Income polarization and innovation: Evidence from African economies

Abstract

This paper examines the degree of polarization of GDP per capita of African economies between 1966 and 2008. Based on a nonparametric analysis, we find that countries tend to cluster in two classes of per capita GDP. Relying on the Wolfson's bipolarization measure, the results reveal that bipolarization has been accelerating during the two first decades and is still growing. We relate the evolution of polarization during the period to the business sectors. We find that countries specialization is the driving force of this evolution, namely, agriculture and industry sectors. We also study the innovation-development polarization relation in a VAR framework using patents and trademarks as measures of innovation. JEL classifcation: C32, O34, O47, O55