Rediscovering Structural Change: Africa has the largest differences - - PowerPoint PPT Presentation
A ID , S TRUCTURAL C HANGE , AND THE P RIVATE S ECTOR IN A FRICA John Page The Brookings Institution The Brookings Institution Aid Working for Development d o g o e e op e t DANIDA, Copenhagen, 17 June 2011 Rediscovering Structural
Differences in Labor Productivity Between Sectors
Source: McMillan and Rodrik (2011); author’s calculations
ARG VEN BOL
20
PHL IND TWN KOR TUR MEX COL PER ELS NGA SEN ZMB MUS MWI ZAF TZA MOZ
1
MYS IDN CHN TWN VNM BRA CHL MEX CRI GUA SEN KEN GHA ETH MOZ TUN
THA
2 Structural Change Component Rate of Change Poverty HC 1 25 Fitted values Rate of Change Poverty HC 1.25 Fitted values
PHC = -2.70 - 1.72 SCC d t= 3.12 r squared= 0.24
17.5
Manufacturing as Percentage of GDP Sub-Saharan Africa
11 5 13.5 15.5 P 7.5 9.5 11.5 % of GDP 3.5 5.5
– Seven of its nine indicators “presume that lessening regulation is always desirable” (World Bank 2008a; p xv) is always desirable (World Bank, 2008a; p. xv). – Causal relationships are asserted without persuasive evidence
– Doing Business cannot identify the binding constraints to industrialization – Doing Business has diverted attention from more serious g diagnosis and policy reform
Ease of Doing Business and Industrial Performance
Country Group Average “Ease of Doing Business” Mfg Exports PC 2005 Growth PC Exports 00- 05 % Mfg Exports in Total Share of Mfg in GDP 2005 Rate of growth
GDP 00-05 Score (range) South East Asian new industrializers 132 (78-171) 185.3 4.49 80.2 19.0 9.57 Central American new industrializers 103 (86-125) 209 1.73 69.4 19.0
Leading five African LIC exporters by 132 (67-170) 61 4.88 50.46 10.1 1.26 growth Leading five African LIC manufacturers 127 (76-169) 90 1.66 54.3 13.3
Africa Average 137 39 1.65 54.9 07.6
(20-183)
45 50
ents
ODA for Economic Infrastructure 1973-2009
30 35 40
A Committm
10 15 20 25
5 10
Percent o
– African firms learn by exporting – Beyond the border reforms are needed: Africa ranks 121 out of 155 y countries ranked by the World Bank on trade logistics – Aid and trade policy are not coordinated
– A generous definition: about 25 percent of total development assistance – Share in total development assistance has fallen steadily since 1996 Get real about “Aid for Trade” – Get real about Aid for Trade
– Reducing tariff escalation, especially in Asia g , p y – Harmonize and improve the EPAs and AGOA – A generalized system of preferences for the “least developed manufacturing countries
– Agglomerations confer significant productivity gains – Starting a new industrial agglomeration is a form of collective action problem Starting a new industrial agglomeration is a form of collective action problem – Africa has few dynamic, modern industrial clusters
– SEZs have not performed well in Africa – Traditional donors have lacked interest – China may be the answer y
– Link natural resources and infrastructure with domestic production – Can be used to address knowledge and coordination problems (Chile, Malaysia) – Are very difficult to evaluate properly
– Capabilities are the tacit knowledge and working practices needed for production and product development b l f d f h h l b l b – Capabilities are transferred from high to low capability settings by FDI or supply chain links – Capabilities can spill over to other firms, although usually not horizontally
– Building effective FDI agencies – Creating knowledge networks – Making capability building a “practice area”
Supporting vertical supply chains – Supporting vertical supply chains – Management training – Linking to geography and skills
– Small countries – The disadvantages of the landlocked – The disadvantages of the landlocked – The failure of collective action
– Aid bureaucracies find regional investments difficult – Regional Economic Communities are weak C b d j f d l – Cross-border projects are too few and too slow
African governments will need to cede sovereignty – African governments will need to cede sovereignty – RECs need to take the lead on regional issues with donors – Link trade preferences with regional integration