Dynamics of Structural Change in a Globalized World: What Is the Role Played by Institutions in the Case of Sub-Saharan African Countries?

Abstract

Within the framework of a panel model of 74 developing countries for the period 1984–2013, we show that structural change can be impacted by the quality of institutions. We use two subsamples: the first composed of countries of Sub-Saharan Africa (SSA), and the second composed of the other developing countries included in the sample. We show that international integration confines the countries of SSA to low-value-added production. It appears that, for these countries, low levels of institution quality and resource-based specialization hinder structural change and prevent them from benefiting from the positive effects of international trade. For the countries of SSA, international trade has a deleterious effect.