Closing Technological Gaps to Alleviate Poverty: Evidence from 17 Sub-Saharan African Countries

Abstract

This paper examines the dynamics of ‘technological catch-up’ and its effects in contributing to poverty alleviation, a crucial pillar of the United Nations’ Sustainable Development Goals (SDGs). Using data on 17 sub-Sahara African (SSA) countries and employing the superlative-index number methodology, we first estimate the total factor productivity (TFP) gap between these African nations and both the USA (leader of advanced countries) and China (leader of developing countries) to provide a measure for technological catch-up that is comparable across African countries. We then investigate the contribution of technological dynamics in SSA to poverty alleviation using the System Generalised Method of Moments (GMM) method. Our results show that from 1987 to 2014, many African nations have to some degree reduced technological gap to the USA, whilst only a few of them managed to briefly catch-up with China until the early 2000s and no such catching-up is observed thereafter, due to the exceptional technological advance achieved by China in the past fifteen years. We find that closing technological gap has had significant poverty alleviation effect for African nations, although this effect is weaker vis-à-vis China. Our paper therefore highlights the important role played by technological progress in alleviating poverty.