NS4301 Summer Term 2015 Rebasing Results

Introduction Amadou Sy, “Are African Countries Rebasing GDP in 2014 Finding Evidence of Structural Transformation, Brookings, March 3, 2015 Rebasing gross domestic product (GDP)– revising methods and base data used to calculate GDP Process provides a clearer picture of economy’s size and structure – many implications Updated figures enable governments to better evaluate fiscal positions, potential revenue bases Investors have more accurate information to make decisions – debt/GDP ratios important – rating agencies Aid terms may change as countries have higher per capita incomes 2

Major Rebasing Efforts 3

Rebasing Findings Rebasing does not make countries richer overnight in sense daily lives don’t change Revised GDPs take into account formerly omitted economic activities Now incorporate recent booms in sectors such as information and communications technologies Finance, real estate Main findings: Service sector is the single largest component of African economies Accounts for around half of GDP Manufacturing and agriculture sectors remain essentially unchanged or have shrunk Services have absorbed growing labor force, but most of these actives are low productivity and unlikely to spur accelerated growth. 4

Agriculture Before and After 5

Manufacturing Before and After 6

Services Before and After 7

Conclusions Traditional engines behand rapid growth and convergence, structural change and industrialization are operating at less than full power If African countries do achieve high sustained growth rates they will do so pursuing a growth model that is different from earlier models based on industrialization Policy makers must now focus on the sectors most poised for transformation and consider how they can provide targeted support Agro business? Information technology? Finance? 8