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FROM GROWTH RECOVERY TO ECONOMIC TRANSFORMATION IN AFRICA
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IFPRI/Badiane
OUSMANE BADIANEDirector for Africa
International Food Policy Research Institute
FROM GROWTH RECOVERY TO ECONOMIC TRANSFORMATION IN AFRICA
MAIN TOPICS
1 KEY MESSAGES
2
3 PACE AND PATTERNS OF STRUCTURAL TRANSFORMATION IN AFRICA
4 STRUTURAL TRANSFORMATION AND SECTORAL IMBALANCE
5 STRUCTURAL TRANSFORMATION, COMPARATIVE ADVANTAGE, AND POVERTY
GROWTH PROCESS AND BRIEF OVERVIEW OF RECENT PERFORMANCE IN AFRICA
FROM GROWTH RECOVERY TO ECONOMIC TRANSFORMATION IN AFRICA
MAIN TOPICS
1 KEY MESSAGES
2
3 PACE AND PATTERNS OF STRUCTURAL TRANSFORMATION IN AFRICA
4 STRUTURAL TRANSFORMATION AND SECTORAL IMBALANCE
5 STRUCTURAL TRANSFORMATION, COMPARATIVE ADVANTAGE, AND POVERTY
GROWTH PROCESS AND BRIEF OVERVIEW OF RECENT PERFORMANCE IN AFRICA
FROM GROWTH RECOVERY TO ECONOMIC TRANSFORMATION IN AFRICA
IFPRI/Badiane
WHERE ARE WE AND WHY? STRUCTURAL CHANGE IN AFRICA HAS BEEN PRODUCTIVITY-REDUCING
NEGATIVE DIVERSIFICATION MOVED LABOR FROM UNDERPERFORMING HIGHER-PRODUCTIVITY AGRICULTURE INTO OVERSIZED LOWER-PRODUCTIVITY SERVICES SECTOR
LACK OF EFFECTIVE INDUSTRIALIZATION POLICY IMPEDED GROWTH IN MANUFACTURING SECTOR FORCED SPECIALIZATION IN LOW VALUE PRIMARY GOODS
DELAYED STRUCTURAL TRANSFORMATION STRONGLY LINKED TO HIGH LEVELS OF POVERTY
KEY MESSAGES
MAIN TOPICS
1 KEY MESSAGES
2
3 PACE AND PATTERNS OF STRUCTURAL TRANSFORMATION IN AFRICA
4 STRUTURAL TRANSFORMATION AND SECTORAL IMBALANCE
5 STRUCTURAL TRANSFORMATION, COMPARATIVE ADVANTAGE, AND POVERTY
GROWTH PROCESS AND BRIEF OVERVIEW OF RECENT PERFORMANCE IN AFRICA
FROM GROWTH RECOVERY TO ECONOMIC TRANSFORMATION IN AFRICA
THE ECONOMIC GROWTH PROCESS
COUNTRIES BECOME RICH BY PRODUCING MORE OUTPUT PER GIVEN WORKER
THIS INVOLVES PRODUCING MORE OF THE SAME GOOD
AND MORE IMPORTANTLY, PRODUCING A LARGER BASKET OF HIGHER VALUE GOODS
COUNTRIES ALSO BECOME RICH OVER TIME
STARTING FROM AN AGRICULTURAL AND RURAL BASE
MOVING TO AN URBAN AND INDUSTRIAL BASE
THE ECONOMIC GROWTH PROCESS
THE DOUBLE CHALLENGE OF MANAGING THE GROWTH PROCESS
RAISING PRODUCTIVITY AGRICULTURE AND THE RURAL ECONOMY
WHILE DIVERSIFYING INTO HIGHER VALUE GOODS OUTSIDE OF AGRICULTURE
DETERMINING FACTORS
HUMAN AND PHYSICAL ASSETS
INSTITUTIONAL AND TECHNOLOGICAL RESOURCES
POLICY AND COORDINATION CAPACITIES
AFRICA IS UNDERGOING ITSLONGEST PERIOD OF SUSTAINED GROWTH SINCE THE 1960S
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
-8
-6
-4
-2
0
2
4
6
8
10
12
GDP, annual growth rate (%)Agriculture, hunting, forestry, fishing, annual growth rate (%)
