Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/302281 
Authors: 
Year of Publication: 
2024
Series/Report no.: 
WIDER Working Paper No. 2024/50
Publisher: 
The United Nations University World Institute for Development Economics Research (UNU-WIDER), Helsinki
Abstract: 
An important stylized fact about African economic development is the phenomenon of urbanization without structural transformation. This paper provides a political economy analysis of the lack of structural transformation in African cities, drawing on the Deals and Development framework. It argues that limited structural transformation in African cities is due to the nature of state-business relations in the cities, where manufacturing and tradeable services firms in the formal sector face semi-ordered deals while 'workhorses', which constitute the large proportion of the economic structure of cities, face disordered deals. Such deals, whether semi-ordered or disordered, are not conducive to long-term growth and structural transformation. In contrast, political and economic elites share rents through closed ordered deals in construction, real estate, and utilities, which disincentivizes investment in productive sectors as well as leading to high costs of inputs for downstream firms in manufacturing and services. Our analysis points to the need to pay closer attention to political economy factors that constrain structural transformation in African cities, in addition to conventional explanations that highlight the role of economic factors such as the lack of agglomeration economies and poor infrastructure in urban Africa.
Subjects: 
structural transformation
deals
cities
political economy
Africa
JEL: 
O18
R11
P14
Persistent Identifier of the first edition: 
ISBN: 
978-92-9267-512-7
Document Type: 
Working Paper

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