Growth Linkages, Price Effects and Income Distribution in Sub-Saharan Africa

Abstract

This paper measures economic linkages emanating from investment-led growth in eight different African countries with widely varying economic structures. To explore the importance of price effects in estimating these linkages, the paper employs two different methodologies for measuring the linkages, a fixed-price semi-input-output (SIO) model as well as a fully price-endogenous computable general equilibrium model (CGE). Regardless of the methodology used, indirect effects prove to be large. On average - across countries and sectors - inclusion of growth linkages nearly doubles estimated national income growth following an initial investment-led shock. Sectorally, investments in agriculture generate the largest impact on the poor.