2. badiane board may13 agriculture and structural transformation
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This document discusses structural transformation in Africa from economic growth to transformation. It finds that structural change in Africa has been productivity-reducing, with labor moving from underperforming agriculture into oversized, lower-productivity services. This delayed structural transformation and was strongly linked to high poverty levels. The agricultural sector was relatively undersized compared to expectations, while the services sector was oversized. This negative diversification impacted productivity growth. Promoting successful structural transformation will require strategies to boost agricultural productivity and diversify economies through industrialization.
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2. badiane board may13 agriculture and structural transformation
- 1. IFPRI/Badiane OUSMANE BADIANE Director for Africa International Food Policy Research Institute FROM GROWTH RECOVERY TO ECONOMIC TRANSFORMATION IN AFRICA
- 2. MAIN TOPICS 1 KEY MESSAGES 2 3 PACE AND PATTERNS OF STRUCTURAL TRANSFORMATION IN AFRICA 4 STRUTURAL TRANSFORMATION AND SECTORAL IMBALANCE 5 STRUCTURAL TRANSFORMATION, COMPARATIVE ADVANTAGE, AND POVERTY GROWTH PROCESS AND BRIEF OVERVIEW OF RECENT PERFORMANCE IN AFRICA FROM GROWTH RECOVERY TO ECONOMIC TRANSFORMATION IN AFRICA
- 3. MAIN TOPICS 1 KEY MESSAGES 2 3 PACE AND PATTERNS OF STRUCTURAL TRANSFORMATION IN AFRICA 4 STRUTURAL TRANSFORMATION AND SECTORAL IMBALANCE 5 STRUCTURAL TRANSFORMATION, COMPARATIVE ADVANTAGE, AND POVERTY GROWTH PROCESS AND BRIEF OVERVIEW OF RECENT PERFORMANCE IN AFRICA FROM GROWTH RECOVERY TO ECONOMIC TRANSFORMATION IN AFRICA
- 4. IFPRI/Badiane WHERE ARE WE AND WHY? STRUCTURAL CHANGE IN AFRICA HAS BEEN PRODUCTIVITY-REDUCING NEGATIVE DIVERSIFICATION MOVED LABOR FROM UNDERPERFORMING HIGHER-PRODUCTIVITY AGRICULTURE INTO OVERSIZED LOWER-PRODUCTIVITY SERVICES SECTOR LACK OF EFFECTIVE INDUSTRIALIZATION POLICY IMPEDED GROWTH IN MANUFACTURING SECTOR FORCED SPECIALIZATION IN LOW VALUE PRIMARY GOODS DELAYED STRUCTURAL TRANSFORMATION STRONGLY LINKED TO HIGH LEVELS OF POVERTY KEY MESSAGES
- 5. MAIN TOPICS 1 KEY MESSAGES 2 3 PACE AND PATTERNS OF STRUCTURAL TRANSFORMATION IN AFRICA 4 STRUTURAL TRANSFORMATION AND SECTORAL IMBALANCE 5 STRUCTURAL TRANSFORMATION, COMPARATIVE ADVANTAGE, AND POVERTY GROWTH PROCESS AND BRIEF OVERVIEW OF RECENT PERFORMANCE IN AFRICA FROM GROWTH RECOVERY TO ECONOMIC TRANSFORMATION IN AFRICA
- 6. THE ECONOMIC GROWTH PROCESS COUNTRIES BECOME RICH BY PRODUCING MORE OUTPUT PER GIVEN WORKER THIS INVOLVES PRODUCING MORE OF THE SAME GOOD AND MORE IMPORTANTLY, PRODUCING A LARGER BASKET OF HIGHER VALUE GOODS COUNTRIES ALSO BECOME RICH OVER TIME STARTING FROM AN AGRICULTURAL AND RURAL BASE MOVING TO AN URBAN AND INDUSTRIAL BASE
- 7. THE ECONOMIC GROWTH PROCESS THE DOUBLE CHALLENGE OF MANAGING THE GROWTH PROCESS RAISING PRODUCTIVITY AGRICULTURE AND THE RURAL ECONOMY WHILE DIVERSIFYING INTO HIGHER VALUE GOODS OUTSIDE OF AGRICULTURE DETERMINING FACTORS HUMAN AND PHYSICAL ASSETS INSTITUTIONAL AND TECHNOLOGICAL RESOURCES POLICY AND COORDINATION CAPACITIES
- 8. AFRICA IS UNDERGOING ITS LONGEST PERIOD OF SUSTAINED GROWTH SINCE THE 1960S -8 -6 -4 -2 0 2 4 6 8 10 12 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 AnnualGrowthRate(%) GDP, annual growth rate (%) Agriculture, hunting, forestry, fishing, annual growth rate (%) Source: UN National Accounts, 2013
