Economic Policy Uncertainty and Structural Transformation in Africa: The Conditional Role of Human Resource Development

The present study has investigated two objectives. First, it examines the unconditional impact of economic policy uncertainty (EPU) on Africa’s structural transformation. Second, it explores the conditional role of human resource development in the nexus between economic policy uncertainty (EPU) and structural transformation. The study is based on a sample of forty-seven African countries covering the period 2010–2022, and the adopted empirical strategy is the interactive generalized method of moments (GMM). The estimation exercise was strategically tailored to avoid a trade-off between selecting a valid model, controlling for variable omission bias, and preventing the proliferation of instruments. Specifically, the study employed human resource development proxies (i.e., average years of schooling, gross secondary enrolment ratio, and labor force participation), which were interacted with economic policy uncertainty to improve both manufacturing value added (% of GDP) and industrial value added (% of GDP). The findings reveal a negative net effect of economic policy uncertainty on Africa’s structural transformation, as well as the corresponding human resource development thresholds that are essential to fully mitigate these adverse effects. The identified human resource development thresholds fall within statistical ranges, making them valuable for policymakers. Policy implications are discussed in line with the United Nations Sustainable Development Goals (SDGs) and the African Union’s Agenda 2063 aspirations.