Labor productivity growth in sub-Sahara African LDCs: sectoral contributions and macroeconomic factors

Abstract

This paper has two objectives. The first is to identify sectoral contributions to labor productivity growth in thirty sub-Sahara African LDCs over 1991–2018. The second objective is to assess the strength of the relation between aggregate labor productivity growth and its sectoral components, and several factors that are said to promote economic growth. Our analysis provides weak evidence that global integration through trade benefits productivity growth within sectors or growth-enhancing structural transformation in the African LDCs. We find more signs that manufacturing and foreign direct investment associate with labor productivity growth and its components at both aggregate and sectoral level. Exporters of minerals are the exception. For these countries a significant but negative estimate for foreign direct investment emerges.