Productive Capacities, Economic Vulnerability and Growth Volatility in Sub-Saharan Africa

IMF Working Papers, August 2, 2024

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Title: Productive Capacities, Economic Vulnerability and Growth Volatility in Sub-Saharan Africa
Author: Aminou Yaya
Publication: IMF Working Papers, Working Paper No. 2024/169
Date: August 2, 2024
Scope: Analysis of the effects of productive capacities on the volatility of economic growth in Sub-Saharan Africa (SSA) under significant economic vulnerability.
Sample and period: 43 SSA countries, period 2000-2018
Methodology: Generalized Method of Moments (GMM)

Economic vulnerability contributes to growth volatility in SSA.
The effect of economic vulnerability on growth volatility varies according to the performance of productive capacities.
Countries with high productive capacities have greater opportunities to mitigate the effect of economic vulnerability on growth volatility.
Specific dimensions of productive capacities—Institutions and ICT—appear to matter more than others for reducing growth volatility.

Strengthen productive capacities to increase resilience to simultaneous shocks such as the Covid-19 pandemic, climate change, and armed conflicts.
Prioritize improvements in Institutions and ICT as dimensions of productive capacities that can more effectively mitigate growth volatility.
Design policies focused on building economic resilience to reduce persistent poverty and inequality by stabilizing growth.

The study emphasizes the role of simultaneous shocks (Covid-19 pandemic, climate change, multiplicity of armed conflicts) in elevating economic vulnerability for SSA countries.
Empirical approach relies on panel estimation using GMM for the 2000-2018 period across 43 SSA countries.