Structural Economic Change and Poverty Reduction: An Analysis of Sectoral Composition in Sudan

This paper examines how structural economic change has influenced poverty reduction in Sudan over 1970–2022, with a particular focus on the role of sectoral composition in a fragile and conflict-affected context. The study’s objective is to assess how value added growth in agriculture, industry, and services affects poverty outcomes, measured by the headcount ratio, poverty gap, and severity index. Methodologically, the analysis constructs annual monetary poverty indices using the Foster–Greer–Thorbecke (FGT) approach, based on a lognormal distribution derived from per capita consumption and Gini coefficients, and then estimates an Autoregressive Distributed Lag (ARDL) model to capture both short and long run effects of sectoral value added growth and key macroeconomic and demographic variables, including education, exports, inflation, population, credit access, and GDP growth. The results show that growth in agriculture and industry significantly reduces poverty in the long run, whereas the services sector exerts a weak, statistically insignificant effect. Education, access to credit, and higher inflation are associated with lower poverty levels, while population growth increases poverty, and export expansion is linked to higher poverty, reflecting the enclave nature of Sudan’s extractive export sectors. Overall, the findings underscore that inclusive structural transformation—centered on revitalizing agriculture, fostering industrial development, and reorienting services—along with complementary policies in human capital, finance, and macroeconomic management, is essential for sustainable poverty reduction in Sudan. The study thus provides new empirical evidence to inform policymakers in Sudan and other conflict affected low income economies undergoing economic transition.