Structural Economic Change and Poverty Reduction: An Analysis of Sectoral Composition in Sudan

Elhaj Mustafa Ali, Mohammed and Elias Suliman, Abdul-Hameed (2025): Structural Economic Change and Poverty Reduction: An Analysis of Sectoral Composition in Sudan.

Abstract

This paper examines how structural economic change has influenced poverty reduction in Sudan over 1970–2022, with a particular focus on the role of sectoral composition in a fragile and conflict-affected context. The study’s objective is to assess how value added growth in agriculture, industry, and services affects poverty outcomes, measured by the headcount ratio, poverty gap, and severity index. Methodologically, the analysis constructs annual monetary poverty indices using the Foster–Greer–Thorbecke (FGT) approach, based on a lognormal distribution derived from per capita consumption and Gini coefficients, and then estimates an Autoregressive Distributed Lag (ARDL) model to capture both short and long run effects of sectoral value added growth and key macroeconomic and demographic variables, including education, exports, inflation, population, credit access, and GDP growth. The results show that growth in agriculture and industry significantly reduces poverty in the long run, whereas the services sector exerts a weak, statistically insignificant effect. Education, access to credit, and higher inflation are associated with lower poverty levels, while population growth increases poverty, and export expansion is linked to higher poverty, reflecting the enclave nature of Sudan’s extractive export sectors. Overall, the findings underscore that inclusive structural transformation—centered on revitalizing agriculture, fostering industrial development, and reorienting services—along with complementary policies in human capital, finance, and macroeconomic management, is essential for sustainable poverty reduction in Sudan. The study thus provides new empirical evidence to inform policymakers in Sudan and other conflict affected low income economies undergoing economic transition.

• Item Type: MPRA Paper
• Language: English
• Keywords: Poverty Reduction, Structural Transformation, Sudan, ARDL
• Subjects: D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I32 - Measurement and Analysis of Poverty; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O14 - Industrialization ; Manufacturing and Service Industries ; Choice of Technology

References

Ali, A. A., & Elbadawi, I. A. (2002). Poverty and inequality in Sudan: An analysis of the 1990s. Arab Planning Institute Working Paper Series. http://www.arab-api.org

Ali, M. E. M. (2018). Impact of Foreign Direct Investment on Domestic Investment in Sudan:" Giving Hope Hypothesis". Journal of Economic Cooperation & Development, 39(3), 39-63.

Ali, M. E. M., & Ebaidalla, E. M. (2019). Factors Influencing Informal Workers' Participation in Health Insurance in Sudan: Evidence from Khartoum and Kassala States. Economic Research Forum (ERF).

Ali, M. E. M., & Ebaidalla, E. M. (2023). Political Islam and crony capitalism in Sudan: A case study of “munazzamat al-dawa al-islamiyya”. Economic Research Forum (ERF).

Armed Conflict Location & Event Data Project. (2025). Sudan: Humanitarian access and conflict analysis, October 2024–March 2025. ACAPS.

Benfica, R., & Henderson, H. (2021). The effect of the sectoral composition of economic growth on rural and urban poverty. Review of Income and Wealth, 67(1), 248-284.

Bourguignon, F. (2003). The growth elasticity of poverty reduction: explaining heterogeneity across countries and time periods. Inequality and growth: Theory and policy implications, 1(1), 1-26.

Christiaensen, L. J., & Kaminski, J. (2015). Structural change, economic growth and poverty reduction: micro-evidence from Uganda. African Development Bank.

Christiaensen, L., & Martin, W. (2018). Agriculture, structural transformation and poverty reduction: Eight new insights. World Development, 109, 413-416.

Christiaensen, L., Demery, L., & Kuhl, J. (2011). The (evolving) role of agriculture in poverty reduction—An empirical perspective. Journal of development economics, 96(2), 239-254.

Chukwu, A. B. (2025). Does the Composition of Growth Matter for Poverty Reduction in Sub-Saharan Africa?. Fudan Journal of the Humanities and Social Sciences, 18(2), 347-380.

Datt, G. (1998). Computational tools for poverty measurement and analysis (FCND Discussion Paper No. 50). International Food Policy Research Institute.

Deininger, K., & Okidi, J. (2003). Growth and poverty reduction in Uganda, 1999–2000: Panel data evidence. Development policy review, 21(4), 481-509.

Dercon, S. (2009). Rural poverty: Old challenges in new contexts. The World Bank Research Observer, 24(1), 1–28. https://doi.org/10.1093/wbro/lkp002

Elbadawi, I., & Suliman, K. M. (2018). The macroeconomics of the gold economy in Sudan. In The Economic Research Forum (ERF) (Vol. 21).

Enongene, B. E. (2024). Structural transformation and poverty alleviation in Sub-Saharan Africa countries: sectoral value-added analysis. Journal of Business and Socio-economic Development, 4(4), 326-339.

Erumban, A. A., & de Vries, G. J. (2024). Structural change and poverty reduction in developing economies. World Development, 181, 106674.

Ferreira, F. H., Leite, P. G., & Ravallion, M. (2010). Poverty reduction without economic growth?: Explaining Brazil's poverty dynamics, 1985–2004. Journal of development economics, 93(1), 20-36.

Food and Agriculture Organization. (2019). Sudan: Agricultural livelihoods and food security in the context of conflict. https://www.fao.org/emergencies/countries/sudan/en/

Fosu, A. K. (2009). Inequality and the impact of growth on poverty: comparative evidence for sub-Saharan Africa. The Journal of Development Studies, 45(5), 726-745.

