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Economic growth in Benin, Burkina Faso, and Cote d'Ivoire occurred in tandem with a rapid exodus of labor out of agriculture. This paper investigates the contribution (or lack thereof) of within- and between-sector productivity changes to overall productivity growth and output per capita growth since 2000. Productivity growth was relatively significant in Burkina Faso, modest in Benin, and in the negative territory in Cote d'Ivoire. The results show that static structural change drove growth in Burkina Faso and Benin, although it was partly offset by a dynamic loss in Benin. However, structural change made a smaller contribution in Cote d'Ivoire. Within-sector productivity loss generally held back growth. The pattern of structural change observed in Benin, Burkina Faso, and Cote d'Ivoire starkly contrasts with that of Asia, where within-sector productivity gains were preponderant and dynamic structural change was the norm rather than the exception. The bulk of Benin, Burkina Faso, and Cote d'Ivoire's displaced agricultural workers moved into still-low productivity service activities, as is typical of the African sample.
Growth --- Labor Markets --- Labor Productivity --- Poverty Reduction --- Private Sector Development --- Private Sector Economics --- Social Protections and Labor --- Structural Change
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Ethiopia has achieved sustained high growth for more than a decade. At the same time, the country has been facing several economic challenges, including falling exports, chronic foreign currency shortages, as well as a slow pace of structural transformation. In recent years, the already overvalued birr has appreciated sharply in real terms, partly driven by the appreciation of the dollar, thereby making Ethiopia's competitiveness and industrialization drive more difficult. In response to these challenges, this paper looks at the question of why the real exchange rate is a useful policy instrument. The analysis suggests that Ethiopia needs a more flexible exchange rate policy. A competitive or undervalued exchange rate is important in bringing about productivity-enhancing structural change. There is robust evidence that a real devaluation stimulates exports in general and manufacturing exports in particular, improves the trade and current account balances, and spurs economic growth. Currency undervaluation is a second-best policy intervention that can help offset some of the key constraints to manufacturing growth prevalent in low-income countries and speed up structural transformation. However, exchange rate adjustments need to take into account the increase in the cost of capital imports and debt burden.
Exchange Rate --- Export Competitiveness --- Exports --- Finance and Financial Sector Development --- Foreign Exchange --- Growth --- International Economics and Trade --- Structural Change
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