Distance from the technology frontier: How could Africa catch-up via socio-institutional factors and human capital?

Abstract

Drawing on stylized evidences on emerging economies and Sub-Saharan Africa, we ask: why some countries lag while some are fast in catching-up? By considering a tripartite grouping—advanced North, dynamic emerging Southern engines of growth, and laggards in Sub-Saharan Africa—this paper (i) uses the metafrontier approach for measuring the technology gap between the African nations and emerging economies, and (ii) tests the relationship between the technology gap, educational quality, trade openness, and foreign direct investment. We show that knowledge capabilities backed by human development, access to new technology, capacity to absorb new technologies are essential for development success. On the other hand, Africa's poor infrastructure, relatively poor business environment, and lack of human development are the most significant barriers to technology catch-up. Results show that globalization is not merely the means of opening new markets but for achieving higher productivity through technology transfers. Moreover, improved macroeconomic policies and sustained reform, as well as human capital, stronger governance and better investment climate are needed for accelerating the technology catch-up, and to put the African economies on a path to sustainable growth.