The Role of Logistics Performance in Prosperity in Sub-Saharan Africa: Linking Global Value Chains (GVC) and Global Competitiveness (GCI) to Gross Domestic Product (GDP)

Abstract

Many countries in sub-Saharan Africa (SSA) are not fully benefiting from participation in the global value chain (GVC) due to a lack of competitive advantage and logistics inefficiencies. Yet, both competitive advantage and efficient logistics are critical for countries aiming to upgrade in GVCs and benefit from international trade in this era of liberalisation. This study examines the relationship between global value chain participation and competitiveness in SSA countries, focusing on how this relationship influences economic prosperity. The study also explores the role of logistics performance in the GVC context, examining whether it acts as a moderator or a mediator using a hierarchical regression model. The study covers the years 2007, 2010, 2012, 2014, 2016, and 2018 for 25 SSA countries with available data on logistics performance and competitiveness.

The results confirm the significant influence of logistics efficiency in the global value chain for African participants. Moreover, the study provides further insight into the differences in the mediating role of logistics performance, depending on whether global competitiveness or global value chain participation is the primary driver of national income growth. The lack of clarity on the specificity of the mediating role of LPI in the bridge between GDP and GCI should be taken seriously. This highlights the challenge in the policy space of determining what to focus on in the ever-growing, complex global market. There is a need for greater clarity in identifying the precise role of logistics performance in the connection between GDP and GVC participation.