Structural transformation and poverty alleviation in Sub-Saharan Africa countries: sectoral value-added analysis

Enongene Betrand Ewane

24 citations0/0 files storedJournal of Business and Socio-economic Development

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Economic Theory and Policy Income, Poverty, and Inequality Economic Growth and Development

Abstract

Purpose This study aims to examine the effect of structural transformation on poverty alleviation in Sub-Saharan Africa (SSA) countries with a higher share of services as a percentage of gross domestic product (GDP). The study specifically focuses on the value-added share as a percentage of GDP in the agricultural, manufacturing, industrial, and service sectors using time series data from 1988 to 2019. Design/methodology/approach The study utilizes the autoregressive distributive lag (ARDL) bound test framework for estimation, based on the conclusions drawn from the augmented Dickey-Fuller and Phillips–Perron unit root tests, which provide evidence of a mixed order of integration. Findings The result reveals that agriculture value-added (AVA), manufacturing value-added (MVA), industrial value-added (IVA), and services value-added (SVA) have a positive and significant impact on poverty alleviation in both the short and long run. However, the agriculture sector is found to be more effective in reducing poverty compared to the other sectors examined in this study. Additionally, this study challenges the notion that SSA countries have undergone an immature structural transformation. Instead, it reveals a pattern of stagnant structural transformation, as indicated by the lack of growth in the industrial and manufacturing value-added shares of GDP. Practical implications To enhance productivity and reduce poverty, SSA economies should adopt a development strategy that prioritizes heavy manufacturing and industrial sectors, leading to a transition from the agricultural to the secondary and tertiary sectors. Originality/value The study contributes to the emerging literature on structural transformation by investigating which sector is more efficient in reducing poverty in SSA countries, using the value-added share as a percentage of GDP for agricultural, manufacturing, industrial, and service sectors. The study also aims to determine if SSA countries have experienced immature structural transformation due to the growing share in the service sector.

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References

1988On the mechanics of economic development 2001Bounds testing approaches to the analysis of level relationships 1988Testing for a Unit Root in Time Series Regression 1990Endogenous Technological Change 1981Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root 1954Economic Development with Unlimited Supplies of Labour 2009Business Model Design: An Activity System Perspective 2011Globalization, Structural Change and Productivity Growth

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