Structural change in Africa: role of agriculture

This paper argues that rapid agricultural productivity growth is necessary for the expansion of manufacturing employment as a share of total employment. This hypothesis is tested utilizing data from 15 African nations. The estimation technique utilized is dynamic ordinary least squares and represents the first use of this technique to study the hypothesis that agricultural productivity growth is an important factor in the growth of manufacturing employment. The results indicate that agricultural productivity growth is a significant positive factor in the expansion of manufacturing employment. This is important in that productivity growth in agriculture in Sub-Saharan Africa has until recently been very sluggish. Thus, if manufacturing is to play an important role in this region, then significant investment in raising agricultural productivity needs to occur.