How structural change affects economic vulnerability: Evidence from resource-rich countries in sub-Saharan Africa.

Abstract

Abstract The goal of this essay is to assess how structural transformation indicators affect economic vulnerability of resource-rich countries in sub-Saharan Africa. Using data from 26 nations covering the period from 1996 to 2020, we estimate a linear model with the FM-OLS method. Overall, our findings indicate that while industrial employment has an amplifying effect on vulnerability, employment in the service sector, industrial value added, and value contributed in the service sector all contribute little to lessening economic vulnerability. Our findings hold up well to changes in estimating methodology (PCSE). By taking into account the distinctive features of the CFA Franc and non-CFA Franc monetary zones, sensitivity is evaluated. Therefore, we advocate for the creation of an institutional framework that places special emphasis on vocational training, so that industrial employment is no longer restricted to manoeuvring tasks, on the efficient distribution of NR rents, and on the relentless fight against corruption and embezzlement of public funds, which slow down the process of structural transformation and, consequently, of creating strong shock-resistant economies. These measures need to be stepped up in the Franc zone countries, which, according to the study, are performing less well than other monetary systems. JEL code: F630, O110, O130, L510.