Made in Africa Learning to Compete In Industry Comments and - - PowerPoint PPT Presentation

Made in Africa

Learning to Compete In Industry

Comments and Responses Haroon Bhorat UNU-WIDER Annual Development Conference Helsinki, Finland 13-15 September, 2018

Five Key Observations

• 1. The Nuances in Africa’s Manufacturing Malaise
• 2. What about the Natural Resource Sector?
• 3. Another Lens: Building Economic Complexity Through Capabilities
• 4. Are we Over-Stating (Under-Stating) the Opportunity in Services

(Manufacturing)?

• 5. The Future African Workforce: The Challenge to Industrialisation

• I. Africa’s Manufacturing (& Services) Malaise?

AGR MIN MAN UTI CONT WRT TRS BUS GOS PES

=15.91; t-stat=1.34

• 1

1 2 3

• .1
• .05

.05 Change in Employment Share (%)

*Note: Size of circle represents employment share in 2010

• There has been a structural

transformation from Agriculture into low productivity (but relatively higher than Agric.) jobs in the urban informal sector

• High productivity-low

employment Natural Resource Sector

• No Manufacturing Growth

Dynamic

• No spillover effects from

Manufacturing

Sectoral Productivity and Employment Changes in Africa, 1975 - 2010

Ethiopia Ghana Rwanda Sierra Leone Mozambique Nigeria Zambia United Republic of Tanzania Uganda Central African Republic Burkina Faso Angola Niger

• Dem. Rep. of the Congo

Chad Congo Sao Tome and Principe

5 6 7 8 9 .2 .4 .6 .8 1 Resource Dependence

• In period 2008-2013:

Seventeen African Economies have grown at

• ver 5%.
• 14 of these 17 ‘African

Lions’ classified as resource-dependent*.

• Any industrialisation

strategy must think about the natural resource sector (governance, management of super- cycles, Dutch Disease)

• To what extent is

manufacturing output, really downstream mining?

• Use of natural resource

boom revenues? Evidence?

Source: WDI, 2014, UNCTAD (2014), Own Calculations.

*: The 17 countries are: Ethiopia, Uganda, São T

• mé and Príncipe, Ghana, Rwanda, Burkina Faso, Tanzania,

CAR, Niger, Sierra Leone, Mozambique, Zambia, DRC, Congo, Chad, Angola, and Nigeria.

• 2. What about the Natural Resource Sector?

• 3. Building Economic Complexity Through

Capabilities

• ‘Substantial African Manufacturing Exporters’

(blue markers) are:

• Mauritius, South Africa, Tunisia, Morocco and Egypt -

have higher levels of economic complexity.

• Group of African countries ‘substantial

exporters’ of manufactures, but lower levels

• f econ. Dev. (blue markers):
• Cote d’Ivoire, Kenya, Uganda, T
• go, Malawi and

Madagascar.

• Relative to top-performing emerging market

countries, Africa’s top manufacturing exporters have lower levels of economic complexity and hence lower levels of productive knowledge.

Source: Own calculation using data from The Economic Complexity Observatory (Simoes & Hidalgo, 2011) Notes: 1. The middle income country groups, depicted by the green markers refers to a sample of non-African middle income countries. 2. The blue markers refer to African countries whose pure manufacturing exports as a share of total exports exceeds 20 percent. 3. The red markers refer to African countries whose pure manufacturing exports as a share of total exports is less than 20 percent.

BGD BRA CHN CUB IDN IND LKA MEX MYS PAK PHL SLV THA TUR UKR VNM CIV CPV EGY GMB KEN LBR MAR MDG MLI MUS NER STP TGO TUN UGA ZAF AGO BDI BEN BFA BWA CAF CMR COG COM DZA ERI ETH GAB GHA GIN GNB GNQ LBY LSO MOZ MRT MWI NAM NGA RWA SEN SLE SWZ SYC TCD TZA ZAR ZMB ZWE

5 6 7 8 9 10

• 3
• 2
• 1

1 Economic complexity index Middle income countries Africa - PM/X > 0.2 Africa - PM/C < 0.2

Pure Manufacturing ECI & GDP p.c. MIC Sample only ,2013

Chemicals and plastics Machinery and transport Horticulture Platinum Iron ores and concentrates Coal Gold Agro-processing

• 3. Building Economic Complexity Through Capabilities

Source: CID (2018) Notes: Product groupings or clusters are represented by the following colours: Textiles & Furniture (light green); Vegetables, Foodstuffs & Wood (yellow); Stone & Glass (light brown); Minerals (dark brown); Metals (red); Chemicals & Plastics (light purple); Transport Vehicles (dark purple); Machinery (blue); Electronics (turquoise); Other (dark blue).

• South Africa’s

Product Space, 2015

• Still peripheral,

and thus no evidence of manufacturing- led structural transformation

• 4. Are we Over-Stating (Under-Stating) the

Opportunity in Services (Manufacturing)?

• View that convergence through manufacturing exports (the East Asian

miracle route) is no longer possible in today’s world economy.

• Hence, its more about services and less about manufacturing.
• Technical (non-economist) question: Can you build a high-tech services

economy without manufacturing capabilities?

• Manufacturing output requires the building of transport infrastructure,

provision of energy, logistics – a necessary phase of economic development

• e.g. Rwanda: Drone production versus delivery of cold stored pasturised

milk

• On average Services economy is much more skills-intensive than

manufacturing:

• “With few exceptions, services traditionally have not acted as an escalator sector like

manufacturing “ (Rodrik,2014)

• 5. The Future African Workforce: The

Challenge to Industrialisation

Population Projections, World and Sub-Saharan Africa: 2015 - 2100

Source: Authors’ calculations using the UN World Population Database.

Total Population (Billion) Working Age Population (Billion) 2015 2100 % Change 2015 2100 % Change SSA 1.0 3.9 291.62 0.5 2.5 400.00 World 7.3 11.2 53.42 4.8 6.7 39.58 SSA Proportion (%) 13.7% 34.8%

• 10.4%

37.3%