Are the drivers of structural change different in Asia and Africa?

Richard Grabowski and Sharmistha Self

Applied Economics, 2024, vol. 56, issue 47, 5650-5664

Abstract: Structural change has played an important role in the overall process of economic development. Africa seems to have faced greater difficulty than Asia in terms of achieving structural change. A number of hypotheses have been proposed to explain the structural change process in these two regions. The objective of this paper is to test several of these hypotheses utilizing data from a sample of Sub-Saharan African countries as well as a sample of Asian countries. Fixed effects and fully modified ordinary least squares techniques were used to test the hypotheses. The results indicate that there are many similarities between the two regions in terms of what factors are important in the process of structural change, and a few differences. Agricultural productivity, a reduction in dependence on natural resources, openness to trade all seem to be important, but for Sub-Saharan Africa efforts must also be made to aid domestic manufacturing firms so as to be able to compete. In addition, it seems that being relatively labour abundant was important for the structural change process in Asia. Policies aimed at promoting more rapid structural change in Sub-Saharan Africa include promoting agricultural productivity, improving the extent of trade openness, and additional efforts to coordinate the expansion of manufacturing.

Date: 2024
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DOI: 10.1080/00036846.2023.2257930

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