The Lion on the Move Towards the World Frontier: Catching Up or Remaining Stuck?

Abstract

The remarkable growth spurt reported by the Sub-Saharan African (SSA) economy since the mid-1990s offers the opportunity to revisit the narrative of its economic development experience. We investigate whether the SSA economy has initiated a gradual process of convergence which reverses the long-term fall so far behind the U.S. frontier. Our framework begins with a top-down approach that performs a nested development accounting exercise. This aggregate analysis complements a bottom-up approach that tracks the sectoral origins of the SSA aggregate relative labor productivity performance. The application of this framework to a representative sample of the SSA economy over the 1970-2010 period suggests the following set of results. After one-quarter of a century of falling behind the U.S. level of real income per capita, the SSA economy observed a swift turnaround towards the end of the 1990s, yet without showing any sign of catch-up. Second, parallel to favorable demographic developments, SSA reports a startling relative labor productivity gap which accounts for much of its relative income per capita gap. Third, the use of the concept of cognitive skills reveals that human capital considerations have worsened off over time, making total factor productivity no longer the biggest part of the story underlying relative labor productivity differences. Fourth, the sectoral evidence points to the coexistence of headwinds (negative within-and reallocation-effects) and tailwinds (between-effects) which tend to cancel out each other, thus preventing SSA aggregate economic performance to get anywhere closer to the world frontier even during the growth spurt period.JEL classification: N10, O47, O55, O57.

Sectoral sources of sub-Saharan Africa’s convergence

“…Our decomposition places the emphasis on 'level', which generally leads to a different interpretation from theirs, which is based on 'growth'. This article also complements our earlier work, which provides a broad-brush assessment on the relative performance of the SSA economy using the guidance offered by competing growth theories (see Harchaoui and Üngör 2015). It offers a higher level of resolution at the country level in an effort to identify any regularities on a cross-country basis that stem from the sectoral sources of convergence.…”

Is this time different? Social capability and catch‐up growth in Ethiopia, 1950–2020

“…Some observers worry that the current period of stronger economic development is yet another cycle of this pattern. The principal concern is that the current growth process is not accompanied by sufficient structural transformation and productivity increases but rather driven by extensive agricultural production or commodity exports during a time of favourable terms of trade (Frankema & van Waijenburg, 2018; Harchaoui & Üngör, 2018; Rodrik, 2016). The volatile nature of the agricultural sector adds another layer of concern, given the sector's seasonal and yearly variations reflecting weather and market conditions (Djurfeldt et al, 2018).…”

The Effects of the Catch-Up Mechanism on the Structural Transformation of Sub-Saharan Africa

“…Some studies have focused on whether the rapid growth rates have been accompanied by structural change (Busse et al 2019;McMillan et al 2014;De Vries et al 2015). Others, such as Harchaoui and Üngör (2018), have probed the potential relationship between rapid growth rates and convergence to the U.S. level of income per capita. What appears to be overlooked is the examination of the underlying factors determining the unique patterns of structural change unfolding in SSA.…”