Recent growth accelerations in Africa are characterized by increasing productivity in agriculture, a declining share of the labor force employed in agriculture and declining productivity in modern sectors such as manufacturing. To shed light on this puzzle, we disaggregate firms in the manufacturing sector by size using two newly created panels of manufacturing firms, one for Tanzania covering 2008-2016 and one for Ethiopia covering 1996-2017. Our analysis reveals a dichotomy between larger firms that exhibit superior productivity performance but do not expand employment much, and small firms that absorb employment but do not experience any productivity growth. We suggest the poor employment performance of large firms is related to use of capital-intensive techniques associated with global trends in technology.

Recent growth accelerations in Africa are characterized by increasing productivity in agriculture, a declining share of the labor force employed in agriculture and declining productivity in modern sectors such as manufacturing. To shed light on this puzzle, we disaggregate firms in the manufacturing sector by size using two newly created panels of manufacturing firms, one for Tanzania covering 2008-2016 and one for Ethiopia covering 1996-2017. Our analysis reveals a dichotomy between larger firms that exhibit superior productivity performance but do not expand employment much, and small firms that absorb employment but do not experience any productivity growth. We suggest the poor employment performance of large firms is related to use of capital-intensive techniques associated with global trends in technology.

We examine worker training by Chinese manufacturing firms using nationally representative firm-level data from both Ethiopia and Tanzania. While Chinese firms make up a relatively small portion of the manufacturing industry in both Ethiopia and Tanzania, at the firm-level they contribute significantly to both domestic employment and labor training. In both countries more than 85 percent of the workers employed by Chinese firms are local, and Chinese firms (and other foreign firms) are more likely to offer labor training than their domestic counterparts. However, we find evidence that Chinese firms underperform relative to other foreign firms in the share of local workers employed, and in Tanzania the difference is especially large for managerial positions.

This book explores the role of agriculture in long-term economic growth. With a particular focus on Ethiopia, the role of the state in igniting agricultural growth and in sustaining economic growth is highlighted as essential for low-income countries. Taking ideas from both economic history and development economics, the ability of Ethiopia and the rest of Africa to sustain recent rapid growth into something that can tackle the development agenda is discussed, alongside policy suggestions. This book overall presents an optimistic account of Africa and its economic prospects. It will be relevant to students and researchers interested in economic development and agricultural economics. This is an open access book.

Industrialization drives the sustained growth in jobs and productivity that marks the developmental take-off of most developed economies. Yet, academics and policy makers have questioned the role of manufacturing in development for late industrializers, especially ith more job creation. Industrialization drives the sustained growth in jobs and productivity that marks the developmental take-off of most developed economies. Yet, academics and policy makers have questioned the role of manufacturing in development for late industrializers, especially in view of rapid advancements in technologies and restructuring of international trade.Concurrently, industrialization and structural transformation are integral to the African Union’s Agenda 2063 and the development strategies of several countries in Sub-Saharan Africa (SSA). Given this renewed interest in industrialization across the region, a central question is not whether SSA countries should pursue industrialization as a potential path to sustainable growth but how to promote the prospects of industrialization. Industrialization in Sub-Saharan Africa: Seizing Opportunities in Global Value Chains addresses this question by reassessing the prospects for industrialization in SSA countries through integration into global value chains. It also examines the role of policy in enhancing these prospects. The main findings indicate that • SSA has not experienced premature deindustrialization; the region has witnessed substantial growth in manufacturing jobs despite a lack of improvement in the contribution of manufacturing value-added to GDP. • The region’s integration into manufacturing global value chains is reasonably high but it is dominated by exports of primary products and engagement in low-skill tasks. • Global value chain integration has led to job growth, and backward integration is associated with more job creation. The report emphasizes the role of policy in maintaining a competitive market environment, promoting productivity growth, and investing in skills development and enabling sectors such as infrastructure and finance. Policy makers can strengthen the global value chain linkages by (1) increasing the value-added content of current exports, (2) upgrading into high-skill tasks, and (3) creating comparative advantages in knowledge-intensive industries.

All African countries need better and more jobs for their growing populations. Digital Africa: Technological Transformation for Jobs shows that broader use of productivity-enhancing digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, broader use can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of country populations averaged across Sub-Saharan Africa, but only 22 percent use such services. The average African business lags in the use of smartphones and computers, as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: the affordability of these new technologies and the willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small and medium businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skill-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty across Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.

Ethiopia has long prioritized creating more and better jobs as core to its sustainable and inclusive development. However, steady growth in the gross domestic product and gains in agricultural productivity in recent decades have not translated into better opportunities nor increased earnings for much of the population. The 2021 Labor Force Survey data reveal labor trends since 1999 and underscore these realities. Moreover, COVID-19 and other shocks have reinforced the disconnect between positive macroeconomic trends at a national level and stagnant incomes at the household level. Working Today for a Better Tomorrow in Ethiopia: Jobs for Poor and Vulnerable Households outlines how Ethiopia can leverage its social safety net programs to help poor and vulnerable workers earn more in today’s labor market. The government’s latest development planning policies focus on private sector growth and structural transformation to create more and better jobs. While these long-term reforms take hold, the jobs agenda also must include near-term measures to improve worker productivity in and connect people to jobs that already exist. Complementing cash transfers with capital, training, and other services can help workers earn more in their current work, diversify into new types of employment, or connect to available wage jobs.These investments can have an immediate impact for poor people in Ethiopia while also contributing to sustainable and inclusive development.