Alan Gelb is senior fellow at the Center for Global Development (CGD). He was previously director of development policy at the World Bank and chief economist for the bank’s Africa region.
Although Sub-Saharan Africa is increasingly attractive to investors, structural transformation and formal job growth remain slow. Industrial surveys in many countries show that some highly productive firms co-exist with many low-productivity businesses. Why do these “productivity islands” not diffuse more rapidly to create the “missing middle”? Our research (pdf) suggests three important factors.