The Effect of ICT on Premature Deindustrialization in Sub-Saharan Africa

Abstract

Rodrik (2015) documents a significant trend of premature deindustrialization in developing regions throughout the world, including Sub-Saharan Africa. This trend is concerning for Sub-Saharan Africa’s growth prospective, as industrialization is critical to rapid economic growth, and has been present in the economic ‘miracles’ of developmental convergence. As Information and Communication Technologies (ICT) become more ubiquitous in the developing world, it alters the trajectory of development. However, the scholarly literature contains next to no information on how the interaction between ICT and manufacturing plays a role in economic growth. This thesis uses a cross-country time series regression with lagged indicators to investigate the relationship between manufacturing and growth, ICT and growth, and the interaction between ICT & manufacturing and growth in Sub- Saharan Africa. This thesis finds a substantial positive relationship between manufacturing and economic growth, consistent with Rodrik (2013; 2014) and between ICT and growth, consistent with Andrianaivo and Kangni (2011). However, when the interaction between the ICT and manufacturing is regressed, there is a substantial and highly statistically significant negative association with economic growth. This indicates that ICT has an adverse influence on manufacturing that likely contributes to premature deindustrialization in Sub- Saharan Africa. Relevant policy recommendations are discussed.