Structural transformation in Africa: Static gains, dynamic losses

This paper studies structural transformation in Africa and its implications for productivity growth during the past fifty years, extending the work by McMillan and Rodrik (2011). We present the Africa Sector Database including time series of value added and employment by sector for eleven Sub-Saharan African countries during the period 1960 to 2010. It is based on an in-depth country-by-country study of available statistics and linking procedures that aim to ensure consistency over time and across countries. We use this novel database to put recent African growth in historical and international perspective. The expansion of manufacturing activities during the early post-independence period led to a growthenhancing reallocation of resources. This process of structural change stalled in the mid-1970s and 80s. When growth rebounded in the 1990s, workers mainly relocated to market services industries. Market services activities had above-average productivity levels, but productivity growth was low and increasingly falling behind the world frontier. This pattern of static gains but dynamic losses of reallocation since 1990 is found for many African countries. It is comparable to patterns observed in Latin America, but different from those in Asia.