2.3 Human Capital Index, by Country, 2017

26 b oostin G Pro D u C tivity in s ub- sA h A r A n Afri CA

MAP 2 .3 Human Capital Index, by Country, 2017

Human Capital Index 0.2 – 0.4 0.4 – 0.6 0.6 – 0.8 > 0.8

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Sources: Penn World Table (PWT) 9.0 and PWT9.1 updates (Feenstra, Inklaar, and Timmer 2015). Note: The figure plots the values of the World Bank’s 2017 Human Capital Index (HCI) for all countries. The HCI measures three components: probability of survival, expected learningadjusted years of school, and health. The HCI values (from 0 to 1.0) reflect prospective worker productivity relative to a benchmark (1.0) of complete education and full health.

least five times that of 31 countries (out of 37) in Sub-Saharan Africa (map 2.4). Specifically, US TFP is 5 times that of Botswana, Côte d’Ivoire, and Kenya; 10 times that of Ghana and Zambia; and more than 20 times that of Nigeria and Tanzania.7

Drivers of Labor Productivity Gaps between Sub-Saharan Africa and the United States

Development Accounting Analysis

Labor productivity in Sub-Saharan Africa, relative to the global efficiency benchmark (the United States), exhibits long swings (from 5 percent to 15 percent) between 1960 and 2017 (figure 2.3, panel a). This relative productivity declines from an average of 12 percent in the 1970s to a trough of 6 percent in the 1990s, and then it recovers to 8 percent from 2010 to 2017.

The development accounting analysis shows that, from the 1960s to the mid1980s, more than half of the differences in output per worker between Sub-Saharan Africa and the United States were driven by differences in the relative endowment of (physical and human) capital. Since the 1990s, differences in TFP became the main driver explaining the output-per-worker gaps (figure 2.3, panel b).8

Overall, two findings emerge from this analysis of the widening gap in aggregate labor productivity between the United States and Sub-Saharan Africa: • Differences in output per worker were mainly driven by undercapitalization in Sub-Saharan Africa from the 1960s to the mid-1980s. The region’s lower relative accumulation of (physical and human) capital became the main culprit of the labor productivity gap. • Gaps in factor accumulation between Sub-Saharan Africa and the United States still play a role in explaining differences in relative output per worker. However, the gap in the region’s efficiency in combining its factors of