Services and Economic Development in Africa

Abstract

This paper presents data and analyzes the structure of employment in 13 African economies at the administrative unit level, with a focus on the role of services. We provide two novel pieces of evidence. First, we present a descriptive snapshot of changes in the composition of employment over time and across geographies. This reveals evidence of structural transformation towards services and service-related occupations at sub-national level and provides a fine-grained overview of who works in services and where and how this has changed over time. Second, we provide correlations between services and economic development, using per capita nightlight luminosity as a proxy. We document (a) a strong positive association between high skills services and economic development; (b) substantial heterogeneity across industries within services; and (c) a mediating role of market conditions and technology in the relation between services and economic development. Overall, our work highlights an important role of services activities for employment, skills and economic development in Africa