Services, jobs and economic development in Africa

Due to the changes occurring in the organisation of international production, the reduction in transport costs and opportunities offered by new technologies, the economic role of services is changing dramatically. Many service activities are increasingly tradable, have experienced high productivity growth, and can achieve economies of scale. In practice, many services are provided by foreign investors. Research on the role of services and foreign direct investment in developing countries is scant. This gap in the literature is particularly surprising in a global context in which traditional manufacturing is losing ground as a driver of economic growth in developing countries.
This project centres on an empirical assessment of the relationship between the distribution of employment across services industries, and the role of foreign direct investment in structural transformation in Africa. The first stage of the research involved the construction of a comprehensive database mapping the sectoral distribution of services employment at the sub-national level across a wide number of African countries and over time. This generated stylised facts on the relationship between employment in services sectors and key indicators of economic development at the sub-national level in Africa. If you would like more information, you can explore the database linked below.
Ongoing research uses these data to investigate the links between foreign direct investment and structural transformation. From a policy perspective, this project will contribute to the long-standing debate on the extent and direction of structural transformation for developing countries. More specifically, this project is relevant to understand whether and how service-led development can be a suitable strategy for African countries by documenting changes in the sectoral distribution of employment at the sub-national level, helping to assess whether a structural transformation away from agriculture and manufacturing towards services is a feasible path to economic growth.

Publications

• Leonardo Baccini, Matteo Fiorini, Bernard Hoekman and Marco Sanfilippo, Services, Jobs, and Economic Development in Africa, journal article in publiched in the The World Bank Research Observer, 2023
• Bernard M. Hoekman, Marco Sanfilippo and Margherita Tambussi, Foreign direct investment and structural transformation in Africa, RSC Working Paper, 2023
• Bernard Hoekman and Marco Sanfilippo, Trade and value chain participation: Domestic firms and FDI spillovers in Africa, article published in the World Economy, 2023
• Bernard Hoekman, Marco Sanflippo, Filippo Santi and Rohit Ticku4, Trade, productivity, and services input intensity, article published in the Review of World Economics, 2024

Team: Leonardo Baccini, Matteo Fiorini, Bernard Hoekman, Marco Sanfilippo