- 9. IFPRI/Badiane THE GROWTH IS ACCELERATING AS WELL AS SPREADING GEOGRAPHICALLY SOURCE: IFPRI / Badiane and Ulimwengu Data from national account s / UN database: http://data.un.org/Explorer.aspx?d=SNAAMA
- 10. MAIN TOPICS 1 KEY MESSAGES 2 GROWTH PROCESS AND BRIEF OVERVIEW OF RECENT PERFORMANCE IN AFRICA 3 PACE AND PATTERNS OF STRUCTURAL TRANSFORMATION IN AFRICA 4 STRATEGIES FOR THE AGRICULTURAL SECTOR 5 STRATEGIES FOR THE INDUSTRIAL SECTOR FROM GROWTH RECOVERY TO ECONOMIC TRANSFORMATION IN AFRICA
- 11. Per-capita Income Share of agriculture in total labor force Share of agriculture in total GDP low High Agricultural GDP per worker Agricultural GDP low high AGRICULTURE IN THE ECONOMIC TRANSFORMATION PROCESS Based on Timmer (2009)
- 12. Share of agriculture in total labor force Share of agriculture in total GDP AGRICULTURE IN THE ECONOMIC TRANSFORMATION PROCESS Time Axis 0 100 Ag GDP Share = Ag labor share Ag incomes = Non Ag incomes
- 13. AGRICULTURE IN THE ECONOMIC TRANSFORMATION PROCESS 0 100 CONVERGENCE: [Ag GDP Share – Ag labor share] => 0
- 14. (60) (40) (20) - 20 40 60 80 100 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Share(%) CENTRAL AFRICA (60) (40) (20) - 20 40 60 80 100 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Share(%) EAST AFRICA (60) (40) (20) - 20 40 60 80 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Share(%) SOUTHERN AFRICA Ag GDP Share Ag Emp. Share Difference (60) (40) (20) - 20 40 60 80 100 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Share(%) WEST AFRICA TRENDS IN STRUCTURAL CHANGE AMONG AFRICAN COUNTRIES 1960 - 2008
- 15. TRENDS IN LABOR PRODUCTIVITY AND EMPLOYMENT IN AFRICA 1980 - 2008 - 20 40 60 80 100 120 140 198019821984198619881990199219941996199820002002200420062008 Index:1980=100 LABOR PRODUCTIVITY - 10 20 30 40 50 60 70 80 198019821984198619881990199219941996199820002002200420062008 Share(%) LABOR EMPLOYMENT SHARE LABOR PRODUCTIVITY HAS STAGNATED IN AGRICULTURE AND DECLINED SHARPLY IN NON AGRICULTURAL SECTOR, DRIVEN PRIMARILY BY LOW-PRODUCTIVITY SERVICES EMPLOYMENT HAS FALLEN SLIGHTLY IN AGRICULTURE AND INCREASED RAPIDLY IN NON AGRICULTURAL SECTOR, AGAIN DRIVEN BY SERVICES AND LESS BY INDUSTRY Agriculture Non-agriculture Source: FAOSTAT 2011
- 16. (0.020) (0.015) (0.010) (0.005) - 0.005 0.010 0.015 0.020 AFRICA CAF EAF SAF WAF NAF 1980-1995 Agriculture Non Agriculture (0.030) (0.020) (0.010) - 0.010 0.020 0.030 0.040 0.050 0.060 0.070 AFRICA CAF EAF SAF WAF NAF 1995-2005 Source: FAOSTAT, 2011 and WDI, 2009 SECTORAL CONTRIBUTION TO PRODUCTIVITY GROWTH NEGATIVE CONTRIBUTION OF NON AG. SECTOR DURING THE 1980S TO MID 1990S BETTER CONTRIBUTION OF BOTH SECTORS WITH RECOVERY IN THE LATE 1990S,
- 17. (0.070) (0.060) (0.050) (0.040) (0.030) (0.020) (0.010) - 0.010 0.020 0.030 0.040 AFRICA CAF EAF SAF WAF NAF Source: FAOSTAT, 2011 and WDI, 2009 CONCLUSION NO. 1 STRUCTURAL CHANGE CONTRIBUTED NEGATIVELY TO PRODUCTIVITY GROWTH WITH EXCEPTION OF WEST AFRICA 1980-1995 1995-2005
- 18. MAIN TOPICS 1 KEY MESSAGES 2 3 PACE AND PATTERNS OF STRUCTURAL TRANSFORMATION IN AFRICA 4 STRUTURAL TRANSFORMATION AND SECTORAL IMBALANCE 5 STRUCTURAL TRANSFORMATION, COMPARATIVE ADVANTAGE, AND POVERTY GROWTH PROCESS AND BRIEF OVERVIEW OF RECENT PERFORMANCE IN AFRICA FROM GROWTH RECOVERY TO ECONOMIC TRANSFORMATION IN AFRICA
