Infrastructure and Structural Change in Africa.

The article examines how investments in transport, electricity, and Internet infrastructure influence economic development through structural transformation—specifically, shifts in sectoral employment—in African countries within the Horn of Africa and Lake Chad regions. Empirical analysis using georeferenced data and instrumental variables reveals that access to both paved roads and electricity significantly reallocates labor from agriculture to manufacturing and services, while access to fast Internet further accelerates this shift. A spatial general-equilibrium model quantifies the welfare and employment impacts of future infrastructure projects, showing that bundled investments in roads, electrification, and Internet access yield larger structural changes and welfare gains than isolated investments, with regional trade facilitation amplifying these effects. The study highlights heterogeneous spatial outcomes, with Kenya and parts of Cameroon benefiting from increased manufacturing specialization, while poorer and more fragile areas around Lake Chad experience welfare gains but remain predominantly agricultural. The findings underscore the importance of integrated infrastructure development and regional connectivity for fostering economic transformation in these African regions.