the root causes of structural vulnerability by reducing exposure to shocks, particularly those linked to export concentration.