Premature deindustrialization and development without factories. Are services sectors a new path for the development of sub-Saharan African countries?

Abstract

For some authors (Rodrik, 2015 and 2017) deindustrialization process is premature in sub-Saharan countries. This means that the period of industrialization has been too short, with too little job creation and growth to guarantee a development trajectory. For these authors, the consequences for development are necessarily negative. However, in this work, the economic causes are: the global demand for services is growing faster than the demand for manufactured goods. This growth would leave too few development opportunities for industries in these countries that suffer from narrow domestic markets. Global demand for services and weak domestic demand are the causes of this deindustrialization. However, according to other authors (Loungani et al. 2017), if sub-Saharan African countries (SSA) deindustrialize, they should still be able to benefit from development opportunities through the services sector, which will be a new development path without factories (Ghani and O’Connel, 2014; Dihel and Grover, 2016). This article is part of the controversy. It tests the impacts of different sectors on growth, for a sample of 57 developing countries (Asia, SSA, and Latin America) in a panel data model over the period from 1984 to 2017. Our work shows that the services sector generates few spill-over effects on the income of SSA, which remains highly specialized in low-knowledge-intensive services.