The Comparative Economics of Catch-Up in Output Per Worker, Total Factor Productivity and Technological Gain in Sub-Saharan Africa

African Development Review, 28(2), pp. 215-228 (June, 2016)

27 Pages Posted: 18 Sep 2015 Last revised: 17 Jun 2016

See all articles by John Ssozi

John Ssozi

Baylor University

Simplice Asongu

African Governance and Development Institute

Date Written: September 18, 2015

Abstract

After investigating the effect of external financial flows on total factor productivity and technological gain, we use the beta catch-up and sigma convergence to compare dispersions in output per worker, total factor productivity and technological gain in Sub-Saharan Africa (SSA) for the years 1980-2010. The comparative evidence is articulated with income levels, years of schooling, and health factors. We find; first, a positive association between foreign direct investment, trade openness, foreign aid, remittances and total factor productivity. However, when foreign direct investment is interacted with schooling, it is direct effect becomes negative on total factor productivity. Second, beta catch-up is between 19.22% and 19.70% per annum with corresponding time to full catch-up of 25.38 years and 26.01 years respectively. Third, we find sigma-convergence among low-income nations and upper-middle income nations separately, but not for the entire sample together. Fourth, schooling in SSA is not yet a significant source of technology, but it can make external financial inflows more effective. Policies to induce external financial flows are not enough for development if absorptive capacity is low. More policy implications are discussed.

Keywords: External capital flows, Human capital, Total Factor Productivity, Convergence, and Sub-Saharan Africa

JEL Classification: E23, F21, O11, O33, O55

Suggested Citation

Ssozi, John and Asongu, Simplice, The Comparative Economics of Catch-Up in Output Per Worker, Total Factor Productivity and Technological Gain in Sub-Saharan Africa (September 18, 2015). African Development Review, 28(2), pp. 215-228 (June, 2016). Available at SSRN: https://ssrn.com/abstract=2662730 or http://dx.doi.org/10.2139/ssrn.2662730

John Ssozi (Contact Author)

Baylor University ( email )

Waco, TX 76798
United States

Simplice Asongu

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

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