What Can Trade Tell Us About Economic Transformation? Composition of Trade and Structural Transformation in African Countries

In this chapter, we explore the effects of exporting manufactures, primary commodities, and food and agricultural products, as well as examine the impact of importing capital and semi-capital goods, on structural transformation in a group of 21 sub-Saharan African countries that were covered in the inaugural African Transformation Report (ACET, 2014). The empirical results suggest that the import of capital and semi-capital goods can be a good predictor of structural transformation while concentration of exports in primary commodities, and food and agricultural products seems to predict weak structural transformation. In addition, we obtain evidence suggesting that higher shares of capital goods in total imports seem to have a greater positive influence in resource (primary commodity) rich economies.