It is now well-established that the modern organized manufacturing sector exhibits unconditional convergence, contrary to other economic sectors (Rodrik 2014); that is, manufacturing industries converge to the global productivity frontier regardless of the condition of growth fundamentals. The question is whether Africa can generate a “growth miracle” based on the manufacturing industry. In a model that incorporates this unconditional convergence, structural change – the shift of labor from low productivity industries to high productivity industries- plays an essential role.

The level of employment shares across sectors in developing countries conditional on income level shows that African countries fit into a global pattern: shares of employment in the different sectors are what one would expect them to be. So just like elsewhere, structural change in sub-Saharan Africa has been through a decline in the share of labor employment in agriculture, the least productive sector in subSaharan economies. Unlike other developing countries, African countries (generally) have not seen a significant increase in the share of labor force employment in manufacturing—instead, the shift in employment share has been towards the services sector.

Thus African structural change is unlike the pattern exhibited by Asian and European industrializers: labor is currently largely shifting towards the services industry, which historically has been less productive than manufacturing in other countries. Additionally, the manufacturing sector is dominated by informal firms, which are less productive than the formal organized firms required for unconditional convergence. Rodrik (2014) notes that African countries are de-industrializing much faster than Asian and European countries did in the past. African countries thus need to assess what type of growth model is both suitable and feasible.<sup>**1**</sup>

> 1 Other literature has investigated the consumption side of African growth in recent decades. Using the <mark>Demographic and Health Survey (DHS) data, Young (2012) shows that since 1990, real material consumption in Sub-Saharan Africa has been rising at a rate of 3.4 to 3.7 percent per year. This is 3 to 4 times higher than the number usually reported by international data sources like the Penn World Tables (PWT) and the UN: .9 - 1.1 percent. Non-African developing countries in the DHS sample exhibit a growth rate of 3.8 percent. When the data are examined by product group, Young (2012) finds greater Sub-Saharan growth in durable goods (5.6 percent) but lower growth in housing (1.8 percent). Although various sources claim Sub-Saharan Africa is growing at less than half the pace of other developing countries, DHS data suggest African growth is easily comparable to that of other economies. McMillan and Harttgen (2014) explore the reason behind the African growth and fill in some of the explanatory gaps in Young (2012).  The African “miracle” can be traced to a decline in the share of the labor force that engages in agriculture. The paper links improvements in living standards found by Young (2012) to sectoral changes: between 2000 and 2010 the share of the labor force employed in agriculture in sub-Saharan Africa declined by approximately 10 percentage points. With this came a 2-percentage point increase in manufacturing employment and 8-percentage point increase in services.  Between 2000 and 2010, structural change contributed 1 percentage point to labor productivity growth. Essentially the shift of employment from agriculture to more productive sectors explains some of the growth in real consumption documented by Young (2012).</mark>

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