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Structural Change in Sub-Saharan Africa: An Open Economy Perspective

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Abstract

We study the evolution of manufacturing value-added shares in 11 sub-Saharan African (SSA) countries through the lens of an open economy model of structural change. Our analysis leverages recent developments in input-output tables in SSA countries. Our model allows for income effects, substitution and relative price effects, and comparative advantage and specialization effects. We calibrate our model to include each SSA country with nine major economies for each year between 2000 and 2018. We do similar calibrations for 11 developing Asian (DA) countries. Our main results are that domestic and foreign sectoral TFP are important drivers of structural change. Trade integration over time plays a small role. However, trade is important as a transmission mechanism of foreign productivity trends. While the drivers and mechanisms of industrialization are broadly similar in SSA and DA countries, one difference is the larger mining sector in SSA countries, which generates Dutch disease-type effects.

Suggested Citation

  • Gaaitzen de Vries & Hagen Kruse & Emmanuel Mensah & Yabo Vidogbena & Kei-Mu Yi, 2024. "Structural Change in Sub-Saharan Africa: An Open Economy Perspective," Working Papers 2418, Federal Reserve Bank of Dallas, revised 20 Mar 2026.
    • Handle: RePEc:fip:feddwp:99314
    DOI: 10.24149/wp2418r1
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    References listed on IDEAS

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    1. McMillan, Margaret & Rodrik, Dani & Verduzco-Gallo, Íñigo, 2014. "Globalization, Structural Change, and Productivity Growth, with an Update on Africa," World Development, Elsevier, vol. 63(C), pages 11-32.
    2. Xinshen Diao & Margaret McMillan & Dani Rodrik, 2019. "The Recent Growth Boom in Developing Economies: A Structural-Change Perspective," Springer Books, in: Machiko Nissanke & José Antonio Ocampo (ed.), The Palgrave Handbook of Development Economics, chapter 9, pages 281-334, Springer.
    3. Hagen Kruse & Emmanuel Mensah & Kunal Sen & Gaaitzen Vries, 2023. "A Manufacturing (Re)Naissance? Industrialization in the Developing World," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 71(2), pages 439-473, June.
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    1. Abay, Kibrom A. & Wondale, Meseret & Korir, Josphat K. & Bachewe, Fantu Nisrane & Araya, Mesele & Breisinger, Clemens, 2025. "The landscape of youth engagement in labor markets in Africa: Are youth driving structural transformation?," IFPRI discussion papers 2382, International Food Policy Research Institute (IFPRI).

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    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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