notably finance, insurance, and real estate) tend to feature many of the virtues conventionally associated with manufacturing (such as high productivity and unconditional convergence in labor productivity). However, these sectors are all too skill-intensive and thus unaligned with the comparative advantages of these countries at current stages of development. By contrast, BBC’s rapidly expanding sectors, particularly trade and distribution services, fail to exhibit most of these features, which casts serious doubt on the sustainability of the existing growth model.<sup>39</sup> Nonetheless, the exceptionally high degree of inter-sectoral labor mobility, particularly in Benin and Côte d’Ivoire, offers a tremendous opportunity for lifting growth through structural change.

Sustained rapid growth in BBC would require reversing current trends and significantly improving productivity within sectors, notably in the agriculture and service activities. Although there is no magic bullet to achieve sustained high growth, and the path towards prosperity tends to be context-specific, theory and experience suggest that long-term growth is driven by increased productivity. As Nobel Laureate Paul Krugman famously quipped, “ _Productivity is not everything, but in the long-run it is almost everything_ .” Given the large size of the agriculture and services sectors, it is imperative that considerable endeavors are geared toward improving the productivity of these sectors. Agriculture remains to the largest contributor to total output and is the biggest employer in all three economies, while the service sector is the largest in terms of contribution to output and the second largest employer. As the vast majority of BBC’s labor force will continue to work in agriculture and services, substantial labor productivity improvements in these sectors are critical toward improving living standards. It is also critical to support relatively high-productivity services industries in which substantial numbers of the unskilled workers leaving agriculture can be productively employed.

# **References**

Agénor, Pierre-Richard, and Hinh T. Dinh (2013). ‘Public Policy and Industrial Transformation in the Process of Development’. Research Working Paper 6405. Washington, DC: World Bank.

Amirapu, A. and Subramanian, A. (2015). Manufacturing or Services? An Indian Illustration of a Development Dilemma. Center for Global Development, Working Paper 409.

- Dinh, H. T., Palmade, V., Chandra, V., and Cossar, F. (2012). _Light Manufacturing in Africa: Targeted Policies to Enhance Private Investment and Create Jobs_ . Washington, DC: World Bank.

- Dossou, A. S., Sinzogan, J.-Y, Mensah, S. (2005). Economic growth in Benin: lost opportunities. In The political economy of economic growth in Africa, Ndulu, B. J., O.Connell, S., Azam, J. P., Bates, R. H., Fosu, A. K., Gunning, J.W., Njinkeu, D. (Eds.). Cambridge: Cambridge University Press.

Gala, P. (2007). Real exchange rate levels and economic development: Theoretical analysis and econometric evidence. _Cambridge Journal of Economics_ , 32(2): 273–288.

Ghani, E., and O’Connell, S. (2014). Can service be a growth escalator in low income countries? Policy Research Working Paper 6971. Washington, D.C.: World Bank.

Haile, F. (2016). Growth and Structural Change in Tanzania: Retrospect and Prospect. Background paper prepared for the World Bank’s _Systematic Country Diagnostics_ for Tanzania. World Bank: Dar es Salaam.

International Monetary Fund. (2016). Côte d’Ivoire: Article IV consultation 2014. IMF Country Report No.16/147. June. Washington, D.C.: IMF

- Jones, B., and Olken, B. (2008). The anatomy of start-stop growth. _Review of Economics and Statistics_ , 90(3): 582-587.

Kapsos, S. (2005). The employment intensity of growth: Trends and macroeconomic determinants. International Labour Office, Employment Strategy Paper 2005/12.

> 39It should be noted that an expansion of services does not necessarily stand in the way of successful structural transformation and growth so long as an economy has accumulated human capital and other fundamental capabilities necessary for making these services sectors high-productivity activities. However, these are features that developing economies would typically have later in the development process, i.e. in post-industrialization stages (Rodrik, 2013b; Amirapu and Subramanian, 2015).

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