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Enhancing UNIDO s Industrial Capacity Building Tools Presentation of key findings from the final report Maria da Graa F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015 THE PROJECT Overview and


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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

Enhancing UNIDO’s Industrial Capacity Building Tools

Presentation of key findings from the final report

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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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THE PROJECT

Overview and objectives

London School of Economics and Political Science and UNIDO collaboration. The consultancy project is part of the LSE graduate programme MSc Development Management.

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Maria da Graça F. A. Prado Michael Mbate Anja Rangette Jonathan Rejaud Armin Scheffczyk

Deliverable

Project report (10,000 words) delivered 27 April 2015

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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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TABLE OF AGENDA

Conceptual framework Case study: Brazil Case study: Kenya Q&A Recommendations

2 3 4 1 5

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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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CONCEPTUAL FRAMEWORK

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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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RESEARCH QUESTIONS

Is evidence-based analysis already part of industrial policy strategies in developing countries and, where it is not, what can it contribute? Is EQuIP a relevant and effective tool capacity-building tool for country- specific industrial diagnosis?

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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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INDUSTRIAL POLICY IN DEVELOPING COUNTRIES

Challenges

  • 1. Competitive markets
  • number of competitors
  • accumulation of capital in industrialized

countries

  • 2. Demands on industrial policy
  • economic growth
  • inclusive growth
  • sustainable growth
  • 3. Challenges of evidence-based

diagnosis/monitoring

  • 4. Shortage of trained national analysts
  • spillover: impact of macro level

policies

  • discrepancy: design vs

implementation stage

  • multiple rationales: trade-offs

and conflicting priorities

  • dependency on international

consultants

  • uniformed decision-making
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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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CRITERIA FOR ANALYSIS

Relevance Effectiveness

  • Alignment with key themes of policy

plans / political discussion

  • Reflect move towards inclusiveness and

sustainability

  • Provide an overview over relevant key

themes

  • Enable users to conduct independent

analysis:

  • impact assessment of policy aims
  • identification of bottlenecks and trade-offs
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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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METHODOLOGY

  • 1. Selection of case

studies: Brazil, Kenya

  • 2. Application of

EQuIP to cases + five benchmarking countries

DATA COLLECTION

Overarching themes of the case study analysis for the application of EQuIP

DISCUSSION AND SUGGESTIONS

Assessing EQuIP’s relevance and effectiveness for industrial policy

CONCEPTUAL FRAMEWORK

Analysis of EQuIP application results in the context of country industrial policy plans

CASE STUDY ANALYSIS

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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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BRAZIL

Case study

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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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INDUSTRIAL POLICY HISTORY

Industrial, Technology and Foreign Trade Policy (PITCE): emphasis on technology, innovation and exports. Human capital and infrastructure for doing business. Productive Development Policy (PDP): renewed importance on sustainable industrial production, addressing export diversification, SMEs, employment, and promotion regional trade. Greater Brazil Plan (PBM): innovation, technological upgrade, export diversification, human qualification, sustainable production, regional and non-regional focus

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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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POLICY GOALS AND EQUIP

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EQuIP PITCE PDP PBM

Tool 1: Industrial growth and capacity - domestic and export dimensions

✔ ✔ ✔

Tool 2: Sub-sector competitive performance

✔ ✔

Tool 3: Industrial and export upgrading

✔ ✔ ✔

Tool 4: Diversification - domestic and export dimensions

✔ ✔

Tool 5: Inclusive industrial development

✔ ✔

Tool 6: Greening industry - energy efficiency and vulnerability

✔ ✔

Tool 7: Global Value Chains (GVCs)

Tool 8: Industrial organization and firm profiling at sub-sector level Tool 9: Industrial capabilities

✔ ✔ ✔

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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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TECHNOLOGICAL UPGRADE

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The application of EQuIP shows interlinkages and conflicting objectives that helps in the process of capacity- and skill-building

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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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CONCLUSION

Other themes of analysis underscore similar conflicts, trade-offs and also synergies in the process of industrial policy implementation. Brazilian case reflects how capabilities are built in this process. In countries with multiple institutional instances involved in industrial policy EQuIP can enhance the communication link between the agencies and ministries.

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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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KENYA

Case study

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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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INDUSTRIAL POLICY HISTORY

Objective of Kenya’s industrial policy: To promote labor intensive, commodity based, technology-intensive and value added upgrading underpinned by strong infrastructural capabilities. Approach undertaken in the report: Conduct an industrial policy diagnosis to assess how Kenya’s performance is aligned or deviates from the set national objectives

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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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POLICY GOALS AND EQUIP

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EQuIP tool is not only aligned with the objectives of the KNIPF but also introduces new aspects which Kenyan policymakers should be wary of.

