2. badiane board may13 agriculture and structural transformation

IFPRI/Badiane

OUSMANE BADIANEDirector for Africa

International Food Policy Research Institute

FROM GROWTH RECOVERY TO ECONOMIC TRANSFORMATION IN AFRICA

MAIN TOPICS

1 KEY MESSAGES

2

3 PACE AND PATTERNS OF STRUCTURAL TRANSFORMATION IN AFRICA

4 STRUTURAL TRANSFORMATION AND SECTORAL IMBALANCE

5 STRUCTURAL TRANSFORMATION, COMPARATIVE ADVANTAGE, AND POVERTY

GROWTH PROCESS AND BRIEF OVERVIEW OF RECENT PERFORMANCE IN AFRICA


MAIN TOPICS

1 KEY MESSAGES

2






IFPRI/Badiane

WHERE ARE WE AND WHY? STRUCTURAL CHANGE IN AFRICA HAS BEEN PRODUCTIVITY-REDUCING

NEGATIVE DIVERSIFICATION MOVED LABOR FROM UNDERPERFORMING HIGHER-PRODUCTIVITY AGRICULTURE INTO OVERSIZED LOWER-PRODUCTIVITY SERVICES SECTOR

LACK OF EFFECTIVE INDUSTRIALIZATION POLICY IMPEDED GROWTH IN MANUFACTURING SECTOR FORCED SPECIALIZATION IN LOW VALUE PRIMARY GOODS

DELAYED STRUCTURAL TRANSFORMATION STRONGLY LINKED TO HIGH LEVELS OF POVERTY

KEY MESSAGES

MAIN TOPICS

1 KEY MESSAGES

2






THE ECONOMIC GROWTH PROCESS

COUNTRIES BECOME RICH BY PRODUCING MORE OUTPUT PER GIVEN WORKER

THIS INVOLVES PRODUCING MORE OF THE SAME GOOD

AND MORE IMPORTANTLY, PRODUCING A LARGER BASKET OF HIGHER VALUE GOODS

COUNTRIES ALSO BECOME RICH OVER TIME

STARTING FROM AN AGRICULTURAL AND RURAL BASE

MOVING TO AN URBAN AND INDUSTRIAL BASE

THE ECONOMIC GROWTH PROCESS

THE DOUBLE CHALLENGE OF MANAGING THE GROWTH PROCESS

RAISING PRODUCTIVITY AGRICULTURE AND THE RURAL ECONOMY

WHILE DIVERSIFYING INTO HIGHER VALUE GOODS OUTSIDE OF AGRICULTURE

DETERMINING FACTORS

HUMAN AND PHYSICAL ASSETS

INSTITUTIONAL AND TECHNOLOGICAL RESOURCES

POLICY AND COORDINATION CAPACITIES

AFRICA IS UNDERGOING ITSLONGEST PERIOD OF SUSTAINED GROWTH SINCE THE 1960S

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

-8

-6

-4

-2

0

2

4

6

8

10

12

GDP, annual growth rate (%)Agriculture, hunting, forestry, fishing, annual growth rate (%)

Annu

al G

row

th R

ate

(%)

Source: UN National Accounts, 2013

IFPRI/Badiane

THE GROWTH IS ACCELERATINGAS WELL AS SPREADING GEOGRAPHICALLY

SOURCE: IFPRI / Badiane and UlimwenguData from national account s / UN database: http://data.un.org/Explorer.aspx?d=SNAAMA

http://data.un.org/Explorer.aspx?d=SNAAMA

MAIN TOPICS

1 KEY MESSAGES

2 GROWTH PROCESS AND BRIEF OVERVIEW OF RECENT PERFORMANCE IN AFRICA


4 STRATEGIES FOR THE AGRICULTURAL SECTOR

5 STRATEGIES FOR THE INDUSTRIAL SECTOR


Perc

enta

ge S

hare

Per-capita Income

Share of agriculture in total labor force

Share of agriculture in total GDP

low

HighAgricultural GDP per worker

Agricultural GDP

low high

AGRICULTURE IN THE ECONOMIC TRANSFORMATION PROCESS

Based on Timmer (2009)

Share of agriculture in total labor force

Share of agriculture in total GDP


Time Axis

0

100

Ag GDP Share = Ag labor shareAg incomes = Non Ag incomes


0

100

CONVERGENCE: [Ag GDP Share – Ag labor share] => 0

1960196219641966196819701972197419761978198019821984198619881990199219941996199820002002200420062008

(60)

(40)

(20)

