Structural change in sub-Saharan Africa: An open economy perspective

We study the evolution of manufacturing value-added shares in 11 sub-Saharan African (SSA) countries through the lens of an open economy model of structural change. Our analysis leverages recent developments in input–output tables in SSA countries. Our model allows for income effects, substitution and relative price effects, and comparative advantage and specialization effects. We calibrate our model to include each SSA country with nine major economies for each year between 2000 and 2018. We do similar calibrations for 11 developing Asian (DA) countries. Our main results are that domestic and foreign sectoral TFP are important drivers of structural change. Trade integration over time plays a small role. However, trade is important as a transmission mechanism of foreign productivity trends. While the drivers and mechanisms of industrialization are broadly similar in SSA and DA countries, one difference is the larger mining sector in SSA countries, which generates Dutch disease-type effects.