Transcript Slide 1

Fostering Structural
Change and Enhancing
Competitiveness in Small
Countries
Ludovico ALCORTA
Director
Research, Statistics and Industrial Policy Branch
UNIDO
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Structural Change and
Industrialization
• The structural transformation of economies is
profoundly interconnected with their growth and to
social development
– Static effect of shifting labour/capital from lower to higher
value added sectors
– Dynamic effects as an outcome of capital accumulation,
division of labour, economies of scale and technological
progress
– Spillover effects through backward and forward linkages
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Economic diversification pays
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Industry as engine of growth
8.0%
China
Annual Growth Rate of GDP per capita
7.0%
6.0%
First-tier newly industrialized
economies
5.0%
CIS (1995-2007)
Eastern Europe (1995-2007)
4.0%
Southeast Asia
3.0%
South Asia
2.0%
Central America and the Caribbean
Semi-industrialized countries
1.0%
Sub-saharan Africa
Low- to middle-income Latin America
0.0%
-1.0%
-0.5%
0.0%
Middle East and Northern Africa
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
Annual change in the share of Manufacturing VA in GDP
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Pattern of Structural Transformation …
100
90
.. over the last 50 years the economic
structure in countries changed …
80
70
%
60
50
40
30
20
10
0
1960
1965
1970
Manufacturing
1975
1980
1985
Non-manuf industries
1990
1995
Agriculture
2000
2005
Services
.. but since some grew faster than other
the change is more visible with GDP per
capita on the horizontal axis…
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… inside manufacturing …
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But size matters!
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Structural transformation and development
strategies in Small Countries
• Identification of sunrise (and sunset
manufacturing sectors …
• … based on patterns specific to small
countries …
• … based on analysis of economic growth,
employment and exports …
• … at different income levels.
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Where are (selected) SIDS?
Jamaica
Dominican
Republic
Suriname
Samoa
Fiji
Papua New
Guinea
Tonga
Timor-Leste
Cabo Verde
Mauritius
GDP per capita
(US$ 2005 PPP)
7,083
Population
8,651
7,378
3,952
4,201
9400000
567000
195000
858000
2,363
4,315
1,393
3,616
12,733
7000000
103000
1200000
512000
1260000
2900000
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Priorities for growth (1mn)
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A few points to reflect on
• Fish and vegetable oil processing will soon
exhaust their growth potential, while sugar holds
a better prospect
• Manufacturing of vehicles emerges as a solid bet
for small countries
• The transition to the machinery for metallurgy
sector is medium-term sunrise industry, whose
development ought to be nurtured
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Priorities for employment (1mn)
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A few points to reflect on:
• There is a lasting employment generating
potential of watches (at lower income levels) and
of steam generators (at higher one)
• Manufacturing of pasta maintains its (lower)
employment potential across the income range
• The employment dividends of man-made fibers
and motor vehicles (strong engines of growth
across the income spectrum) emerges at higher
income levels
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Priorities for export (1mn)
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A few points to reflect on
• Coke oven products (at lower income lelvels) and
veg. oils (at higher ones) hold good prospects for
export growth (despite their low employment and
growth potential)
• The export potential of sugar manufacturing is
kept across the income spectrum
• Motor vehicles combine growth and export
potential (although the latter fades at higher
income levels)
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Priorities for growth (5mn)
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A few points to reflect on
• Fish and vegetable oil processing gradually
exhaust their growth potential
• Manufacturing of machinery for metallurgy
emerges as a solid bet for small countries across
the income range
• The transition to tanks and containers sector is
medium-term sunrise industry, whose
development ought to be nurtured
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Priorities for employment (5mn)
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A few points to reflect on:
• There is a lasting employment generating
potential of ropes/nets and finishing of textiles
(not matched by equal growth potential)
• Machineries for metallurgy display their dividends
for employment at lower income levels than for
growth
• The employment dividends of primary plastic and
synthetic rubber are solid and increase as
countries grow richer
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Priorities for export (5mn)
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A few points to reflect on
• The potential for vegetable oils is stronger in
terms of exports that overall growth dynamics
• Furnaces and ceramic products appear to have
good export potential at lower income levels,
which however fades away as countries grow
• Limited overlap between the sectors with export
potential and the ones that can enhance
employment
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Thank You!
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