Can technological innovations contribute to more overcome the issue of poverty reduction in africa?

Abstract

Although recent years have shown that innovation can also thrive in economies where the challenges of absolute poverty and inequality remain long-standing problems, the effects of innovation on poverty reduction has remained a largely unexplored field of investigation. . So this study assesses the effect of technological innovations on poverty reduction using a panel of 36 sub-Saharan African countries over the period 2008 to 2019. More specifically, the study examines the influence of technological innovation on poverty reduction. Using the principal component analysis (PCA) we constructed an indicator of the use, adoption and adaptation of technological innovations and that of multidimensional poverty. After applying several estimation techniques for panel data such as fixed effects, Driscoll and Kraay, kiviet (2020), Lewbel two stage least square (Lewbel 2SLS), mediating effects, the results shows that technological innovations significantly reduce poverty in sub-Saharan Africa. Our results survive several robustness checks. Taking into account the level of urbanization, it appears that technological innovations reduce poverty in countries with low urbanisation rates and increase it in countries with high urbanization rates. Finally, the analysis of mediation effects suggests that almost 30 % of the total effect of the use, adoption and adaptation of technological innovations on multidimensional poverty reduction is through the improvement of productivity in the industrial sector while 62.5 % is through the productivity of the agricultural sector. These results imply that poverty reduction policies in sub-Saharan Africa need to refocus on capacity building in the use, adoption and adaptation of technological innovations, particularly in the agricultural and industrial sectors.