Total Factor Productivity Convergence in Africa: Panel Unit Root Approach

Abstract

The study tested absolute and conditional convergence of Total Factor Productivity in Africa using a sample of 23 countries and TFP data covering the period between 1960 and 2003 while deploying the panel unit root  methodology. Countries that have experienced sustained economic growth rate are found to have invested in both factor accumulation and total factor productivity (technological progress). It has been argued that countries with similar technology and physical capital will converge if they share similar TFP. In this regard, this study aims at finding if there is total factor productivity  convergence in Africa. The results show that there is evidence of conditional convergence and emergence of many convergence clubs of TFP in Africa.  However, there is weak evidence of absolute convergence in Africa which is contrary to results obtained in developed economies. Based on the results, some recommendations were made.

Keywords: Total factor productivity, Convergence, Panel Unit Root.