Testing Kaldor's Growth Laws Across the Countries of Africa

Wells, Heather; Thirlwall, A.P.

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Title:	Testing Kaldor's Growth Laws Across the Countries of Africa
Authors:	Wells, Heather Thirlwall, A.P.
Year:	2003
Periodical:	African Development Review
Volume:	15
Issue:	2-3
Period:	December
Pages:	89-105
Language:	English
Geographic term:	Africa
Subjects:	economic development industrial development Development and Technology Economics and Trade
External link:	https://onlinelibrary.wiley.com/doi/10.1111/j.1467-8268.2003.00066.x/pdf
Abstract:	One of the strong factors reflecting Africa's economic backwardness is the low level of industrial development. Not only does the industrialization process appear to have bypassed the continent, there is evidence of deindustrialization in the case of several countries. This paper seeks to address a set of interrelated questions: To what extent is the growth performance of African economies related to these structural characteristics? More precisely, is there any discernible evidence that GDP growth and overall labour productivity growth of African countries is positively related to how fast their industrial sector is growing? The authors test N. Kaldor's three growth laws: that the growth of GDP is positively related to the growth of manufacturing output not simply in a definitional sense (because manufacturing output is a part of GDP) but in a fundamental causal sense related to the production characteristics of manufacturing activity; that the growth of labour productivity in manufacturing is positively related to manufacturing output growth because of static and dynamic increasing returns to scale; and that there will be a negative relation between labour productivity growth in the economy as a whole and the rate of growth of employment in the nonmanufacturing sector because most activity outside the manufacturing sector is subject to diminishing returns, particularly in land-based activities such as agriculture and many service activities. The authors conclude that there is some empirical support for Kaldor's growth laws in respect of the countries of Africa. Bibliogr., notes, ref., sum. in English and French. [Journal abstract]

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