EQuIP KNIPF

Tool 1: Industrial growth and capacity - domestic and export dimensions Tool 2: Sub-sector competitive performance Tool 3: Industrial and export upgrading Tool 4: Diversification - domestic and export dimensions Tool 5: Inclusive industrial development Tool 6: Greening industry - energy efficiency and vulnerability Tool 7: Global Value Chains (GVCs) Tool 8: Industrial organization and firm profiling at sub-sector level Tool 9: Industrial capabilities

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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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Industrial performance snapshot

EQuIP framework provides policymakers with a comprehensive view of industrial policy at both the macro and sub-sector level:, EQuIP shows that Kenya performed well in both absolute and relative terms,

SCORECARD: Kenya's Manufacturing Sector Dimensions Industry indicators (MVA) Trade indicators (Exports) 1995 2005 2013* 1995-2013 1995 2005 2013 1995-2013 Structure (%) 9.9% 11.8% 11.7% 1.8 28.1% 32.4% 36.0% 8.0 Capacity (Current USD) 27.6 55.2 129.9 3.7 37.4 61.9 89.9 1.4 Impact (%) 0.01% 0.03% 0.04% 3.08% 0.03% 0.03% 0.03% 0.59% Food, Beverages & Tobacco Dimensions Industry indicators (MVA) Trade indicators (Exports) 1990 2000 2010 1990-2010 1990 2000 2010 1990-2010 Structure (%) 38.5% 33.0% 37.2%

  • 1.3

14.9% 22.7% 22.3% 7.4 Capacity (Current USD) 15.1 11.8 23.8 57% 3.4 4.3 13.7 309.5% Impact (%) 0.1% 0.0% 0.1% 0.0 0.1% 0.1% 0.0% 0.0

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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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Misaligned Performance

EQuIP highlights that policy makers should be cautious of the static nature of ‘growth enhancing sectors’. Labor intensive sectors are shrinking and capital intensive sectors emerging. Other (most) sectors are stagnant.

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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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Adjusting Priorities

Contrary to the objective KNIPF, EQuIP shows that MHT exports stagnated around 10% between 2000-2010. In other countries such as Tanzania and Ethiopia, this performance has regressed overtime.

  • The KNIPF stresses the need for technological upgrade in order to improve export

competitiveness

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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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Assessing infrastructural capacities

EQuIP highlights constraints on infrastructural capacities in Kenya, especially the energy sector.

KNIPF underscores the importance of industrial ‘enablers’, such as infrastructure, finance, energy and innovation..

GERD funding (2010, in %)

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Conclusions

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RECOMMENDATIONS

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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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OVERARCHING FINDINGS

Effectiveness Provides an overview over trends in key policy areas

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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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OVERARCHING FINDINGS

Effectiveness Highlights trade-offs and conflicting policies

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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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RECOMMENDATIONS

Regional trade

‘Kenya aims to become the provider of choice for basic manufactured goods in Eastern and Central Africa’ (Vision 2030)

  • COMESA
  • MERCOSUR

Visualization of trade streams

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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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RECOMMENDATIONS

External factors

Currency exchange rates, commodity prices, ..., inform industrial strategy-making

  • diversification of product groups
  • trade partners
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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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RECOMMENDATIONS

Triangulation

Streamline tools to build capacities and emphasize ‘starting point’

  • bjective

Tool 4: Diversification Tool 9: Industrial capabilities

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RECOMMENDATIONS

Disaggregation

Highlight important structural characteristics of certain indicators

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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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RECOMMENDATIONS

Training

  • 1. Complementary training is required to use EQuIP

to its full potential

  • 2. Online/print versions of EQuIP should include
  • streamlined labelling of graphs and units
  • information on databases and their sources
  • an extended section on further analysis/indicators to

emphasize the ‘starting point’ objective

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Q&A

Thank you!

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Maria da Graça F. A. Prado, Michael Mbate, Anja Rangette, Jonathan Rejaud, Armin Scheffczyk | 29 April 2015

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CONTACT DETAILS

Postal address

London School of Economics and Political Science Houghton Street, London WC2A 2AE UK

Email

Maria: M.D.Ferraz-De-Almeida- Prado@lse.ac.uk Michael: M.Mbate@lse.ac.uk Anja: A.A.Rangette@lse.ac.uk Jonathan: J.P.Rejaud@lse.ac.uk Armin: A.Scheffczyk@lse.ac.uk