We observe that in recent decades, manufacturing jobs have moved around the world looking for spots that minimize costs. From the US to say South Korea, then to China, and now to Vietnam and others.
Will African countries be next? Well, a recent working paper from the Center for Global Development suggests that one factor standing in the way is comparatively high labor costs in SSA.
Here’s the “money shot” from the paper:
Now, those lines might look close to each other, but the chart is in a log scale so the gaps are pretty large. At around $4000 value added per worker, the gap is about 50%!
At this rate, it’s not going to be the lure of cheap labor that will draw global manufacturing to SSA.
PS: the paper uses,
“comparable, cross-sectional data from 10,502 manufacturing firms in 12 Sub-Saharan African countries (Angola, Ethiopia, Ghana, Kenya, Mali, Mozambique, Nigeria, Senegal, South Africa, Tanzania, Uganda, Zambia) and 13 comparators from four regions (Indonesia, Philippines, Vietnam, Russia, Turkey, Ukraine, Argentina, Brazil, Chile, Colombia, Mexico, Uruguay, and Bangladesh).”