Blog African Lions - unpacking labor trends and growth in Mozambique.

 
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Mozambique, over the last two decades, has experienced explosive growth, with an average GDP growth rate of almost 8 percent between 1997-2015. Not only that, but, for the most part, Mozambique has a track record of solid macroeconomic policies, like controlling inflation, reducing current account deficit, and lowering the country's dependence on aid. Like many other sub-Saharan African countries, though, the rapid growth rate has not transformed into substantially decreasing poverty rates. Indeed, while Mozambique's poverty rates fell dramatically from 1997-2003, many experts attribute that trend to post-war recovery from the civil war that ended in 1992, no clear progress seems to have been made from 2003-09.

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In a recent paper, Understanding Mozambique's growth experience through an employment lens, and as part of the wider African Lions project, Sam Jones and Finn Tarp examine macro and microeconomic developments in Mozambique and apply labor market decomposition tools to investigate the disconnect between the country's performance in growth and poverty reduction. In their study, the authors find that, while labor movement out of agriculture--like in classic structural transformation--has contributed to aggregate economic growth, this trend is over-concentrated in the services sector (Figure 1), which itself is experiencing a decrease in labor productivity.

Figure 1: Sectoral share of employment in Nigeria, 1970 to 2014 Agriculture Mining Manufacturing Services 1997 83 2 3 12 1998 82 2 3 13 1999 82 2 4 13 2000 81 2 4 13 2001 80 2 5 13 2002 80 2 5 13 2003 79 2 6 13 2004 79 2 5 14 2005 79 2 5 15 2006 79 2 4 15 2007 79 2 3 16 2008 79 2 3 17 2009 79 2 3 17 2010 77 2 3 19 2011 76 1 3 20 2012 74 1 3 21 2013 73 1 4 23 2014 72 0 4 24 Source: Jones and Tarp's (2015) calculations using Mozambican official statistics. Note: Table made from bar graph. As the author's point out, while labor makeup is changing, each sector's contribution to GDP is only shifting a little (Figure 2), with minor changes in sectoral trends in labor productivity overall.

Figure 1: Sectoral share of employment in Nigeria, 1970 to 2014 Agriculture Mining Manufacturing Services 1996 39 2 9 50 1997 38 3 11 48 1998 38 4 11 47 1999 37 5 12 46 2000 32 5 13 49 2001 31 5 16 48 2002 32 5 16 47 2003 32 5 17 45 2004 31 6 18 45 2005 30 6 17 46 2006 31 6 16 47 2007 31 7 15 47 2008 31 7 14 48 2009 31 8 13 48 2010 30 8 13 49 2011 30 8 12 50 2012 28 9 12 51 2013 27 9...

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