Gutierrez, C., Paci, P., Orecchia, C., & Serneels, P. (2009). Does employment generation really matter for poverty reduction?. In Labor markets and economic development (pp. 15-39). Routledge.

Hasan, R. (2013). Growth, structural change, and poverty reduction: Evidence from India. Himanshu, Lanjouw, P., Murgai, R., & Stern, N. (2013). Non-farm diversification, poverty, economic growth and inequality: The case of India.

International Labour Organization. (2018). Informal economy in Sudan. ILO. https://www.ilo.org Ivanic, M., & Martin, W. (2018). Sectoral productivity growth and poverty reduction: National and global impacts. World Development, 109, 429-439.

Khan, A. U., Saboor, A., Ali, I., Malik, W. S., & Mahmood, K. (2016). Urbanization of multidimensional poverty: empirical evidences from Pakistan. Quality & quantity, 50(1), 439-469.

Lewis, W. A. (1954). Economic development with unlimited supplies of labor. The Manchester School, 22(2), 139–191. https://doi.org/10.1111/j.1467-9957.1954.tb00021.x

Ligon, E., & Sadoulet, E. (2018). Estimating the relative benefits of agricultural growth on the distribution of expenditures. World Development, 109, 417-428.

Loayza, N. V., & Raddatz, C. (2010). The composition of growth matters for poverty alleviation. Journal of Development Economics, 93(1), 137–151. https://doi.org/10.1016/j.jdeveco.2009.03.008

Loayza, N., & Raddatz, C. E. (2006). The Composition of Growth Matters for Poverty Alleviation (Vol. 4077). World Bank Publications.

Maswana, J. C. (2021). The Role of the Secondary Sector in Poverty Alleviation in Indonesia. The Journal of Indonesia Sustainable Development Planning, 2(2), 111-128.

McMillan, M. S., & Rodrik, D. (2011). Globalization, structural change and productivity growth (Working Paper No. 17143). National Bureau of Economic Research. https://doi.org/10.3386/w17143

Megbowon, E., & Mulatu, Z. (2025). Disaggregated Sectoral Economic Performance and Poverty Reduction in Lesotho. The Journal of Developing Areas, 59(1), 43-60.

Montalvo, J. G., & Ravallion, M. (2010). The pattern of growth and poverty reduction in China. Journal of Comparative Economics, 38(1), 2-16.

Mustafa, M. E., Elshakh, M. M., & Ebaidalla, E. M. (2019). Does Foreign Aid Promote Economic Growth in Sudan? Evidence from ARDL Bounds Testing Analysis. Journal of Economic Cooperation & Development, 40(3).

Pavcnik, N. (2017). The impact of trade on inequality in developing countries (Working Paper No. 23878). National Bureau of Economic Research. https://doi.org/10.3386/w23878

Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289–326. https://doi.org/10.1002/jae.616

Ravallion, M., & Chen, S. (2007). China’s (uneven) progress against poverty. Journal of Development Economics, 82(1), 1–42.

Ravallion, M., & Datt, G. (1996). How important to India’s poor is the sectoral composition of economic growth? The World Bank Economic Review, 10(1), 1–25.

Rostow, W. W. (1960). The stages of economic growth: A non-communist manifesto. Cambridge University Press.

Sharaf, M. F., & Shahen, A. (2023). Economic instability and poverty dynamics in Sudan: Post-secession challenges. African Development Review, 35(3), 245-257. https://doi.org/10.1111/1467-8268.12689

Sharaf, M. F., & Shahen, A. M. (2023). Does external debt drive inflation in Sudan: Evidence from symmetric and asymmetric ARDL approaches. Journal of Business and Socio-economic Development, 3(2), 123–138. https://doi.org/10.1108/JBSED-07-2022-0076

Suliman, K. (2019). Resource curse or blessing? The case of oil and gold in Sudan. Resources Policy, 62, 189-199. https://doi.org/10.1016/j.resourpol.2019.03.008

Suliman, K. M. (2019). Gold mining and economic development in Sudan: Opportunities and challenges. Journal of African Economies, 28(3), 245–267. https://doi.org/10.1093/jae/ejy015

Suryahadi, A., Suryadarma, D., & Sumarto, S. (2009). The effects of location and sectoral components of economic growth on poverty: Evidence from Indonesia. Journal of development economics, 89(1), 109-117.

Thorbecke, E., & Jung, H. S. (1996). A multiplier decomposition method to analyze poverty alleviation. Journal of Development Economics, 48(2), 279-300.

United Nations Economic and Social Commission for Asia and the Pacific. (2018). Economic and social survey of Asia and the Pacific 2018: Mobilizing finance for sustained, inclusive and sustainable economic growth. United Nations. https://doi.org/10.18356/b27e34c2-en

United Nations High Commissioner for Refugees. (2025). Sudan emergency update: Impact of the 2023 conflict. https://www.unhcr.org/sudan-emergency.html

United Nations. (2020). Darfur: Humanitarian overview. UN Office for the Coordination of Humanitarian Affairs. https://www.unocha.org

Warr, P. (2000). Poverty reduction and economic growth: The Asian experience. Asian Development Review, 18(02), 131-147.

World Bank. (2020). Sudan economic update: Navigating the transition. World Bank Group. https://www.worldbank.org/en/country/sudan/publication/economic-update

World Bank. (2020). Sudan: Country economic memorandum. World Bank Group. https://www.worldbank.org

World Bank. (2025). World development indicators. World Bank Group. https://data.worldbank.org/country/sudan