Technological Capability, Inclusive Growth and Structural Transformation in Africa

Abstract

ABSTRACT Some studies have shown that economic growth in Africa has not been sustainable, transformative, nor inclusive. This is very perplexing, considering that resource-poor East Asian countries have not only achieved high growth rates but have done so while alleviating poverty and becoming major players in the global economy. Despite the recognition that technology was instrumental in the success story of East Asian countries, there have been few empirical studies that focus on how technology drives economic growth in Africa. Based on a sample of forty-one African countries (2005–2020), this article uses the Generalized Method of Moments (GMM) estimation technique to investigate the extent to which technological capability plays an important role on economic growth of African countries. The results from the empirical analysis suggest, inter alia, that technology, investment in physical capital, macroeconomic and political stability are important determinants of growth in Africa. The article suggests that African countries should intentionally strengthen their technological capabilities, to leverage new opportunities in emerging frontier industries, foster inclusive growth, and be adequately prepared for the fourth industrial revolution.