TITLE:
Theoretical Foundations of Africa’s Economic Transformation and Growth
AUTHORS:
Joseph Atta-Mensah
KEYWORDS:
Structural Economic Transformation, Growth Models, Policy Advice
JOURNAL NAME:
Theoretical Economics Letters,
Vol.7 No.5,
July
21,
2017
ABSTRACT: This paper provides the
theoretical underpinnings of growth models to explain structural economic
transformation in Africa. The paper suggests that endogenous growth model is the key for understanding long-run growth of economies
through the accumulation of knowledge. Private and public investments in
knowledge and Research and Development (R & D) have long-run effects on
growth. Since small changes in the growth rate of an economy can cumulate into large changes in the standard of living over a generation or more, government
policies can have a large impact on economic welfare. Furthermore, endogenous
growth models provide a richer structure that can add insight into the
mechanics of growth. The implications of the growth models examined in this
paper are that for an African country to achieve economic transformation
through an interrelated processes of structural change that accompany economic
development, and growth has to be at
sustainable high levels for a very long time. Furthermore, it is important
African policymakers work hard to circumvent diminishing marginal productive of
key factors of production. It is also important that adequate resources are
invested by African government in research and development, allowing for
technological progress, innovations and accumulation of knowledge. A
combination of these factors is the necessary ingredient for sustainable high
levels of growth. The endogenous growth models hold a lot of promise for the
structural economic transformation of African economies. The paper offers
policy advice for African countries attempting to transform and build resilient
economies.