-

20

40

60

80

100 CENTRAL AFRICA

Shar

e (%

)1960196219641966196819701972197419761978198019821984198619881990199219941996199820002002200420062008

(60)

(40)

(20)

-

20

40

60

80

100 EAST AFRICA

Shar

e (%

)

1960196219641966196819701972197419761978198019821984198619881990199219941996199820002002200420062008

(60)

(40)

(20)

-

20

40

60

80 SOUTHERN AFRICA

Shar

e (%

)

Ag GDP Share

Ag Emp. Share

Difference

1960196219641966196819701972197419761978198019821984198619881990199219941996199820002002200420062008

(60)

(40)

(20)

-

20

40

60

80

100 WEST AFRICA

Shar

e (%

)TRENDS IN STRUCTURAL CHANGE AMONG AFRICAN COUNTRIES 1960 - 2008

TRENDS IN LABOR PRODUCTIVITY AND EMPLOYMENT IN AFRICA 1980 - 2008

19801982

19841986

19881990

19921994

19961998

20002002

20042006

2008 -

20

40

60

80

100

120

140

LABOR PRODUCTIVITY

Inde

x:19

80=1

00

-

10

20

30

40

50

60

70

80

LABOR EMPLOYMENT SHARE

Shar

e (%

)

LABOR PRODUCTIVITY HAS STAGNATED IN AGRICULTUREAND DECLINED SHARPLY IN NON AGRICULTURAL SECTOR, DRIVEN PRIMARILY BY LOW-PRODUCTIVITY SERVICES

EMPLOYMENT HAS FALLEN SLIGHTLY IN AGRICULTURE AND INCREASED RAPIDLY IN NON AGRICULTURAL SECTOR, AGAIN DRIVEN BY SERVICES AND LESS BY INDUSTRY

Agriculture Non-agriculture

Source: FAOSTAT 2011

AFRICA

CAF

EAF

SAF

WAF

NAF

(0.020)

(0.015)

(0.010)

(0.005)

-

0.005

0.010

0.015

0.020 1980-1995

Agriculture Non Agriculture

AFRICA

CAF

EAF

SAF

WA

F

NA

F

(0.030) (0.020) (0.010)

- 0.010 0.020 0.030 0.040 0.050 0.060 0.070

1995-2005

Source: FAOSTAT, 2011 and WDI, 2009

SECTORAL CONTRIBUTION TO PRODUCTIVITY GROWTH

NEGATIVE CONTRIBUTION OF NON AG. SECTOR DURING THE 1980S TO MID 1990S

BETTER CONTRIBUTION OF BOTH SECTORS WITH RECOVERY IN THE LATE 1990S,

AFRICA

CAF

EAF

SAF

WAF

NAF

(0.080)

(0.060)

(0.040)

(0.020)

-

0.020

0.040

Source: FAOSTAT, 2011 and WDI, 2009

CONCLUSION NO. 1STRUCTURAL CHANGE CONTRIBUTED NEGATIVELY TO

PRODUCTIVITY GROWTH WITH EXCEPTION OF WEST AFRICA

1980-1995 1995-2005

MAIN TOPICS

1 KEY MESSAGES

2






AGRICULTURAL SECTOR UNDERPERFORMANCE AND STRUCTURAL CHANGE

THE SHARE OF THE AGRICULTURAL SECTOR IN OVERALL GDP IS LOWER IN NEARLY ALL AFRICAN COUNTRIES THAN WOULD HAVE BEEN EXPECTED BASED ON THE LEVEL OF PER CAPITA

OBSERVED AVERAGE SHARES OVER THE LAST 30 YEARS ARE AROUND 30%, NEARLY 20 PERCFENTAGE POINTS BELOW WHAT WOULD BE EXPECTED BASED ON COUNTRIES’ LEVEL OF DEVELOPMENT

Observed Ag GDP Share Expected Ag GDP Share Relationship based on sample of 210 countries over 1960-2008 period

Djibouti

South A.

Gabon

Angola

NamibiaCongo

Moro

cco

Zambia

Swazil

and

GuineaEgyp

t

Leso

tho

Madagasca

rDRC

Kenya

Moza

mb...Chad

Togo

Sierra

L.

