Understanding Disparate Structural Change and Growth Among Sub-Saharan African Countries: A Comparative Analysis of Senegal and Mauritius

Historical data show that developed countries experienced a period of structural change, characterized by a falling value-added (VA) share of the agricultural sector, a rising VA share of the services sector, and a hump shape in the VA share of the manufacturing sector (Herrendorf et al. 2014). This process of structural change is a key feature of long-run, sustained economic growth (Kuznets 1973). Some developing countries, however, experience an alternative pattern of structural change in which VA moves from primary to tertiary sectors while VA and employment shares behave differently. Mauritius followed the quintessential standard pattern of structural change and growth. By contrast, Senegal has not experienced industrialization and its manufacturing real VA and employment shares do not behave as the canonical structural change model would predict. This project seeks to answer the question: what economic forces drive the different structural change processes in Mauritius and Senegal?

The author uses sectoral national accounts data for the two countries from 1980 to 2019 to first conduct standard aggregate and sectoral growth accounting exercises to study the historical contributions of productivity, labour, and capital inputs to the countries’ aggregate and sectoral growth. With more insight from the growth accounting exercise results and estimated sectoral productivity growth rate time series serving as exogenous inputs for simulations, the author will then extend the canonical three-sector structural change model to quantitatively account for the divergent structural change experiences of Senegal and Mauritius and the divergence of employment and VA sectoral shares in Senegal.

The results from the project will illuminate the causes of Senegal’s industrial sector’s slow growth. The growth accounting exercises and comparative empirical analysis with Mauritius will clarify the major aggregate and sectoral factors accounting for Mauritius’ successful industrialization and Senegal’s relative development failure. Moreover, the structural change model will identify the quantitatively important mechanisms that have driven Senegal’s observed pattern of structural change and inform policymakers on the macroeconomic and microeconomic policies that can foster a more favourable development experience. This research is focused on Senegal and Mauritius but can inform policies in other African countries that are also struggling to industrialize, and/or inspire similar research in other countries to shed light on the different dynamics at play across the continent. Senegal, especially, represents an important case study as it is one of the largest economies in Francophone West Africa; little research has addressed the development experiences of these countries.