Labor Productivity Growth and Industrialization in Africa

42 Pages Posted: 20 Dec 2021 Last revised: 18 Apr 2022

See all articles by Margaret McMillan

Margaret McMillan

Tufts University - Department of Economics; International Food Policy Research Institute (IFPRI); National Bureau of Economic Research (NBER)

Albert Zeufack

World Bank

Date Written: December 2021

Abstract

Manufacturing has made an important contribution to raising living standards in many parts of the world. Concerns about premature deindustrialization have made some observers skeptical about the potential for manufacturing to play this role in Africa. But employment in African manufacturing has grown rapidly over the past 20 years. These employment gains have been accompanied by: (i) large increases in the number of small manufacturing firms; (ii) limited employment gains in large firms; and (iii) robust labor productivity growth in Africa’s large firms. Limited employment growth in Africa’s large manufacturing firms is partly a result of the capital intensity of the manufacturing sub-sectors in which African countries are most engaged – the processing of resources, and partly a result of rising capital intensity in manufacturing. The potential for manufacturing to raise living standards in Africa depends on indirect job creation by large firms through backward and forward linkages and increasing labor productivity in small firms.

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Suggested Citation

McMillan, Margaret and Zeufack, Albert, Labor Productivity Growth and Industrialization in Africa (December 2021). NBER Working Paper No. w29570, Available at SSRN: https://ssrn.com/abstract=3989578

Margaret McMillan (Contact Author)

Tufts University - Department of Economics ( email )

Medford, MA 02155
United States

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
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National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Albert Zeufack

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

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