Structural Change in Selected African Countries

2018

This paper combines a standard decomposition of labour productivity with a decomposition of labour market turbulence to study the role of structural change and job reallocation in the economic growth performance of African countries over the past fifty years using an updated and expanded version of the Africa Sector Database (ASD) developed by the Groningen Growth and Development Centre (GGDC). The results show that productivity growth has been generally low since the 1960s with moderate contributions from structural change across the entire period. Although productivity growth from structural change is generally low, a regional comparison shows that structural change is more rapid in East Africa than in the other regions of sub-Saharan Africa (SSA). While structural change accounts for more than half of the labour productivity growth in East Africa, within-sector productivity growth accounts for more than half of the labour productivity growth in West Africa and Southern Africa. St...

Policy Research Working Papers, 2015

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

World Development, 2014

The limitations of neo-classical growth models have led to a resurgence of interest in dual economy models and structural change. Structural change entails the movement of labor from low productivity sectors like agriculture into more modern sectors of the economy. Because the share of the labor force in agriculture is so high in most of Sub-Saharan Africa, the potential for structural change to lead to growth and poverty alleviation in Africa appears to be enormous. Yet, very little of this new literature on structural change focuses on Africa. This special issue begins to fill that gap. The first half of this special issue contains five original contributions that provide new insights with respect to the nature of Africa's growth over the past two decades. The second half contains six original contributions that examine opportunities for structural transformation in Africa.

Journal of Business and Economic Development, 2020

This paper analyses the structural transformation process of ECOWAS economies through an exploratory approach of stylized facts analysis on added value, employment, productivity and intra-and inter-sectoral mobility of labour factor, followed by an econometric approach in balanced panel data from 1991 to 2017 for the 15 countries in the region. The analysis revealed the beginnings of a structural transformation process in some ECOWAS economies, especially Ghana, Nigeria and Senegal, and more or less Burkina Faso and Guinea. The positive effects of the mobility of labour factor, albeit timid and at slow pace, from the agricultural sector to the industrial (manufacturing industry mainly) and services sectors, could be limited, on the one hand, by the low level of human capital development and on the other hand by a reverse itinerary characterized by the hegemony of the activities of the service sector, in terms of the proportion of value added and employment. In this regard, it appears that reforms aimed at strengthening the development of human capital could contribute to the acceleration of the productivities of industrial sector activities in general and manufacturing in particular through the channel of the accumulation of knowledge, know-how and technology. Economies could thus benefit from the growing prospects of attracting FDI in relation to the growing economic and geopolitical interests of foreign investors for Africa in general and ECOWAS in particular.

Macroeconomic Policy Framework for Africa's Structural Transformation, 2017

This Working Paper series provides a vehicle for preliminary circulation of research results in the fields of economic development and international trade. The series is intended to stimulate discussion and critical comment. Staff and visitors in any part of the Australian National University are encouraged to contribute. To facilitate prompt distribution, papers are screened, but not formally refereed.

2020

This paper examines whether productivity growth induced by intersectoral labor movement affects inequality and poverty. To address this question a nonparametric shift-share decomposition technique is employed to decompose productivity growth into the structural change component; the component of productivity growth that is induced by the intersectoral labor movement, and the technological change component; the component of productivity growth that is induced by capital or improvements in productive efficiency. The paper then examines the long-run impact of structural change-induced productivity growth on poverty and inequality for a sample of 28 countries, and with a focus on Sub-saharan Africa and Asia. The Theil index of industrial wage inequality and the Gini coefficient from the estimated household income inequality data from the University of Texas Inequality Project (UTIP) are used as measures of inequality, and the percentage change in household final consumption measures poverty. Parametric fixed effects estimation techniques are employed and I find that labor share in productivity growth reduces poverty and inequality for the full sample and the Asia and sub-Saharan Africa subsamples. The effects are however stronger for Asia than for sub-Saharan Africa. Nonparametric time-varying coefficient estimation techniques are also employed to determine if any nonlinearities exist in the relationship between the dependent and independent variables. The results confirm that structural change has nonlinear effects on poverty and inequality. The paper recommends that governments should encourage policies directed towards improving labor shares in productivity as a means to reduce poverty and inequality, especially for developing countries.

Policy Research Working Papers, 2021

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Tanzanian Economic Review, 2024

This study assesses the extent of structural transformation within the manufacturing sector by discomposing the source of labour productivity and TFP growth, shares of capital, and employment among other indicators. For the sake of the analysis, the manufacturing sector is classified into three categories: resource-based, low technology, medium and high technology. Labour productivity and TFP growth were estimated using data between 1982/83–2017/18 to assess the reallocation of resources among industrial groups. The findings show that resource-based industries still hold the largest share of output and capital in the manufacturing sector, and remains to be the most productive group. Low technology industries continue to maintain the largest percentage of workers although there has been high rate of growth of workers in medium and high technology industries in recent years. Albeit the prevalence of a slight movement of workers from lower productive to higher productive industrial groups with a given productivity level, there is no evidence of dynamic reallocation or a movement of labour driven by productivity changes across industries. Static comparative advantages or natural resource endowments seem to induce the establishment of most industries in Ethiopia, although these same industries heavily rely on imported inputs. In addition, government policies tend to favour resource-based and low technology industries in the form of, for instance, the provision of working premises and infrastructural facilities such as power through the establishment of industrial parks. Thus, there is a need to improve institutional and policy enablers to address existing binding constraints and strengthen inter-sectoral linkages not only to efficiently tap the available domestic resources, but also pave the way for the growth of medium and high technology industries as a pathway for faster pace of industrialization and economic development.

