reallocation gains. The dynamic effect is, however, heavily negative (-0.6 ppts), suggesting that relocation of the workforce from ‘high’ productivity growth to low productivity growth sectors (i.e. reverse structural transformation) has been a drag on economic growth.

Sectoral decomposition reveals that agriculture, commerce, and ‘other services’ were the major contributors to structural change and within-sector productivity changes. Agriculture made significant positive contribution to the “within” component, which was more than offset by productivity decline in ‘other services’, commerce, and manufacturing. A larger proportion of agriculture’s positive growth contribution was due to an increase in productivity and static gains. As agriculture has productivity level below the economy-wide average, the drop in its share of employment led to higher per capita growth. However, the decline in agriculture’s employment rate was so large that it reduced per capita growth. Manufacturing made a negative contribution to growth due to a marked decline in productivity. As opposed to this, commerce contributed negligibly. Despite absorbing most of the labor that left agriculture, the sharp productivity drop in commerce more than offset the growth gain due to employment growth, thereby causing static productivity loss.

Altogether, despite negative within-sector productivity growth in 2006-2015, Benin’s economy grew by 4.5 percent mainly via reducing allocative inefficiencies. Table 3 presents the percent contribution of each sector to the structural change term. We see that agriculture has made the largest contribution to overall inter-sectoral productivity growth (about 60 percent), followed by other services (44 percent). Commerce contributed significantly but negatively because it absorbed most of the workforce displaced from agriculture while at the same time experiencing a steep decline in output per worker. However, a look at the more recent period, 2010-2015, reveals newly emerging trends with respect to the key drivers of growth. “Within” gains accounted for almost all of the average annual growth per capita of about 2 percent. Unlike 2006-2010, static structural change explains only 20 percent of the per capita growth during 2010-2015. This period was also marked by dynamic productivity loss, albeit to a relatively limited extent. Substantially higher “within” productivity gain has been a distinctive feature of the 2010s, unlike the 2000s during which structural change dominated while “within” productivity loss reduced growth.

**Table 3. Benin: Sectoral decomposition of GDP per capita growth: 2006-2015** **<u>(Annual percentage changes)</u>**

|||% C<br>|ontributio|n of<br>|||
|---|---|---|---|---|---|---|
||Within-sector<br>|Employment||Inter-sectoral<br>|<br>|Total<br>|
||productivity|rate|Static|Dynamic|total|(%)|
|Agriculture|0.69|-2.32|1.67|-0.65|1.02|-0.61|
|Mining|-0.01|0.00|0.00|0.00|0.00|0.00|
|Utilities|0.08|0.00|0.01|0.00|0.01|0.09|
|Manufacturing|-0.60|0.01|0.11|-0.03|0.07|-0.51|
|Construction|-0.07|0.04|0.11|0.00|0.11|0.08|
|Commerce|-0.53|0.98|-0.47|0.09|-0.47|-0.02|
|Transport|0.03|0.12|0.18|0.00|0.18|0.33|
|Finance|0.47|0.00|0.04|0.00|0.04|0.51|
|Other services|-0.83|0.57|0.75|-0.04|0.75|0.49|
|Subtotals|**-0.77**|**-0.61**|**2.36**|**-0.64**|**1.73**|**0.35**|
|Demographic co|mponent|||||**0.73**|
|Annual % chang|e in GVA per cap|ita||||**1.07**|

Source: Author’s estimation based on data described in Section 2.

During 1998-2014, Burkina Faso registered per capita growth of almost 3 percent per annum, over 80 percent of which was accounted for by structural change. In particular, the contribution of static structural change stood at 1.6 percent, roughly half of the per capita growth in this period. This does not come as much of a surprise in view of the fact that labor moved predominately from very lowproductivity agriculture to higher productivity sectors, including ‘other services’ and commerce. In 18