- 19. AGRICULTURAL SECTOR UNDERPERFORMANCE AND STRUCTURAL CHANGE THE SHARE OF THE AGRICULTURAL SECTOR IN OVERALL GDP IS LOWER IN NEARLY ALL AFRICAN COUNTRIES THAN WOULD HAVE BEEN EXPECTED BASED ON THE LEVEL OF PER CAPITA OBSERVED AVERAGE SHARES OVER THE LAST 30 YEARS ARE AROUND 30%, NEARLY 20 PERCFENTAGE POINTS BELOW WHAT WOULD BE EXPECTED BASED ON COUNTRIES’ LEVEL OF DEVELOPMENT Observed Ag GDP Share Expected Ag GDP Share Relationship based on sample of 210 countries over 1960-2008 period 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0 AgriculturalshareofGDP(%)
- 20. - 5 10 15 20 25 30 35 40 45 East Asia & Pacific Latin America & Caribbean Middle East & North Africa South Asia Sub-Saharan Africa Share(%) Average Share of Agriculture in GDP 1965-1980 1980-1995 1995-2008 CONLUSION NO. 2 RELATIVELY UNDERSIZED HIGHER-PRODUCTIVITY AGRICULTURAL SECTOR HAS IMPACTED NEGATIVELY ON TRANSFORMATION $1,758 $4,767 $1,909 $682 $618 SOURCE: IFPRI/Badiane & Makombe based on data from WDI, 2009 Pc GDP in 2008
- 21. OVERSIZED SERVICE SECTOR AND STRUCTURAL CHANGE IN AFRICA ON THE OTHER HAND, THE SHARE OF THE SERVICES SECTOR IN GDP IS MUCH LARGER IN THE MAJORITY OF COUNTRIES COMPARED WHAT WOULD HAVE BEEN EXPECTED BASED ON THE LEVEL PER CAPITA INCOMES THE RELATIVELY BIGGER SERVICES SECTOR IS LINKED TO THE UNDERSIZED AGRICULTURAL SECTOR IT IS A REFLECTION OF “NEGATIVE DIVERSIFICATION” WITH LABOR LEAVING THE UNDERPERFOMING AGRICULTURAL SECTOR TO MOVE INTO THE EQUALLY UNPRODUCTIVE OR LESS PRODUCTIVE SERVICES SECTOR 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 ServicesshareofGDP(%) Observed Ag GDP Share Expected Ag GDP Share Relationship based on sample of 210 countries over 1960-2008 period
- 22. - 10 20 30 40 50 60 70 East Asia & Pacific Latin America & Caribbean Middle East & North Africa South Asia Sub-Saharan Africa Share(%) Average Share of Services in GDP 1965-1980 1980-1995 1995-2008SOURCE: IFPRI/Badiane & Makombe Data from WDI, 2009 CONCLUSION NO. 3 RELATIVELY OVERSIZED LOWER-PRODUCTIVITY SERVICES SECTOR HAS IMPACTED NEGATIVELY ON TRANSFORMATION $1,758 $4,767 $1,909 $682 $618
- 23. MAIN TOPICS 1 KEY MESSAGES 2 3 PACE AND PATTERNS OF STRUCTURAL TRANSFORMATION IN AFRICA 4 STRUTURAL TRANSFORMATION AND SECTORAL IMBALANCE 5 STRUCTURAL TRANSFORMATION, COMPARATIVE ADVANTAGE, AND POVERTY GROWTH PROCESS AND BRIEF OVERVIEW OF RECENT PERFORMANCE IN AFRICA FROM GROWTH RECOVERY TO ECONOMIC TRANSFORMATION IN AFRICA
- 24. CONCLUSION NO. 4 THE UNDERPERFORMING AGRICULTURAL SECTOR IS NOT JUST DELAYING TRANSFORMATION IT IS ALSO CONTRIBUTING TO HIGHER POVERTY RATES ANG BN BTN BF CMN CAR CHD DRC CG CI GBA GHN GNE GNEB KYA LST LBR MDG MI MTA MZQ NBA NGR NGRA RWD SNG SL SA SZL TZN TG UGDZB Note: y_hat=43.363*-0.534*x, over 1990-2005 20406080 100 -60 -50 -40 -30 -20 -10 0 Observed-expected Ag GDP share
- 25. 0.0 2.0 4.0 6.0 8.0 10.0 12.0 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Expy(1,000$US) Brazil China Africa 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Expy(1,000$US) Non-agriculture Agriculture Non-agriculture CONCLUSION NO. 5 PRODUCTIVITY-REDUCING STRUTURAL CHANGE CONFINED AFRICAN ECONOMIES TO LOWER VALUE PRODUCTS EXPY measures the extent to which a country has Revealed Comparative Advantage in sophisticated / higher value products (AVG over 100 countries > 10,000$ (Hausmann and Klinger, (2006)
- 26. PROMOTING SUCCESSFUL STRUCTURAL CHANGE IMPLICATIONS FOR AGRICULTURAL GROWTH AND INDUSTRIALIZATION STATEGIES
Editor's Notes
- We did not have enough variation in pc GDP so we are plotting the changes over time (x axis is not GDP pc but 1960 – 2008)
- LABOR SHARE IS SHARE IN ACTIVE POPULATION