Theoretical economics letters, 2024

This article examines the effect of structural transformation on the growth of Sub-Saharan African economies. Thus, from a sample of 46 countries observed over the period 1995-2020, we estimate a model in panel data by the method of Generalized Moments in system. Overall, our results show that Structural Transformation (ST) contributes significantly to the growth of the economies under consideration. However, this effect is counterbalanced by the low share of high value-added activities. Human capital and infrastructure level minimally support the positive effect of ST on economic growth. The results remain broadly stable when checked for the different dimensions of the SC. In addition, they remain robust in the face of changing economic growth indicators and the use of competing estimators. We suggest a promotion of activities with higher local added value.

Springer eBooks, 2019

Growth has accelerated in a wide range of developing countries over the last couple of decades, resulting in an extraordinary period of convergence with the advanced economies. We analyze this experience from the lens of structural change -the reallocation of labor from low-to highproductivity sectors. Patterns of structural change differ greatly in the recent growth experience. In contrast to the East Asian experience, none of the recent growth accelerations in Latin America, Africa, or South Asia was driven by rapid industrialization. Beyond that, we document that recent growth accelerations were based on either rapid within-sector labor productivity growth (Latin America) or growth-increasing structural change (Africa), but rarely both at the same time. The African experience is particularly intriguing, as growth-enhancing structural change appears to have come typically at the expense of declining labor productivity growth in the more modern sectors of the economy. We explain this anomaly by arguing that the forces that promoted structural change in Africa originated on the demand side, through either external transfers or increase in agricultural incomes. In contrast to Asia, structural change was the result of increased demand for goods and services produced in the modern sectors of the economy rather than productivity improvements in these sectors.

WIDER Working Paper

Typescript prepared by Lesley Ellen for UNU-WIDER. UNU-WIDER gratefully acknowledges the financial contributions to the research programme from the governments of Denmark, Finland, Sweden, and the United Kingdom. The World Institute for Development Economics Research (WIDER) was established by the United Nations University (UNU) as its first research and training centre and started work in Helsinki, Finland in 1985. The Institute undertakes applied research and policy analysis on structural changes affecting the developing and transitional economies, provides a forum for the advocacy of policies leading to robust, equitable and environmentally sustainable growth, and promotes capacity strengthening and training in the field of economic and social policy-making. Work is carried out by staff researchers and visiting scholars in Helsinki and through networks of collaborating scholars and institutions around the world.

We document that structural change accounts for approximately one-fifth of the total change in labor productivity in Nigeria between 1996 and 2009. Labor moved out of the agricultural and wholesale and retail trade sectors into manufacturing, transportation and communications, business services, and general services. While structural change did occur in this period, significant gains to aggregate labor productivity are still available from further shifts of labor to higher-productivity sectors. We discuss the factors limiting structural change, which include poor agricultural productivity, insufficient infrastruc-ture to support high productivity sectors, and a lack of appropriate skills in the labor force. We calculate that the gains still available to Nigeria from structural change are equivalent to an increase in value-added of 25 percent, given the existing productivity levels of sectors in 2009.

IMF Working Papers, 2015

Many small middle-income countries (SMICs) in sub-Saharan Africa (SSA) have experienced a moderation in growth in recent years. Although factor accumulation, most notably capital deepening, was crucial to the success of many SMICs historically, this growth model appears to have run its course. The analysis in this paper suggests that the decline in the contribution of total factor productivity (TFP) to growth is largely responsible for the slowdown in trend growth in many SMICs, which highlights the need for policy actions to reinvigorate productivity growth. This paper explores the question of what kind of structural policies could boost productivity growth in SMICs and the political economy factors that may be contributing to the slow implementation of these critical reforms in these countries. The findings suggest that although macroeconomic stability and trade openness are necessary for productivity growth, they are not sufficient. SMICs need to improve the quality of their public spending, most notably on education to minimize the skill mismatch in the labor market, reduce the regulatory burden on firms, improve access to finance by small and medium-sized enterprises and create the enabling environment to facilitate structural transformation in these economies. JEL Classification Numbers:JEL C53, E37, O41

WIDER Working Paper

This study is published under the UNU-WIDER project ETD-Economic Transformation Database.

1999

In most countries in sub-Saharan Africa at present, the majority of the population is engaged in agriculture, with economies in the very early stages of structural transformation - the process whereby a predominantly agrarian economy is transformed into a diversified and productive economy dominated by manufacturing and services. These countries are characterized by low levels of farm productivity, limited growth