Industrialization as driver of sustainable economic growth in Africa

Whilst the last couple of decades have witnessed an unprecedented growth expedition in Africa, an important question is how to make the growth sustainable. A remarkable distinction between the growth experience in the Asian economies and the African economies is that Africa has more or less skipped the industrial stage which many developed countries observed. Given the major contribution of industrialization to growth, this paper examines the impact of industrialization on economic growth in Africa. The examination of industrialization has become more imperative following recent commitments of African governments and the African Development Bank to it, and also it been a core part of the Sustainable Development Goals. Employing data for the period 1980–2014 from 37 African countries and the generalized method of moments method, we show two main interesting results despite the fact that industrialization is very much on the low in the region. First, our results affirm the hypothesis that industrialization is an important booster of economic growth. Second, trade openness further augments the effect of industrialization on economic growth. We also employ alternative measures of industrialization and perform sub-regional/sampling analyses. The results are shown to be robust across.

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