Structural change and productivity growth in Africa

This research aimed to understand the causes and consequences of structural transformation in Africa. While it is well understood that structural change and economic growth go hand in hand, there is little consensus among researchers – and in the case of Africa little actual research – on the determinants of structural transformation.

A major contribution of this project was the construction of a harmonised long-term sectoral dataset for several countries in Sub-Saharan Africa. This dataset consisted of time series information on value added in international prices and employment for ten broad economic sectors for the period from 1960 to 2010.

With this new dataset, the researchers identified countries in which structural change was growth enhancing as well as countries in which structural change reduced economic growth. Comparisons with other developing regions of the world was made through similar datasets already available for Asia and Latin-America. Using the results of this analysis, the researchers identified specific policies and events that influenced the process of structural change.

The researchers also examined the links between urbanisation, food prices and structural change by using a combination of qualitative and quantitative methods including in-depth case studies.

Follow-on Grant

Following on from this research work, the ESRC has awarded McMillan a new project grant to continue research into explaining patterns of growth in sub-Saharan Africa until January 2021. While many countries in Africa have experienced remarkable growth in the last decades, there is a lack of solid understanding about the drivers of this growth and concern about its sustainability.

The work will explore the growth potential of modern manufacturing in the region, understanding that without productivity growth in non-agricultural sectors, it is unlikely that growth in Africa will be sustained. Research will aim to identify explanations for the observed patterns of growth and their linkages with demand- or supply-side factors or structural change, with updated economic data analysis.