Productive efficiency, structural change, and catch-up within Africa

• Published in: Structural change and economic dynamics Vol. 65; pp. 78 - 100
• Main Authors: Mensah, Emmanuel B., Owusu, Solomon, Foster-McGregor, Neil
• Format: Journal Article
• Language: English
• Published: Elsevier B.V 01.06.2023
• Subjects: Africa; Productive efficiency; Structural change; Technological catch-up; Technological change; O47; N1; Technological catch-up; Productive efficiency; Africa; Technological change; O30; Structural change
• ISSN: 0954-349X; 1873-6017
• DOI: 10.1016/j.strueco.2023.02.006

•This paper studies the dynamics of labor productivity convergence and technology catch-up within Africa.•It examines how African countries are catching-up with the local technology frontier from a nonparametric and structural perspectives.•The analysis shows that productivity convergence within Africa is primarily driven by technology catch-up (i.e., efficiency change).•The paper explores the special role of technological catch-up by decomposing it into within-sector convergence, between-sector convergence, and initial specialization.•The results highlight the special role of structural change in closing the productivity gap with the local frontier. This paper studies the dynamics of labor productivity convergence and technology catch-up within Africa, shedding light on two important and inter-related issues that are central to Africa’s growth: (i) convergence of relative productivity among African countries and (ii) the role of technological change and technological catch-up in driving productivity change across and within African countries. We do this by using a nonparametric method to estimate an African production frontier.  Productivity change in Africa is decomposed into two components: technological change and technological catch-up. Our results show that Botswana and Mauritius are the only two countries in Africa that have converged to the productivity as well as the efficiency level of the frontier. This successful convergence is driven more by technological catch-up and less by technological change. We explore the special role of technological catch-up by decomposing it into within-sector convergence, between-sector convergence and initial specialization using a structural model (Shift and Share catch-up decomposition). The results highlight the special role of structural change in closing the productivity gap with the frontier. This paper contributes to recent evidence suggesting that countries can climb up the income ladder at a faster rate through a two-pronged transformation – i.e., structural change and technological catch-up.