Transcript Presentation - Economic Commission for Africa

Resilient Human Capital: A
Precondition for Structural
Transformation
Adrian Gauci and Chrystelle Tsafack Temah
EDND, UNECA
African Economic Conference, 28 October 2011
Outline of the presentation
 Research Statement
 Why do LDCs need a structural transformation
 Methodology
 Implications for African LDCs
 Areas for future Research
Research statement
 African
LDCs
structural
transformation is dependent also on
an
adequate
education
supply.
Structural transformation requires
cognitive supply of skills not currently
produced in African LDCs with the
survivalist employment outcomes and
continued vulnerability.
Need for structural transformation I
Table 1: Growth rate in selected African LDCs during 1996-2008
Country
Benin
Burkina-Faso
Ethiopia
Lesotho
Liberia
Malawi
Mali
Mozambique
Rwanda
Sao Tomé and Principe
Senegal
Sierra Leone
Tanzania
Uganda
Zambia
Source: Radelet, 2010.
Annual Income growth
per capita, 1996-2008
1.3
2.8
4.1
2.3
3.1
1.2
2.5
5.3
3.7
5.0
1.4
3.7
3.0
3.8
1.8
Cumulative Increase in
Average Real Income,
1996-2008
18
43
65
33
13
15
37
96
60
40
20
24
46
61
25
Need for structural transformation II
•
Table 2: Contribution of the primary and manufacturing sectors to GDP in selected
African LDCs, 2009-2010.
Country
Share of primary
sector in the GDP
Angola
Benin
Burkina Faso
Burundi
Central African Republic
Chad
Comoros
Democratic Republic of
Congo
Djibouti
Ethiopia
Niger
Rwanda
Sao Tome and Principe
Senegal
Sierra Leone
Sudan
Tanzania
Togo
Uganda
Zambia
55.1
36.2
40.5
44.6
56.6
58.1
44.7
54.5
the
4.1
43.6
49.8
36.5
17.7
18.5
53.6
51.3
32.5
45.9
25.1
22.2
Share of the
manufacturing
sector in the GDP
6.5
8
9.9
7.1
6.8
5.8
3.9
5
2.4
4.9
5.5
6.7
6.7
13.8
2.5
9.5
7.9
8.2
9.3
Source: African Economic Outlook 2011, country notes (OECD, AfDB, ECA and UNDP)
Need for structural transformation III
6
• Moderate to good economic growth
primarily driven by primary commodities
• Type and character of growth did not lead
to commensurate employment creation
• Informal sector absorbs the vast majority of
employment
• Vulnerability to exogenous shocks persists
Need for structural transformation IV
7
• Capital intensive primary sector that
creates little employment opportunities
• Supply side provision of educational skills
is a precursor of industrial policy to exit
commodity dependence
• Numeracy and literacy skills are
insufficient to an industrialization process
Methodology: the Human asset index
 HAI: information regarding the level of development of
human capital of a country, criterion for identification
of LDCs.
 Combination of four indicators;


two for health and nutrition
two for education : the gross secondary school enrolment ratio
and the adult literacy rate.
 Secondary education is African LDCs is inadequate
 Quantity: focus on primary, in 2005-2009, enrolment rate was
33% for males and 25% for females in African LDCs (UNESCO)
 Quality: mismatch with labor market, lack of specific skills
The Ethiopian case study I
 Ethiopia: biggest LDC in Africa, successful design
and implementation of the Plan for Accelerated
and Sustained Development to End Poverty (20052009)
 Tremendous progress in economic , human and
social development



Sustained GDP growth: over 10% since 2004
Commendable progress on MDG 4: reduce child mortality
Primary enrolment increased from 68.5 to 87.9%
The Ethiopian case study II
 However constrained transition towards post-primary education




enrolment
Gross secondary enrolment ratio: 39 for male and 28 for female
Lack of skills: those who did not enrol in secondary education
are not readily “employable”.
They finally end up in the informal sector, which does not
constitute decent employment, hence no reduction in poverty.
Survey undertaken on women in the entrepreneurial informal
sector:


33 percent of respondents had primary education and 25 percent had no
education.
63 percent of respondents dropped out of school primarily to look for a
job and/or to support the family.
The East Asian Example I
 The NICs have had spectacular annual growth rate of
outputs well in excess of 6 percent.
 This has been sustained over a 30 year period;
 Leading to the transformation of these economies
since 1960 from agriculturally based to industrial
and post-industrial economies: successful
example of structural transformation
 Thus increasing their resilience to exogenous shocks.
The East Asian Example II
 Three sets of factors were critical
 Policy incentives;
 Capabilities;
 Institutions
 In fact, the value of education in dealing with
disequilibria or changes in economic conditions is clear
in agricultural contexts.
 Quick gains in competitiveness, transfer of technology
and manufacturing employment opportunities were
the criteria for industrial selectivity by the State
What African LDCs can & cannot infer from East
Asian experience I
 Education in East Asian countries drove not only
economic growth but successful structural
transformation
 Quality of education allowed these countries to move
from a stage of economic development to anotherfrom primary to secondary and beyond
 Primacy of education was contextualized within
policy incentives and institutions that reinforced
economic and development gains.
What African LDCs can & cannot infer from East
Asian experience II
 Investment in education was linked to a demographic
dividend of increasing resources per unit produced.
 Export-led regimes in East Asian countries led to
education being geared to enhance
firms’competitiveness and transfer of technology.
 The role of the State that ensured educational
investment was linked to the overall vision of structural
transformation.
What African LDCs can & cannot infer from East
Asian experience III
 Institutions that linked labour markets and
educational policies were crucial in addressing
mismatch:
 Workforce development agency in Singapore
 Productivity councils in Taiwan and South Korea
 Science and technology were a critical part of
educational systems to allow technical catch-up
What we can & cannot infer from East Asian
experience IV
 Development of technical and vocational
education and training (TVET) outside formal
educational system, also financed by the
private sector and linked to on-the-job
training ;
 Research and Development institutions were
steered by public and private organizations
towards product and technology development
Areas for Future Research
 Recent African country studies have shown that secondary
education have higher rates of return. A more systemic
study needs to be tackled of the quality of education and
structural transformation
 Incremental versus instrumental education needs to be
investigated in the African LDCs context
 Quality of education forms part of the post-2015 MDG
agenda- analysis of resource needs and relationship to
development requires more investigation.
 Appropriate African institutions that link educational
output to labour markets demands more research.
Thank You