The Unassuming Economist

From a paper by Meshach Jesse Aziakpono:

“As economies develop, they undergo large scale structural change – the reallocation of economic activities across three broad sectors of agriculture, manufacturing and services that accompany economic development. A fundamental attribute of structural change is the structural heterogeneity within and across countries, giving rise to cross-country variation in structural change patterns. Beyond the systematic variation in structural composition, structural transformation also induces a wide range of complementary processes and changes in technological progress, consumer behaviour, urbanisation, demographic transition, female labour participation, living standards, welfare redistribution, and even socio-political institutions. Although structural transformation has been extensively investigated in several industrialised economies and remains a pertinent policy issue amongst developing economies, empirical insights into these processes within developing economies remain unclear. The collection of four stand-alone essays in this dissertation examines the drivers and inclusive growth effects of African structural change patterns towards providing a deeper conceptual understanding of policy implications.

The first essay reconsiders the stylised facts of structural change within the context of Africa. Specifically, the study summarizes broad trends and patterns in the data to understand the empirical regularities in the composition of value-added and employment shares, relative labour productivity levels and growth rates, and capital intensity levels using descriptive statistics of 20 (38) African economies from 1960 to 2018 (1970-2017). The study found considerable sectoral differences, emphasising structural disequilibrium in Africa’s economic growth pattern. The following empirical insights were derived from the analyses. First, any talk of premature de-industrialisation in Africa is premature, as the manufacturing sector is still expanding, albeit more slowly than expected. Second, the service sector in Africa is equally or even more productive than the manufacturing sector, which is even more evident in the bottom-income quantile economies in Africa than in the top-income quantile. Third, the agriculture sector has overtaken the manufacturing sector as the fastest-growing sector, an empirical regularity common to emerging and industrialised economies. Fourth, while capital utilisation in agriculture has remained a paltry sum, capital utilisation in the service sector has surpassed that of the industrial sector over the last decade.”

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