Structural transformation in Egypt, Morocco and Tunisia: Patterns, drivers and constraints

Abstract

Abstract This study analyses structural transformation in three Middle East and North Africa (MENA) countries: Tunisia, Morocco and Egypt over a large time period (1960–2010). We examine labour productivity evolution and structural change contribution to productivity growth over different sub‐periods. We analyze the contribution of different economic sectors to aggregate structural change in the three countries. An econometric analysis is also performed to identify the main factors underlying the intensity and the pattern of structural change. Results suggest that the three countries initiated and achieved some progress in structural transformation over the 1970s, 1980s and early 1990s. However, this process has stagnated at low‐income levels and has remained unfinished. Deindustrialization occurred at an early stage of development in the three countries, in contrast to that noticed in developed and emergent countries. The results of the econometric analysis suggest a significant and positive association between investment and structural change as capital accumulation increases the future productive capacity and triggers reallocative efficiency. The human capital quality and availability has a positive and significant impact on structural change. Trade openness is also expected to boost structural transformations. However, labour market rigidity hampers structural transformation.

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