Malawi

GhanaCAR

UgandaNiger

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

Agric

ultu

ral s

hare

of G

DP

(%)

East Asia & Pacific Latin America & Caribbean

Middle East & North Africa

South Asia Sub-Saharan Africa

-

5

10

15

20

25

30

35

40

45

Average Share of Agriculture in GDP

1965-1980 1980-1995 1995-2008

Shar

e (%

)CONLUSION NO. 2

RELATIVELY UNDERSIZED HIGHER-PRODUCTIVITY AGRICULTURAL SECTORHAS IMPACTED NEGATIVELY ON TRANSFORMATION

$1,758 $4,767 $1,909 $682 $618

SOURCE: IFPRI/Badiane & Makombe based on data from WDI, 2009

Pc GDP in 2008

OVERSIZED SERVICE SECTOR AND STRUCTURAL CHANGE IN AFRICA

ON THE OTHER HAND, THE SHARE OF THE SERVICES SECTOR IN GDP IS MUCH LARGER IN THE MAJORITY OF COUNTRIES COMPARED WHAT WOULD HAVE BEEN EXPECTED BASED ON THE LEVEL PER CAPITA INCOMES

THE RELATIVELY BIGGER SERVICES SECTOR IS LINKED TO THE UNDERSIZED AGRICULTURAL SECTOR

IT IS A REFLECTION OF “NEGATIVE DIVERSIFICATION” WITH LABOR LEAVING THE UNDERPERFOMING AGRICULTURAL SECTOR TO MOVE INTO THE EQUALLY UNPRODUCTIVE OR LESS PRODUCTIVE SERVICES SECTOR

E. Guinea

Liberia

Guinea-B.

Mali

UgandaGhana

DRC

Zambia

Malawi

Maurit

...

Swazil

and

Leso

thoSu

danChad

Came...

GuineaKenya

Benin

Zimb...

Gambia

South A.

Tunisia

Eritre

a

Seyc

he...0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

Serv

ices

shar

e of

GD

P (%

)

Observed Ag GDP Share Expected Ag GDP Share Relationship based on sample of 210 countries over 1960-2008 period

East

Asia &

Pacific

Latin Americ

a & Cari

bbean

Middle

East

& North

Africa

South

Asia

Sub-Sa

haran Afri

ca -

10

20

30

40

50

60

70 Average Share of Services in GDP

1965-1980 1980-1995 1995-2008

Shar

e (%

)

SOURCE: IFPRI/Badiane & Makombe Data from WDI, 2009

CONCLUSION NO. 3

RELATIVELY OVERSIZED LOWER-PRODUCTIVITY SERVICES SECTORHAS IMPACTED NEGATIVELY ON TRANSFORMATION

$1,758 $4,767 $1,909 $682 $618

MAIN TOPICS

1 KEY MESSAGES

2






CONCLUSION NO. 4THE UNDERPERFORMING AGRICULTURAL SECTOR IS NOT JUST DELAYING TRANSFORMATION

IT IS ALSO CONTRIBUTING TO HIGHER POVERTY RATES

ANG

BN

BTN

BF

CMN

CAR

CHD

DRCCG

CI

GBA

GHN

GNE

GNEB

KYA

LST

LBR

MDGMI

MTA

MZQ

NBA

NGR

NGRA

RWD

SNG

SL

SA

SZL

TZN

TG

UGDZB

Note: y_hat=43.363*-0.534*x, over 1990-2005

20

40

60

80

10

0P

ove

rty r

ate

s (

%)

-60 -50 -40 -30 -20 -10 0Observed-expected Ag GDP share

Pove

rty

Rate

19621963

19641965

19661967

19681969

19701971

19721973

19741975

19761977

19781979

19801981

19821983

19841985

19861987

19881989

19901991

19921993

19941995

19961997

19981999

20000.0

2.0

4.0

6.0

8.0

10.0

12.0

BrazilChinaAfrica

Expy

(1,0

00 $

US)

19621963

19641965

19661967

19681969

19701971

19721973

19741975

19761977

19781979

19801981

19821983

19841985

19861987

19881989

19901991

19921993

19941995

19961997

19981999

20000.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Non-agriculture Agriculture

Expy

(1,0

00 $

US)

Non-agriculture

CONCLUSION NO. 5PRODUCTIVITY-REDUCING STRUTURAL CHANGE

CONFINED AFRICAN ECONOMIES TO LOWER VALUE PRODUCTS

EXPY measures the extent to which a country has Revealed Comparative Advantage in sophisticated / higher value products (AVG over 100 countries > 10,000$ (Hausmann and Klinger, (2006)

PROMOTING SUCCESSFUL STRUCTURAL CHANGEIMPLICATIONS FOR AGRICULTURAL GROWTH AND INDUSTRIALIZATION STATEGIES

Business

2. badiane board may13 agriculture and structural transformation