Theoretical Foundations of Africa’s Economic Transformation and Growth
Abstract
This paper provides the theoretical underpinnings of growth models to explain
structural economic transformation in Africa. The paper suggests that
endogenous growth model is the key for understanding long-run growth of
economies through the accumulation of knowledge. Private and public investments
in knowledge and Research and Development (R & D) have longrun
effects on growth. Since small changes in the growth rate of an economy
can cumulate into large changes in the standard of living over a generation or
more, government policies can have a large impact on economic welfare.
Furthermore, endogenous growth models provide a richer structure that can
add insight into the mechanics of growth. The implications of the growth
models examined in this paper are that for an African country to achieve
economic transformation through an interrelated processes of structural
change that accompany economic development, and growth has to be at sustainable
high levels for a very long time. Furthermore, it is important African
policymakers work hard to circumvent diminishing marginal productive of
key factors of production. It is also important that adequate resources are invested
by African government in research and development, allowing for
technological progress, innovations and accumulation of knowledge. A combination
of these factors is the necessary ingredient for sustainable high levels
of growth. The endogenous growth models hold a lot of promise for the
structural economic transformation of African economies. The paper offers
policy advice for African countries attempting to transform and build resilient
economies.
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