Could Innovation and Productivity Drive Growth in African Countries? Lessons from Korea

The Korean model of development that flowered in the final third of the twentieth century remains a fertile source of lessons for countries in sub-Saharan Africa attempting to achieve sustainably high rates of growth. Korea relied on two principal drivers. One was a high level of investment in manufacturing activities and infrastructure and a second was steady gains in factor productivity aided first by rapid technology assimilation and complemented in the 1980s and 1990s by own research and innovation. Because gross capital formation in African economies is likely to stabilize at levels well below those attained by Korea, and the services sector accounts for a larger share of African GDP, factor productivity will need to contribute more to growth than investment. For that reason, Korea’s nurturing of science, technology, and innovation capabilities, which has helped stimulate productivity, can be a source of lessons. The purpose of this paper is to underscore the role of productivity, to show how Korea built the technological capabilities underpinning productivity gains, and to extract relevant pointers for African countries that will depend more on services than on manufactures to propel their development and exports.