STRUCTURAL CHANGE, TOTAL FACTOR PRODUCTIVITY AND SECTORAL LABOR PRODUCTIVITY IN SELECTED AFRICAN COUNTRIES

Abstract

The transition from low income to high-income countries requires a change in the production structure of an economy. This paper examines structural change and its implication on TFP growth and sectoral labor productivity for a sample of African countries (Burkina Faso, Ethiopia, Madagascar, Mozambique, Tanzania, and Uganda) for 1991-2017. Using the panel data fixed effects model with Driscoll-Kraay standard error estimation technique, we find that structural change has contributed significantly to the growth of TFP. But it didn’t have any effect on sectoral labor productivity. Therefore, countries should promote relocation of labor from agriculture sector to the modern sectors to increase TFP growth rate.

Keywords

• Structural change
• Labor Relocation
• Shift-Share Analysis
• Total Factor Productivity
• Sectoral Labor Productivity

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