Macroeconomic Risk Diversification and Sectoral Structure Evolution: An Adaptation of the Portfolio Model in CEMAC

Purpose: This study adapt the traditional portfolio model to evaluate the capacity of CEMAC countries to diversify macroeconomic risks. Methodology: The study used a quantitative approach to analyse sectoral structures from 1995 to 2009. Drawing inspiration from Markowitz’s portfolio theory by establishing an analogy between the evolution of a country’s GDP and that of a financial asset. Findings: According to the findings a low level of economic diversification was observed in CEMAC countries, except for Cameroon, which recorded significant gains. At a collective level, CEMAC failed to lay the foundation for diversified economies. The risk-return performance of the countries remains limited, demonstrating an inability to significantly reduce economic volatility. Unique contribution to the theory, practice and policy: Theoretically, they should innovate application of portfolio theory to the economic domain to assess sectoral and regional diversification. It is important to identify structural and sectoral weaknesses in CEMAC countries to guide policymakers in formulating strategies to foster economic diversification. Highlighting the collective role of the region in improving macroeconomic resilience. Practically, we should develop an analytical tool providing a better understanding of regional economic performance and the levers necessary to optimize diversification.