Why has export diversification been so hard to achieve in Africa?

This paper addresses two research issues to which Chris Milner has contributed: the role of trade policy in economic development, and the particular development case of Mauritius. On the first issue, the focus is on understanding why so few low-income countries, especially in Africa, have achieved a sustained level of export diversification. The paper argues that the standard “Washington Consensus” advice on trade policy placed too much emphasis on liberalisation alone and neglected the important role of government policy, in particular the potential to use targeted input subsidies to support the development of export sectors. Mauritius is then discussed as an example of relatively successful subsidy policies that enabled diversification of exports: indeed the only African country to achieve this in a sustained manner. Subsidies are not advocated as a panacea, and it is recognised that they are not always feasible or effective, but they can be part of an export diversification strategy that supports economic growth.