Transcript Presentation by Dr Chris Mlosy

GROWTH FACTORS IN AFRICA
PRODUCTIVITY IN SUB-SAHARA AFRICA:
FRIEND OR FIEND GROWTH FACTOR
Dr Christopher D. Mlosy
Development Economist
[email protected]
Dr David EC Rogers
Principal Scientist
[email protected]
SOUTH AFRICA
24-26 November 2011
Abidjan (Côte d’Ivoire)
TABLE OF CONTENTS OF THE MAIN PAPER
Executive Summary
iv
1. Introduction
1
2. Productivity, Economic Growth and Employment
2.1 The Macro-economic Relationship - Productivity and the Quantity of Employment
2.2 Productivity Measurement in Sub-Saharan Africa
2.3 The Importance of Productivity in the Economic Growth in Sub-Saharan Africa
2.4 Strong and Sustainable Economic Growth in Sub-Saharan Africa
2.5 Lesson on Republic of South Africa
4
10
11
13
15
16
3. Productivity: Friend or Fiend in Sub-Saharan Africa?
3.1 A Fiendish Relationship
3.2 A Friendly Relationship
21
24
25
4. Conclusion
5. Acknowledgement
Appendices
References
26
28
28
29
HOW AFRICA IS GROWING
BURNING ISSUES IN AFRICA
•
Africa is deeply concerned about the high incidence of poverty,
unemployment and underemployment due to low productivity, especially in
the urban informal economy and in rural areas where more than 60% of the
poverty occurs. Corruption is a Disease.
•
A common fear of workers in many countries with industrialized economies
is that the industrialization of the poor nations and in particular Africa will
lead to massive unemployment in their countries. They believe that the
African countries, with their immense labour pools and lower pay scales, will
produce goods so cheaply that competition becomes difficult.
•
Weak economic growth, poor economic management, corruption, social
inequality and discrimination together with the quality of governance are,
among others, the major factors that cause and /or exacerbate
unemployment and poverty in Africa.
•
High and sustainable growth is a necessary in Africa, but not sufficient
condition to reduce unemployment, sustainable development and poverty
reduction also requires the development of cooperatives and adequate
investment in productive sectors that enhance employment opportunities.
PRODUCTIVITY, ECONOMIC GROWTH AND EMPLOYMENT
1. The fundamental reason for addressing the three issues together is
based on the simple observation that a substantial share of poor people in
the world is already at WORK: It is not the absence of economic activity that
is the source of their poverty, BUT the less productivity nature of that
activity.
2. It is not just work that can raise people out of poverty. What is needed is
PRODUCTIVE WORK. The ILO Employment Policy Convention, 1964
(No.122), promotes freely chosen, PRODUCTIVE employment. The UN
Millennium Development Goals articulate the objective of decent
“Productive” employment for young people.
3. Sub-Saharan Africa is the only region where labour productivity
decreased over the past decade. Between 1993 and 2003 productivity
declined 0.2% a year. Nowhere has this decline been more severe than in
agriculture, the mainstay of most. Economic growth, employment growth
and competitiveness require an increase in labour productivity in Africa.
4. Therefore there is a need to more aggressive in using the skill
development mechanism, which focuses in use of the technology
demanded by new growth industries with productivity incentives.
Continues
5.
The prime source of productivity growth is technological change.
Technological changes, in turn relies on innovation, which itself is
influenced by an array of institutions, the quality of the supply of human
capital, competitive market dynamics, spending on research and
development (R&D),and investment in general.
6.
Productivity contributes to a country’s standard of living, as the most
fundamental barometer of living standards is the earning that people
make, and the determinant of those earnings is the productivity with
which people work. Source of productivity growth also depend on macroeconomic institutions and regulatory factors.
7.
75% of the world’s poor live in rural areas where agriculture is the
mainstay of the economy. Agriculture sector employs 40% of developing
countries' workforces and contributes over 20% the GDP. Therefore,
what Africa need is to build a continent in which all states have equal
RIGHTS and EQUAL OPPORTUNITIES in which all can live in peace
with neighbours without suffering or imposing injustice, being exploited or
exploiting and in which all have a gradually increasing basic level of
material welfare before any individual lives in LUXURY.
.
8.
ECONOMIC GROWTH PROCESS
LESSON ON REPUBLIC OF SOUTH AFRICA
•
South Africa’s economy displays many world-class features. These include
a financial and physical infrastructure and telecommunications and energy
supply networks that are a highly developed compared to most other
developing countries.
•
South Africa has a sophisticated financial structure with the JSE Securities
Exchange, a large and active stock exchange that ranks 18th in the world in
terms of total market capitalization.
•
The single most significant factor distinguishing South Africa from other
African countries is its experience of APARTHEID. Africans make up 76%
of the population, their share of income amounts to only 29% of the total.
Whites, who make up less than 12% of the population, take away 58.5% of
total income.
•
QUESTION: What about other sub-Saharan African countries?
UNEMPLOYMENT
80
70
60
50
Par t icipat ion
40
Employment
Unemployment
30
20
10
0
16- 19
20- 24
25- 29
30- 34
35- 39
40- 49
50- 64
PRODUCTIVITY: A FIENDISH RELATIONSHIP
1. Economic growth continue to go hand with hand with structural change,
which often entails a fair amount of creative destruction as old jobs are lost
in declining industries an new jobs are created in expanding sectors of the
economy.
2. For a variety of reasons both internal and external to sub-Saharan Africa, a
skilled labour force is increasingly important to its economy. As we have
seen, most countries in the sub-continent is not alone in facing this
challenge.
3. The complex relationship between productivity, economic growth and
employment create conditions where policy initiatives can easily become
misdirected and generate results that run counter to what was intended.
Currently, employers are demanding workers with certain types of high-level
skills that the unemployed and the working labour force do not posses.
2. There is a need to reform training and education systems as to improve
both the quality and quantity of the skilled workforce.
PRODUCTIVITY: A FRIENDLY RELATIONSHIP
1.
Productivity improvements allow companies to pay higher real wages to
their employees and greater returns to their shareholders without
jeopardising their competitive position.
2.
Similarly, at the national level, productivity is the single most important
determinant of sustained improvements in the standard of living.
3.
Productivity in the employment strategies underpins a nation’s quality of
life. Productivity improvement and wealth creation would facilitate
increased spending on social programmes, health care, education, etc.
4.
Economic growth, employment growth and competitiveness require a
central focus on increasing labour productivity. This requires effective
workers involvement to share the gains of productivity because without
labour support the conditions of increased productivity cannot be met.
CONCLUSION
1. This analysis has shown that innovation is increasingly crucial to
competitiveness, be it at the level of a firm, industry, sector, nation, or
region. Improved productivity is critical to boost the growth and long-term
labour absorptive capacity of the economy.
2. Knowledge has an increasing role in African and global economy that is not
limited to just high-technology sectors. Increased globalisation was also
shown to be reinforcing and perpetuating this accelerating importance of
innovation, knowledge, and learning.
3. In terms of the quality of employment, productivity was seen to be primarily
skills biased for several decades now. The causes of this skills bias were
discussed with the increasing importance of knowledge being seen to be a
significant demand-side force as was the strategic potential of an
increasingly skilled labour force to reduce competitive threats because of
further innovation.
Successful Nations
Successful nations in the twenty-first century will
be those who are willing to take informed
decisions concerning their affairs in the light of
their own specific realities and goals on
Sustainable Economic Growth in order to Curb
Unemployment, and Sustain Regional and
Continental Integration Dynamics
THANK YOU