Determinants of structural change in Africa
This paper examines the contribution of structural change to increasing labor productivity in Africa and its determinants. The analysis covers data from the period 1991-2017 covering 37 countries on the continent. Labor productivity growth was globally low (+ 1.0% per year) during the analysis period. The contribution of structural change represented around one third (1/3) of productivity gains. It has improved significantly since the early 2000s, even if the within-sector productivity share remains preponderant. In landlocked countries, the contribution of structural change to productivity growth has remained positive and above its level in coastal countries. The reallocation of labor to the service sector was the main driver of structural change in Africa during the period 1991-2017. In East Africa, an intermediate phase was observed during the period 1991-2001. The latter is characterized in particular by a structural change driven by the industrial sector. Finally, the econometric analysis of the determinant reveals that the pace of structural change is strongly influenced by human and physical capital, population growth and the initial level of agricultural employment. The combination of push and pull effects is therefore necessary for accelerating structural transformation on the continent and increasing per capita income. On the one hand, investments in economic infrastructure will be crucial to accelerate growth in the non-agricultural, job-creating sectors. On the other hand, the acceleration of the demographic transition and investment in human capital would help to reduce the pressure on the labor supply while guaranteeing a skilled workforce. Given its initial share in the global economy, rapid growth in the agricultural sector will also be necessary to accelerate the process of structural change.