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The digital economy and the gig economy are on a collision course in Africa. For decades, the informal sector has been the engine of employment growth across the continent, with gig work a big part of that.
An increasingly common justification for European development assistance to Africa is the notion that it will reduce migration from the South. While this sounds intuitive and makes for an appealing argument, the research shows that it is highly unlikely. As communities become less poor, more people gain the abilities and wherewithal to undertake an expensive journey to a better life elsewhere. Development often increases migration—at least initially.
Last week we published a new paper, Can Africa Be A Manufacturing Destination?, that highlights the persistence of high labor costs in many countries in sub-Saharan Africa. This led to a lively debate on Twitter, initiated by Chris Blattman at the University of Chicago.
A new paper coauthored by Alan Gelb, Christian Meyer, Divyanshi Wadhwa, and myself suggests that Africa is not, in general, poised to embark on a manufacturing-led take-off, stepping into the shoes of emerging Asia. Africa, including those countries that have come to be regarded as leaders in development, has high manufacturing labor costs relative to GDP as well as high capital costs relative to low-income comparators.