Annu
al G
row
th R
ate
(%)
Source: UN National Accounts, 2013
IFPRI/Badiane
THE GROWTH IS ACCELERATINGAS WELL AS SPREADING GEOGRAPHICALLY
SOURCE: IFPRI / Badiane and UlimwenguData from national account s / UN database: http://data.un.org/Explorer.aspx?d=SNAAMA
MAIN TOPICS
1 KEY MESSAGES
2 GROWTH PROCESS AND BRIEF OVERVIEW OF RECENT PERFORMANCE IN AFRICA
3 PACE AND PATTERNS OF STRUCTURAL TRANSFORMATION IN AFRICA
4 STRATEGIES FOR THE AGRICULTURAL SECTOR
5 STRATEGIES FOR THE INDUSTRIAL SECTOR
FROM GROWTH RECOVERY TO ECONOMIC TRANSFORMATION IN AFRICA
Perc
enta
ge S
hare
Per-capita Income
Share of agriculture in total labor force
Share of agriculture in total GDP
low
HighAgricultural GDP per worker
Agricultural GDP
low high
AGRICULTURE IN THE ECONOMIC TRANSFORMATION PROCESS
Based on Timmer (2009)
Share of agriculture in total labor force
Share of agriculture in total GDP
AGRICULTURE IN THE ECONOMIC TRANSFORMATION PROCESS
Time Axis
0
100
Ag GDP Share = Ag labor shareAg incomes = Non Ag incomes
AGRICULTURE IN THE ECONOMIC TRANSFORMATION PROCESS
0
100
CONVERGENCE: [Ag GDP Share – Ag labor share] => 0
1960196219641966196819701972197419761978198019821984198619881990199219941996199820002002200420062008
(60)
(40)
(20)
-
20
40
60
80
100 CENTRAL AFRICA
Shar
e (%
)1960196219641966196819701972197419761978198019821984198619881990199219941996199820002002200420062008
(60)
(40)
(20)
-
20
40
60
80
100 EAST AFRICA
Shar
e (%
)
1960196219641966196819701972197419761978198019821984198619881990199219941996199820002002200420062008
(60)
(40)
(20)
-
20
40
60
80 SOUTHERN AFRICA
Shar
e (%
)
Ag GDP Share
Ag Emp. Share
Difference
1960196219641966196819701972197419761978198019821984198619881990199219941996199820002002200420062008
(60)
(40)
(20)
-
20
40
60
80
100 WEST AFRICA
Shar
e (%
)TRENDS IN STRUCTURAL CHANGE AMONG AFRICAN COUNTRIES 1960 - 2008
TRENDS IN LABOR PRODUCTIVITY AND EMPLOYMENT IN AFRICA 1980 - 2008
19801982
19841986
19881990
19921994
19961998
20002002
20042006
2008 -
20
40
60
80
100
120
140
LABOR PRODUCTIVITY
Inde
x:19
80=1
00
-
10
20
30
40
50
60
70
80
LABOR EMPLOYMENT SHARE
Shar
e (%
)
LABOR PRODUCTIVITY HAS STAGNATED IN AGRICULTUREAND DECLINED SHARPLY IN NON AGRICULTURAL SECTOR, DRIVEN PRIMARILY BY LOW-PRODUCTIVITY SERVICES
EMPLOYMENT HAS FALLEN SLIGHTLY IN AGRICULTURE AND INCREASED RAPIDLY IN NON AGRICULTURAL SECTOR, AGAIN DRIVEN BY SERVICES AND LESS BY INDUSTRY
Agriculture Non-agriculture
Source: FAOSTAT 2011
AFRICA
CAF
EAF
SAF
WAF
NAF
(0.020)
(0.015)
(0.010)
(0.005)
-
0.005
0.010
0.015
0.020 1980-1995
Agriculture Non Agriculture
