Aid, employment, and poverty reduction in Africa

Growth and poverty reduction in Africa are weakly linked. This paper argues that the reason is that Africa has failed to create enough good jobs. Structural transformation - the relative growth of employment in high productivity sectors - has not featured in Africa's post-1995 growth story. As a result, the region's fastest growing economies have the least responsiveness of employment to growth. The role of development aid in this context is problematic. Across Africa more aid went to countries with a low employment intensity of growth. The paper proposes a new approach to aid and poverty in Africa, one that focuses on supporting structural change for job creation.