Is sub-Saharan Africa deindustrializing?

Emmanuel Mensah

No 2020-045, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT)

Abstract: There is a general view that Africa is deindustrializing. We examine the extent to which the existing result is sensitive to sample size and new sectoral indicators. In addition to the usual linear fixed effect model, we use nonlinear panel data method that recognizes the fractional nature of manufacturing share of employment and output. We do not find convincing and robust evidence in support of the general view that Africa is deindustrializing prematurely. Manufacturing employment shares do not follow an inverse U-shape relationship. Conditional on income, population, and country-specific fixed effects, manufacturing output shares show positive and statistically significant trends over time. When we increase the coverage of countries to almost all countries in Africa, the results suggest that Africa is not deindustrializing, although there has not been any significant industrial development since the 1970s. This result masks important regional differences. A sub-regional analysis shows that East Africa is industrializing, whereas Southern Africa is the only region that seems to be deindustrializing. We examine the underlying drivers of manufacturing performance and discuss the implication for data collection and industrial policy in Africa.

Keywords: Africa; de-industrialization; industrialization; industrial development; manufacturing; economic growth (search for similar items in EconPapers)
JEL-codes: O14 O55 (search for similar items in EconPapers)
Date: 2020-10-09
New Economics Papers: this item is included in nep-afr, nep-dev and nep-gro
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:unm:unumer:2020045

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