Tracking economic transformation

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Since the mid-1990s many Sub-Saharan countries have seen solid economic growth buoyed by reforms in macroeconomic management, stronger incentives for business, high commodity prices, and expanding exports of extractives. The rising incomes are supporting the emergence of an African middle class, and young Africans are now much more likely to return home to pursue a career after an education abroad.

The premise of this first African Transformation Report is that the recent economic growth, largely on the back of a boom in commodity prices and resource extraction, while welcome, will by itself not sustain development on the continent. To ensure that growth is sustainable and continues to improve the lives of the many, countries now need to vigorously promote economic transformation. In addition to faster economic growth, the key elements of transformation are diversifying production and exports, becoming more competitive on international markets, increasing the productivity of all resource inputs (especially labor), upgrading technology in production and exports, and ensuring that growth increases formal employment and results in shared prosperity.

This chapter reviews performance in Sub-Saharan Africa over the past 40 years (1970–2010) on growth and the other aspects of economic transformation. It highlights 15 countries (the ACET 15, for short) where ACET worked with local think tanks to gain a deeper understanding of transformation performance. It also compares the performance of Sub-Saharan Africa and the ACET 15 to eight comparator countries from outside Africa. And it compares individual African countries using indexes for the various aspects of economic transformation as well as an overall index, the African Transformation Index (ATI). The chapter shows that although growth has resumed in Sub-Saharan Africa, progress on the other aspects of economic transformation is lagging, and this demands greater attention from policymakers.

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