Working Paper 293 - Growth Accelerations, Structural Change, and Poverty Reduction in Africa

This paper proposes an assessment of African countries’ growth patterns through the identification of acceleration episodes. About two-thirds of African countries have experienced at least one growth acceleration episode since the 1950s. In some cases, accelerations hardly contributed to long-term growth, as they led or lagged a crisis episode, but in most cases, which we define as growth spike episodes, growth accelerations have directly determined the long-run pattern of growth. Hence studying these growth spike episodes specifically contributes to better understanding of African growth performance. We observe several cases of multiple growth spikes, similar to what has been observed in emerging economies. Growth spike episodes are generally associated with substantial total factor productivity gains. They are also associated with reduction of dualism through sectorial reallocation of labour from low productivity sectors to high-productivity sectors. Growth spikes are additionally associated with poverty reduction, but we challenge the conventional wisdom that growth causes poverty reduction. In several cases, data on income distribution observed during the growth spike episodes are more consistent with the reverse causation, with poverty reduction causing economic growth. The paper concludes with a policy discussion that emphasizes the necessity of building a pro-poor and shared growth strategy.JEL classification: O1, O4, I32, D31 Keywords: Growth accelerations; growth accounting; poverty trap; poverty reduction