Abstract

We evaluate the contributions of physical capital, human capital, and unskilled labor to economic growth for 31 Sub-Saharan African (SSA) countries. We find that growth in physical capital accounts for 67 percent of growth in real GDP, whereas growth in human capital accounts for only 22 percent of real GDP growth and, the rest 11 percent is accounted for by growth of raw labor. When it comes to growth of productivity per employed worker, 90 percent is accounted for by growth rate of physical capital per employed worker, 46 percent by rate of increase in human capital per worker and negative 36 percent by rate of change of total factor of productivity (TFP). These findings are consistent with earlier studies. Negative contribution of growth rate in TFP may have to do with, poor governance, corruption, civil wars, draught and other adverse supply shocks to the production function. In addition, we find that the contributions of labor and human capital are positive but much lower in SSA countries than in high-income countries.

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