Structural change in a poor African country: New historical evidence from Ghana

Robert Darko Osei, Rémi Jedwab

Each country has its own story of how it developed, but at the regional level, some stark patterns stand out. For Asia, the development path was rather traditional, with the decline of agriculture and the rise of manufacturing (that is, industrialization) and services. In fact, it is the path that eight high-performing Asian economies followed between 1960 and 1990 to reach rapid, sustained, and inclusive growth rates—higher than those of all other regions—earning the title the “East Asian miracle.” But for Africa, the development path has been quite different. It, too, saw a decline in agriculture, but it still lacks a vibrant manufacturing sector. There is reason to believe that a major culprit is insufficient growth in labor productivity, which is composed of a “within” component (changes in productivity within a sector) and a “structural change component” (changes in productivity resulting from labor movements across sectors). To shed more light on the African story, a good case study is Ghana. It is one of a handful of countries in Africa that has sufficient data on sectoral productivity and employment over a long period. But it is also a fascinating case of structural change in a poor African country for a variety of reasons.