Economic Structure, Growth, and Evolution of Inequality and Poverty in Africa: An Overview

Abstract

Is Africa experiencing a growth ‘miracle’? Rodrik (2018) seems sceptical, and provides evidence based on modern growth theory to support the scepticism: the recent relatively impressive growth does not seem sustainable. Related to the issue of sustainability is economic structure. Diao et al. (2018) find that accompanying the recent growth record has been improving agricultural labour productivity, a reduction of the agricultural labour share and increasing manufacturing employment, evidence that is consistent with that observed for industrialised economies. Thorbecke and Ouyang (2018) also find that while the efficacy of translating growth into poverty reduction remains lower for Africa than elsewhere, there is evidence of poverty convergence recently in Africa, contrary to that for developing countries generally. Fosu (2018) observes the dominant importance, on average, of growth for poverty reduction in Africa, but also underscores the critical role of inequality, especially for certain countries. Exploring why inequality is particularly high in Africa, Shimeles and Nabassaga (2018) uncover ethnic fractionalisation, limited tertiary education, and poor governance as major culprits, and inequality of opportunity as the dominant component. Bigsten (2018) identifies the dual-economy nature of colonial arrangements as the genesis for Africa’s high inequality, and proposes an enhanced pro-poor Lewis-type modern-sector enlargement as a potential solution.