Transcript Dar Course on Industrial Development

Workshop on Industrial Development and
Globalisation
17 May 2011
Tanzania’s experience in industrial
development and comparative
analysis with other countries
Milasoa Chérel-Robson
Africa Section, Division for Africa, Least Developed
Countries and Special Programmes, UNCTAD
Structure of the session
Main objective: towards an industrial diagnosis of Tanzania
I. Brief History of industrial development in Tanzania
II. Data collection for comparative analysis
III. The possibility of structural change
3-4 minutes per slide including class discussion and questions
I. Brief history of industrial development in
Tanzania
• Perpectives from the literature
• Perspectives from policy makers
• Class discussion
I.
Brief history of industrial development in Tanzania
Key points: Identifying differing industrial performance
across Tanzania’s history.
Identifying the role of the commodity economy in
financing the industrial sector.
Brief history of industrial development in
Tanzania (1)
• Industrial strategy at independence focused on:
structural change and self reliance.
• Manufacturing to satisfy domestic needs before
targeting export markets. Selected sectors were:
food processing, textiles, clothing, footwear,
building materials and materials and facilities to
meet the requirements of education, health
services etc.
Brief history of industrial
development in Tanzania (2)
• Historical data available despite challenges in
computation of reliable data on MVA.
• Industrial censuses in 1961, 1978 and 1989. more
recently?
• Tanzania is a latecomer to the process of
industrialisation. The production of industrial
goods for the local market almost from scratch in
the 1950s.
Brief history of industrial development in
Tanzania (3)
• 1964 – 1966: MVA doubled. With an average
growth rate of more than 10 percent.
• 1966: growth rate of 17.7%. Establishment of
some factories: oil refinery, cement factory, sisal
bag factories, blanket factory.
• 1973: OIL CRISIS
Brief history of industrial development in
Tanzania (4)
• 1973: Industrial growth was lower than economic growth.
Deterioration of the balance of payments.
• 1976: Industrial growth improved.
• 1977: Coffee boom. Foreign exchange used to fund
industrial activities.
• 1977-1978: MVA increased by 24 percent
• 1978: MVA deteriorated
• 1979: balance of payments deteriorated and
• Negative industrial growth rate between 1979 – 1984
• After?
II. Data collection for comparative analysis
Key points: Identifying relevant data for an industrial
diagnosis of Tanzania.
Situating Tanzania’s industrial performance in the
regional context.
II. Data collection for comparative analysis (1)
Table 1: The regional situation: Contribution of Industry
to GDP 1970-2008: Africa and East Africa
performance % share of GDP 1970 1980 1990 2000 2005
African developing
economies
Industry
Mining &
utilities
Industry
4.81
3.12
35.6
2
11.9
2
19.2
8
7.80
Manufacturing
1.67
4.93
Mining &
utilities
0.83
1.48
Manufacturing
Eastern Africa
13.1
1
6.25
35.2
2
15.3
1
15.1
6
20.5
6
13.3
7
3.33
35.5
4
12.8
1
18.4
3
18.5
8
10.3
7
3.11
38.7
8
11.5
9
22.9
8
20.6
0
10.3
1
3.63
2008
40.6
8
10.4
9
25.7
5
20.2
8
9.68
3.65
Data collection for comparative analysis (2)
• Commenting on table 2 on Manufacturing
performance of African countries and
ranking of Tanzania (on separate excel
sheet)
Data collection for comparative analysis (3)
• Identifying Tanzania’s key selected sectors :
based on industries relative growth
potential (i.e. sectoral growth elasticity),
considering the country’s stage of
development and endowments (country
size, resource endowments and population
density).
This is the purpose of group exercise 1.
Data collection for comparative analysis (4):
making use of the UNCTAD/UNIDO
framework
Data collection for comparative
analysis (5)
• International benchmarking:
– Identifying Tanzania’s performance in the
identified most relevant industries (i.e. the level
of efficiency in each industry) in relation to the
identified comparators
Data collection for comparative analysis (5)
• Comparators should include dynamically growing
countries with similar endowment structures and a
per capita income that is about 100 per cent higher
than their own
Data collection for comparative analysis (6)
• among the selected industries, single out which
domestic private firms have already entered
spontaneously and try to identify:
(i) the obstacles that are preventing these firms from
upgrading the quality of their products; or
(ii) the barrier that limit entry to those industries by
other private firms
III. The possibility of structural change
Key points: Introducing the use of the framework for
industrial diagnosis and structural change analysis to
inform Tanzania’s industrial policy.
III. The possibility of structural change (1)
• In international benchmarking: Select benchmarks
that more closely resemble the country as well as
offers a vision for possibilities of structural
change:
Undertake structural change analysis based
on three exogenous variables (country size,
resource endowments, population density).
UNIDO is working on an extended version.
The possibility ofd structural change
(2)
• Use the framework and include information on:
– industries’ relative effect on a country’s
employment creation (i.e. sectoral employment
elasticity), environmental sustainability, gender
mainstreaming, and so forth.
The possibility of structural change (3)
• A comparative assessment of a country’s relative
performance in the identified most relevant
industries (i.e. the level of efficiency in each
industry) in relation to the identified comparators
The possibility of structural change (4)
• A comparative assessment of the structure
of a country’s manufacturing portfolio in
relation to its identified comparators
• Conduct a feasibility study to prioritize
actions based on current capabilities and
endowments.
The possibility of structural change (5)
• Beware of risk of fallacy of composition:
– Many countries with similar characteristics may
choose to focus on the same sectors
– Global demand structure may constantly
change and will necessitate capacity to adapt
Next step
• Use information from the industrial diagnostic to
inform strategic choices for National Industrial
Policy.
Note: this is the purpose of group exercise 2 for
group 1.
Thank you !
Source: recent joint research by UNCTAD and
UNIDO
Additional notes and references will be provided
in final CD of the course.