AFRICA
CAF
EAF
SAF
WA
F
NA
F
(0.030) (0.020) (0.010)
- 0.010 0.020 0.030 0.040 0.050 0.060 0.070
1995-2005
Source: FAOSTAT, 2011 and WDI, 2009
SECTORAL CONTRIBUTION TO PRODUCTIVITY GROWTH
NEGATIVE CONTRIBUTION OF NON AG. SECTOR DURING THE 1980S TO MID 1990S
BETTER CONTRIBUTION OF BOTH SECTORS WITH RECOVERY IN THE LATE 1990S,
AFRICA
CAF
EAF
SAF
WAF
NAF
(0.080)
(0.060)
(0.040)
(0.020)
-
0.020
0.040
Source: FAOSTAT, 2011 and WDI, 2009
CONCLUSION NO. 1STRUCTURAL CHANGE CONTRIBUTED NEGATIVELY TO
PRODUCTIVITY GROWTH WITH EXCEPTION OF WEST AFRICA
1980-1995 1995-2005
MAIN TOPICS
1 KEY MESSAGES
2
3 PACE AND PATTERNS OF STRUCTURAL TRANSFORMATION IN AFRICA
4 STRUTURAL TRANSFORMATION AND SECTORAL IMBALANCE
5 STRUCTURAL TRANSFORMATION, COMPARATIVE ADVANTAGE, AND POVERTY
GROWTH PROCESS AND BRIEF OVERVIEW OF RECENT PERFORMANCE IN AFRICA
FROM GROWTH RECOVERY TO ECONOMIC TRANSFORMATION IN AFRICA
AGRICULTURAL SECTOR UNDERPERFORMANCE AND STRUCTURAL CHANGE
THE SHARE OF THE AGRICULTURAL SECTOR IN OVERALL GDP IS LOWER IN NEARLY ALL AFRICAN COUNTRIES THAN WOULD HAVE BEEN EXPECTED BASED ON THE LEVEL OF PER CAPITA
OBSERVED AVERAGE SHARES OVER THE LAST 30 YEARS ARE AROUND 30%, NEARLY 20 PERCFENTAGE POINTS BELOW WHAT WOULD BE EXPECTED BASED ON COUNTRIES’ LEVEL OF DEVELOPMENT
Observed Ag GDP Share Expected Ag GDP Share Relationship based on sample of 210 countries over 1960-2008 period
Djibouti
South A.
Gabon
Angola
NamibiaCongo
Moro
cco
Zambia
Swazil
and
GuineaEgyp
t
Leso
tho
Madagasca
rDRC
Kenya
Moza
mb...Chad
Togo
Sierra
L.
Malawi
GhanaCAR
UgandaNiger
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
Agric
ultu
ral s
hare
of G
DP
(%)
East Asia & Pacific Latin America & Caribbean
Middle East & North Africa
South Asia Sub-Saharan Africa
-
5
10
15
20
25
30
35
40
45
Average Share of Agriculture in GDP
1965-1980 1980-1995 1995-2008
Shar
e (%
)CONLUSION NO. 2
RELATIVELY UNDERSIZED HIGHER-PRODUCTIVITY AGRICULTURAL SECTORHAS IMPACTED NEGATIVELY ON TRANSFORMATION
$1,758 $4,767 $1,909 $682 $618
SOURCE: IFPRI/Badiane & Makombe based on data from WDI, 2009
Pc GDP in 2008
OVERSIZED SERVICE SECTOR AND STRUCTURAL CHANGE IN AFRICA
ON THE OTHER HAND, THE SHARE OF THE SERVICES SECTOR IN GDP IS MUCH LARGER IN THE MAJORITY OF COUNTRIES COMPARED WHAT WOULD HAVE BEEN EXPECTED BASED ON THE LEVEL PER CAPITA INCOMES
THE RELATIVELY BIGGER SERVICES SECTOR IS LINKED TO THE UNDERSIZED AGRICULTURAL SECTOR
IT IS A REFLECTION OF “NEGATIVE DIVERSIFICATION” WITH LABOR LEAVING THE UNDERPERFOMING AGRICULTURAL SECTOR TO MOVE INTO THE EQUALLY UNPRODUCTIVE OR LESS PRODUCTIVE SERVICES SECTOR
E. Guinea
Liberia
Guinea-B.
