Determinants of Total Factor Productivity Growth in Africa

Abstract

The purpose of this paper is to investigate key determinants of Total Factor Productivity Growth (TFPG) in Africa. A panel of 41 countries from "all Africa" and 35 countries from Sub-Saharan were studied for the sample period 2002-2012. Panel data-based stationarity and cointegration analytical techniques were employed to assess data properties and to estimate the empirical model. TFP is estimated as a Solow residual from a production function specified in the framework of the augmented Solow growth hypothesis. The study found that factors such as inflation, domestic credit to the private sector, human capital and ICT are key determinants of TFPG per worker in Africa. For enhanced productivity growth in Africa, the study findings shed light towards policy direction of credit expansion to the private sector, extra investments in human capital stocks, expansion of ICT adoption and pursuance of price stability.