Labor Productivity Growth and Industrialization in Africa
Journal of Economic Perspectives
vol. 36,
no. 1, Winter 2022
(pp. 3-32)
(Complimentary)
Abstract
Manufacturing has made an important contribution to raising living standards in many parts of the world. Concerns about premature deindustrialization have made some observers skeptical about the potential for manufacturing to play this role in Africa. But employment in African manufacturing has grown rapidly over the past 20 years. These employment gains have been accompanied by: (i) large increases in the number of small manufacturing firms; (ii) limited employment gains in large firms; and (iii) robust labor productivity growth in Africa's large firms. Limited employment growth in Africa's large manufacturing firms is partly a result of the capital intensity of the manufacturing subsectors in which African countries are most engaged—the processing of resources—and partly a result of rising capital intensity in manufacturing. The potential for manufacturing to raise living standards in Africa depends on indirect job creation by large firms through backward and forward linkages and increasing labor productivity in small firms.Citation
McMillan, Margaret, and Albert Zeufack. 2022. "Labor Productivity Growth and Industrialization in Africa." Journal of Economic Perspectives, 36 (1): 3-32. DOI: 10.1257/jep.36.1.3Additional Materials
JEL Classification
- I31 General Welfare; Well-Being
- J23 Labor Demand
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- L25 Firm Performance: Size, Diversification, and Scope
- L60 Industry Studies: Manufacturing: General
- O14 Industrialization; Manufacturing and Service Industries; Choice of Technology
- O16 Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
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