Toward an understanding of economic growth in Africa: A reinterpretation of the Lewis model

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dc.creatorDiao, Xinshen
dc.creatorMcMillan, Margaret S.
dc.date2018-06-07
dc.date2024-06-21T09:05:29Z
dc.date2024-06-21T09:05:29Z
dc.date.accessioned2026-06-27T15:34:37Z
dc.descriptionWe develop a model economy that has many of the features of Lewis (1954) but that also includes an in-between sector as described by Lewis (1979). Our model underscores the importance of the following determinants of structural change: (i) productivity growth in the agricultural sector; (ii) productivity growth in the nonagricultural sector and; (iii) the terms of trade. Public investment enhances productivity growth in all sectors but when it is financed by foreign inflows, it also causes a real exchange rate appreciation leading to a contraction in the open modern sector. These results provide a partial explanation for recent patterns of growth in Rwanda and elsewhere in Africa where the nontradables or what we call the in-between sector has expanded more rapidly than the tradable sector. Our results also highlight the dilemma faced by poor countries in dire need of public investment with a very limited tax base.
dc.identifierhttps://hdl.handle.net/10568/145987
dc.identifier.urihttp://hdl.handle.net/123456789/108326
dc.languageen
dc.publisherElsevier
dc.relationhttp://www.nber.org/papers/w21018
dc.relationhttps://doi.org/10.1016/j.worlddev.2016.08.014
dc.relationhttps://doi.org/10.1016/j.worlddev.2017.07.004
dc.relationhttps://doi.org/10.1016/j.worlddev.2018.05.027
dc.rightsOpen Access
dc.sourceDiao, Xinshen and McMillan, Margaret S. 2018. Toward an understanding of economic growth in Africa: A reinterpretation of the Lewis model. World Development 109 (September 2018): 511-522. Special Section: Agricultural Growth and Poverty Reduction. https://doi.org/10.1016/j.worlddev.2016.12.008
dc.subjectstructural adjustment
dc.subjectmodels
dc.subjectpublic investment
dc.subjecteconomic growth
dc.subjecteconomic development
dc.subjecteconomic systems
dc.subjecteconomic sectors
dc.subjectproductivity
dc.subjecteconometric models
dc.subjecteconomic growth rate
dc.subjecteconomic dualism
dc.subjectexchange rate
dc.subjectfinance
dc.subjectforeign investment
dc.titleToward an understanding of economic growth in Africa: A reinterpretation of the Lewis model
dc.typeJournal Article

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