Africa’s Rapid Economic Growth Hasn’t Fully Closed Income Gaps
Many economies in sub-Saharan Africa grew at a record pace before the pandemic. Ethiopia and Rwanda, for example, saw some of the fastest expansions in the world—an average of more than 7.5 percent per year over the past two decades. However, it is less clear whether the gains in economic growth have been shared equally across regions within countries because income data at the subnational level are not always available.
To assess the extent to which sub-Saharan Africa ’s strong growth performance spread across subnational regions, we used satellite-recorded images of the Earth’s nighttime lights as a proxy for economic activity. The data show that at least until 2010, African countries made tremendous progress in reducing regional income inequality (differences in output per capita across regions of a country). This is in marked contrast with other parts of the world, where inequality either increased or convergence was slower.
Taking a closer look at the factors that affect regional inequality, we found that progress was largely due to improvements in basic infrastructure, which helped lagging regions converge faster to national levels. Night lights per capita increased several-fold in the poorest regions, with the biggest gains in oil exporters and frontier markets such as Ghana and Kenya.
However, not all lagging regions saw improvement. Fragile and conflict-affected states made little-to-no progress in reducing regional inequality. And even in countries that experienced decades of growth, progress stalled after 2010, with regional inequalities having likely widened post-pandemic.
Continued
https://www.imf.org/en/Blogs/Articl...conomic-growth-hasnt-fully-closed-income-gaps
Many economies in sub-Saharan Africa grew at a record pace before the pandemic. Ethiopia and Rwanda, for example, saw some of the fastest expansions in the world—an average of more than 7.5 percent per year over the past two decades. However, it is less clear whether the gains in economic growth have been shared equally across regions within countries because income data at the subnational level are not always available.
To assess the extent to which sub-Saharan Africa ’s strong growth performance spread across subnational regions, we used satellite-recorded images of the Earth’s nighttime lights as a proxy for economic activity. The data show that at least until 2010, African countries made tremendous progress in reducing regional income inequality (differences in output per capita across regions of a country). This is in marked contrast with other parts of the world, where inequality either increased or convergence was slower.
Taking a closer look at the factors that affect regional inequality, we found that progress was largely due to improvements in basic infrastructure, which helped lagging regions converge faster to national levels. Night lights per capita increased several-fold in the poorest regions, with the biggest gains in oil exporters and frontier markets such as Ghana and Kenya.
However, not all lagging regions saw improvement. Fragile and conflict-affected states made little-to-no progress in reducing regional inequality. And even in countries that experienced decades of growth, progress stalled after 2010, with regional inequalities having likely widened post-pandemic.
Continued
https://www.imf.org/en/Blogs/Articl...conomic-growth-hasnt-fully-closed-income-gaps
