AFRICAN TRANSFORMATION INDEX 2023
ATI
Methodology
Contents
DEPTH framework
The African Transformation Index quantifies ACET’s definition of economic transformation as growth with DEPTH. The ATI compares African countries and assesses their progress on economic transformation over time.
The index tracks progress on the five dimensions of DEPTH: Diversification of production and exports, which measures countries’ capability to produce a widening array of goods and services; Export competitiveness, which measures the country’s global non-extractive export share to its global non-extractive GDP share; Productivity increases, which measures labor productivity across the agriculture, manufacturing and construction, and services industries; Technology upgrading, which measures the use of medium-and high-technology in manufactured exports of goods and services; and Human well-being, which measures income, income inequality, and overall and female formal employment.
This version of the ATI covers 30 African countries, using datasets from 2000 to 2020 that are analyzed through the DEPTH framework. Each DEPTH dimension is measured as a composite of between one and four indicators that are used to track economic transformation progress in the 30 countries. There are 14 indicators, as shown below.
Each country’s scores are based on three-year centered moving averages of the indicators, which are normalized and equally weighted. The three-year centered averaging smooths out the volatility of the raw data, which, viewed year-to-year, could give misleading medium-term results. The dimension scores are aggregated and also equally weighted to form the overall ATI score for each country.
Indicator definitions and data sources
Diversification | |
Indicators | Definitions and data sources |
Manufacturing | Manufacturing value added during a given period as a percentage of total value added. Manufacturing corresponds to the industries belonging to ISIC divisions 15-37 (Section D, Revision 4). Source: United Nations Statistics Division national accounts data |
Services | Services value added during a given period as a percentage of total value added. Services correspond to the International Standard Industrial Classification (ISIC) tabulation categories G-P (Revision 4). Source: United Nations Statistics Division national accounts data |
Export concentration | The proportion of a country’s export value generated by the top five highest-earning exports. The top five exports correspond to a country’s five highest-earning exports during a given period. The inverse share is calculated as 100-share of the top five exports. Source: United Nations Comtrade database; World Integrated Trade Solution |
Export sector diversification | The share of total export earnings derived from manufactures and services. Manufactures comprise merchandise products in SITC sections 5 (chemicals), 6 (basic manufactures), 7 (machinery and transport equipment), and 8 (miscellaneous manufactured goods), excluding division 68 (non-ferrous metals). Commercial service exports are total service exports minus exports of government services not included elsewhere. Goods exports (BoP, current US dollars) refer to all movable goods (including nonmonetary gold and net exports of goods under merchanting) involved in a change of ownership from residents to nonresidents. Data are in current US dollars. Service exports (BoP, current US dollars) refer to the economic output of intangible commodities that may be produced, transferred, and consumed simultaneously. Data are in current US dollars. Source: United Nations Comtrade database; World Integrated Trade Solution; World Development Indicators |
Export competitiveness | |
Indicators | Definitions and data sources |
Non-extractive export earnings | The country’s share of world non-extractive exports divided by the country’s share of world GDP. Source: United Nations Comtrade database; World Integrated Trade Solution |
Productivity increases | |
Indicators | Definitions and data sources |
Agricultural productivity | Agricultural productivity corresponds to the International Standard Industrial Classification (ISIC) tabulation categories A and B (Revision 3) or tabulation category A (Revision 4) and includes forestry, hunting, and fishing, as well as cultivation of crops and livestock production. Data are in constant 2010 US dollars. Source: World Development Indicators |
Manufacturing and construction productivity | Manufacturing productivity corresponds to industries belonging to International Standard Industrial Classification (ISIC) divisions 15-37 (Section D). It is calculated without making deductions for depreciation of fabricated assets or depletion and degradation of natural resources. Data are in constant 2010 US dollars. Construction productivity corresponds to industries belonging to ISIC divisions 41-43 (Section F). The origin of value added is determined by ISIC, Revision 4. Data are in constant 2010 US dollars. Source: United Nations Statistics Division national accounts data; Employment data from International Labour Organization, ILOSTAT database |
