Beyond Asian virtues: growth accelerations, within-sector traps, and structural change in Sub-Saharan Africa

This study examines the drivers of economic growth by analyzing the interplay between structural transformation (ST) and within-sector productivity effects (WE) across 25 countries in East Asia (EA), Southeast Asia (SEA), and Sub-Saharan Africa (SSA) over 1980–2020. Using 2SLS and SYS-GMM, results reveal a virtuous ST-WE cycle underlying Asia’s productivity-led growth, as WE facilitate ST toward productive activities. This mechanism is strongest in EA via industrial deepening and SEA trade integration. Yet, SSA exhibits weak and asymmetric ST–WE dynamics, as productivity growth occurs mainly within sectors, while ST is hindered by informality, skill deficits, and limited investment. Human capital, FDI, TFP, and institutions support WE, in EA. Regional divergence reflects capabilities: EA shows industrial resilience, SEA faces middle-income traps, while SSA remains commodity-dependent. Asia’s Virtues underscore coordinated industrial policy and productivity upgrading, while SSA should link ST with productivity through agricultural modernization, industrialization, capacity building, and stronger institutions.