Is Inequality Slowing Down Africa’s Industrialization?

Abstract

Africa has also experienced a decline in the level of industrialization for at least three decades. Examining the dynamics of industrialization, and its effect on inequality, therefore remains a strikingly topical issue. This paper assesses the effects of industrial transformation on inequality in Africa over the period 1980-2016. Using a sample of 48 African countries, we estimate a dynamic panel data model using the Generalized Method of Moments in System (GMM-S). Our results show that strong industrialization would reduce inequality in Africa. The robustness of the results is tested using a PSTR (Panel Smooth Transition Regression) model and a PTR (Panel Transition Regression) model. The study recommends that economic, social and environmental disparities be taken into account in the process of industrial transformation on the continent.