Services productivity | Services productivity corresponds to the International Standard Industrial Classification (ISIC) tabulation categories G-P (Revision 3) or tabulation categories G-U (Revision 4) and include wholesale and retail trade and restaurants and hotels; transport, storage, and communications; financing, insurance, real estate, and business services; and community, social and personal services. Data are in constant 2010 US dollars. Source: World Development Indicators |
Technology upgrading | |
Indicators | Definitions and data sources |
Production technology | The share of the total manufacturing value added from medium- and high-technology industries. Medium- and high-technology industry is defined using OECD classification based on the International Standard Industrial Classification (ISIC) divisions Revision 3 (24, 29, 30, 31, 32, 33, 34, 35 excluding 351) and Revision 4, respectively. Manufacturing value added is the value added of the manufacturing industry, which is Section C of ISIC Revision 4 and Section D of ISIC Revision 3. Source: World Development Indicators |
Technology in exports | Share of medium-and high-technology products in manufactured exports. (The Lall approach is used for the technology decomposition of manufactured exports.) Source: World Development Indicators |
Human well-being | |
Indicators | Definitions and data sources |
Average income | GDP per capita is gross domestic product divided by mid-year population. Data are in constant 2010 US dollars. Source: World Development Indicators |
Income inequality | The Gini index measures the extent to which income distribution (or consumption expenditure) among individuals or households within an economy deviates from a perfectly equal distribution. The index measures the area between the Lorenz curve and a hypothetical line of absolute equality expressed as a percentage of the maximum area under the line. Thus, a Gini index of 0 represents perfect equality, while an index of 100 implies perfect inequality. Source: World Development Indicators; PovcalNet |
Formal employment | Formal employment is the type of employment where there are work arrangements (written rules of recruitment, agreement and job responsibilities, social benefits, and social protection of the employee). The rate of formal employment in the labor force is derived as follows: Source: International Labour Organization, ILOSTAT database |
Formal female employment | Waged and salaried workers, female (% of female employment) (modelled ILO estimate). Wage and salaried workers are workers who hold the type of jobs defined as “paid employment jobs,” where the incumbents hold explicit (written or oral) or implicit employment contracts that give them a basic remuneration that is not directly dependent upon the revenue of the unit for which they work. Source: World Development Indicators; International Labour Organization, ILOSTAT database |
Calculation of the index
To calculate a score for each indicator for each country, normalization is done using the following procedure, which produces a score ranging from 0 to 100:
NCS refers to the normalized country score for the indicator. RCI represents the three-year average of the raw value of the indicator for each country. Min(RCI) refers to the minimum three-year average of the raw value of the indicator among the group of countries, while Max(RCI) refers to the maximum three-year average of the raw value of the indicator among the group of countries.
Aggregation of indicators into DEPTH dimensions
The dimensions are constructed from 14 indicators using the following formula:
For each dimension, γ is the respective weight (100 divided by the number of indicators in each dimension). For example, Diversification has four indicators, where each is assigned 0.25. Since countries have different economic structures, the indicators of Productivity increases are weighted by how much each sector contributes to the total employment in the economy. Each indicator score and each dimension score ranges from 0 to 100, with a higher score indicating better performance.
Aggregation of the DEPTH index
The country ATI score is constructed from the five DEPTH dimensions using an arithmetic mean, giving each dimension equal weight.
Since the ATI is a weighted sum of indices, it also is an index ranging from 0 to 100. For constructing each DEPTH dimension, the same principle is followed. The overall ATI score (aggregated for the 30 African countries) is derived using a simple arithmetic mean.
Discover more from the ATI
ATI Scorecard
Explore the data behind the economic transformation progress of 30 African countries between 2000-2020.
Growth with DEPTH
Explore the ATI in DEPTH and see how African countries performed on each dimension between 2000-2020.
Methodology
Learn more about our methodology, sources, and how we calculate the index.
Country Profiles
To explore the results of the index in greater detail and provide context and analysis, the ATI report includes 11 case studies.