Productive efficiency, technological change and catch up within Africa
Emmanuel Buadi Mensah, Solomon Owusu & Neil Foster-McGregor
#2020-033
The peculiar nature of African development presents unique technological
challenges. This often requires African-induced innovation or a
combination of frontier and local technologies to solve problems unique
to Africa. However, most researchers study technological change in
Africa in relation to some globally defined technology frontier. The
diffusion of knowledge from this global frontier to other regions
however decreases in intensity with geographic and relational distance.
Given that African countries are geographically and relationally close
to each other, this paper makes a departure from this existing
literature and studies technological change and technological catch up
within African by considering catch-up with respect to an African
technology leader. We do this by using structural methods (Shift and
Share catch-up decomposition) and nonparametric methods (Data
Envelopment Analysis) to estimate an African production frontier. We
further measure productivity change in sub-Saharan Africa and
disentangle the change due to general technological progress and
efficiency change using the Malmquist Productivity Index (MPI). Our
results show that Botswana and Mauritius are the only two countries in
Africa which have converged to the productivity level as well as the
efficiency level of the frontier. This successful convergence is driven
more by efficiency catch-up and less by technological change. We explore
the special role of efficiency catch-up by decomposing it into
within-sector convergence, between -sector convergence and initial
specialization. The results highlight the special role of structural
change in catch-up. This paper contributes to recent evidence suggesting
that countries can climb up the income ladder at a faster rate through a
two-pronged transformation – i.e. structural change and technological
catch-up.
Keywords: Africa, Technological change, Technological Catch-up and Economic Growth
JEL Classification: O30, O47, N17