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Working Paper 229 - Structural change, economic growth and poverty reduction – Micro-evidence from Uganda


Within the debate on effective sectoral strategies for growth and poverty reduction in Sub-Saharan Africa, there has been recently a renewed attention to the role of structural transformation (AfDB African Economic Outlook 2013). There exists basically two options to grow and get out of poverty; within-sectoral productivity growth in the assets held by the poor, i.e., land and labor (McArthur and McCord2014; Binswanger et al. 2010; Ravallion and Datt 1996) and inter-sectoral mobility by reallocating labor from low-productivity sectors to higher-productivity ones, i.e., structural transformation (McMillan and Rodrik 2011). Structural and occupational transformation can be (but not necessarily) associated with and may also require spatial transformation, by reallocating households and family labor to where non-farm activity takes place –either rural or urban (Christiaensen and Todo 2013, Suryahadi, Suryadarma, and Sumarto 2009).3 Another dimension is the institutional transformation within the non-agricultural sector and which involves a movement of selfemployed jobs and labor working in informal household enterprises to wage jobs in formal companies (Fox and Sohnesen, 2012; Naude and Nagler 2014). Last, those processes can also be accompanied by demographic transition.

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