Mali
UgandaGhana
DRC
Zambia
Malawi
Maurit
...
Swazil
and
Leso
thoSu
danChad
Came...
GuineaKenya
Benin
Zimb...
Gambia
South A.
Tunisia
Eritre
a
Seyc
he...0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
Serv
ices
shar
e of
GD
P (%
)
Observed Ag GDP Share Expected Ag GDP Share Relationship based on sample of 210 countries over 1960-2008 period
East
Asia &
Pacific
Latin Americ
a & Cari
bbean
Middle
East
& North
Africa
South
Asia
Sub-Sa
haran Afri
ca -
10
20
30
40
50
60
70 Average Share of Services in GDP
1965-1980 1980-1995 1995-2008
Shar
e (%
)
SOURCE: IFPRI/Badiane & Makombe Data from WDI, 2009
CONCLUSION NO. 3
RELATIVELY OVERSIZED LOWER-PRODUCTIVITY SERVICES SECTORHAS IMPACTED NEGATIVELY ON TRANSFORMATION
$1,758 $4,767 $1,909 $682 $618
MAIN TOPICS
1 KEY MESSAGES
2
3 PACE AND PATTERNS OF STRUCTURAL TRANSFORMATION IN AFRICA
4 STRUTURAL TRANSFORMATION AND SECTORAL IMBALANCE
5 STRUCTURAL TRANSFORMATION, COMPARATIVE ADVANTAGE, AND POVERTY
GROWTH PROCESS AND BRIEF OVERVIEW OF RECENT PERFORMANCE IN AFRICA
FROM GROWTH RECOVERY TO ECONOMIC TRANSFORMATION IN AFRICA
CONCLUSION NO. 4THE UNDERPERFORMING AGRICULTURAL SECTOR IS NOT JUST DELAYING TRANSFORMATION
IT IS ALSO CONTRIBUTING TO HIGHER POVERTY RATES
ANG
BN
BTN
BF
CMN
CAR
CHD
DRCCG
CI
GBA
GHN
GNE
GNEB
KYA
LST
LBR
MDGMI
MTA
MZQ
NBA
NGR
NGRA
RWD
SNG
SL
SA
SZL
TZN
TG
UGDZB
Note: y_hat=43.363*-0.534*x, over 1990-2005
20
40
60
80
10
0P
ove
rty r
ate
s (
%)
-60 -50 -40 -30 -20 -10 0Observed-expected Ag GDP share
Pove
rty
Rate
19621963
19641965
19661967
19681969
19701971
19721973
19741975
19761977
19781979
19801981
19821983
19841985
19861987
19881989
19901991
19921993
19941995
19961997
19981999
20000.0
2.0
4.0
6.0
8.0
10.0
12.0
BrazilChinaAfrica
Expy
(1,0
00 $
US)
19621963
19641965
19661967
19681969
19701971
19721973
19741975
19761977
19781979
19801981
19821983
19841985
19861987
19881989
19901991
19921993
19941995
19961997
19981999
20000.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Non-agriculture Agriculture
Expy
(1,0
00 $
US)
Non-agriculture
CONCLUSION NO. 5PRODUCTIVITY-REDUCING STRUTURAL CHANGE
CONFINED AFRICAN ECONOMIES TO LOWER VALUE PRODUCTS
EXPY measures the extent to which a country has Revealed Comparative Advantage in sophisticated / higher value products (AVG over 100 countries > 10,000$ (Hausmann and Klinger, (2006)
PROMOTING SUCCESSFUL STRUCTURAL CHANGEIMPLICATIONS FOR AGRICULTURAL GROWTH AND INDUSTRIALIZATION STATEGIES