Transcript Smart Industrial Policy for Africa in the 21 st century

Smart Industrial Policy for Africa in
the 21st century
10 December 2015, Addis Ababa, Ethiopia.
Jostein Løhr Hauge
4 big chapters in our report
1. “From ‘African growth tragedy’ to ‘Africa rising’ – Debunking the
myths”
2. “Theoretical perspectives on industrial policy”
3. “Experiences of industrial policy in the past and present”
4. “How the industrial policy environment has changed”
Why is manufacturing so important?
• The manufacturing sector has historically been the engine of economic
development.
• Why? Two important points:
1. Lends itself more easily to mechanisation and chemical processing.
2. Leads to productivity growth in other sectors.
• For African countries, additional advantages with manufacturing:
A. Avoid declining terms of trade.
B. Strongest driver for paid employment generation.
C. Diversification away from primary commodities means less
vulnerability to shocks.
How is Africa doing with respect to manufacturing?
• From 1980 to 2013, manufacturing value added (MVA) in Africa
declined from around 12 per cent to 11 per cent of GDP.
• Both shares of employment and value added in manufacturing in Africa
is low compared to ‘counterparts’ in Asia.
• How does performance vary between countries in Africa? North Africa is
on average doing slightly better. In SSA, performance is strikingly
homogenous, especially if we exclude South Africa. 95 per cent of
SSAXSA’s population – over 800 million people – reside in countries
that in 2010 registered MVA per capita that is lower than $100. To put
this in perspective, MVA per capita in 2010 was $622 in Brazil, $820 in
China, $3,162 in the UK and $5,222 in the United States.
World manufacturing exports in billion $
‘Old’ versus ‘new’ industrial policy
• Policies must obviously be context specific, but looking ‘sideways’ and
‘backwards’ can serve as inspiration! That’s why we provide a ‘treasure
box’ of case studies in our report, to free the policy imagination of policy
makers. There are many different ways of succeeding with industrial
policy.
• Has changes in the global economy – such as the expansion of global
value chains and the emergence of international trade agreements fundamentally altered the industrial policy environment? Yes and no,
but less than what most people think.