Structural Transformation, Economic Growth and Employment Creation in Africa: An Empirical Analysis

Abstract

Our work is part of the studies that deal with the issue of structural transformation and economic growth in Africa. More specifically, it seeks to provide evidence of the lack of decent employment in the relatively-high economic growth experienced by the African continent since the turn of the century. The methodology of our work consists of the following two approaches; (I) the first is descriptive and shows the shortcomings of economic growth in terms of job creation, which are explained in part by the absence of effective structural transformation, (ii) the second is econometric and consists, firstly, in determining, by means of different econometric models and methods, the elasticity of the relationship of employment to economic growth in Africa; secondly, and in order to show the role of structural transformation, we try to measure the effect of a change in the share of the manufacturing industry in the GDP on economic growth for a sample of African countries by using an extended model of Mankiew, Romer & Weil (1992). On the basis of all these empirical analyses, we have come up with a set of results. First, the high economic growth achieved in Africa over the last fifteen years has been very low in terms of creating decent employment. This is reflected in the weakness of the elasticity of employment growth compared to the one in other regions of the world, including that of South Asia. Second, Africa is the victim of unsuccessful structural transformation characterized by a very limited contribution of the manufacturing sector to economic growth and consequently to job creation.