typology of african economies and their potential for industrial development milasoa chérel-robson...

Typology of African economies and their

potential for industrial development

Milasoa Chérel-Robson

Africa Section, Division for Africa, Least Developed Countries and Special

Programmes, UNCTAD

Workshop on Industrial Development and

Globalisation17 May 2011

Structure of the sessionI. Brief history of industrial development in Africa

II. Stylised facts about the state of industrial development in Africa

III. Moving forward : typology of African countries and potential for industrialisation

3-4 minutes per slide including class discussion and questions

I. Brief history of industrial development in Africa

Key point: Lessons learnt from past policies and their impact (or lack of) on industrial performance in Africa.

• Political vision of a modern, industrialised continent after independence

• Past policy phases:

1960s-end 1970s: Import Substitution Industrialisation

Early 1980s-late 1990s: Structural Adjustment Policies

2000s: Poverty Reduction Strategies

I. Brief history of industrial development in Africa

Contribution of Industry to GDP 1970-2008 (%)

% share of GDP 1970 1980 1990 2000 2005 2008 World Industry 36.88 38.10 33.25 29.09 28.77 30.08 Manufacturing 26.70 24.38 21.74 19.18 17.77 18.13 Mining & utilities 3.87 7.08 5.17 4.51 5.46 6.21 Developing economies Industry 27.29 41.05 36.80 36.29 38.86 40.24 Manufacturing 17.56 20.19 22.39 22.61 23.32 23.73 Mining & utilities 5.67 14.66 8.87 8.29 10.05 10.93 African developing economies Industry 13.11 35.62 35.22 35.54 38.78 40.68 Manufacturing 6.25 11.92 15.31 12.81 11.59 10.49 Mining & utilities 4.81 19.28 15.16 18.43 22.98 25.75 Eastern Africa Industry 3.12 7.80 20.56 18.58 20.60 20.28 Manufacturing 1.67 4.93 13.37 10.37 10.31 9.68 Mining & utilities 0.83 1.48 3.33 3.11 3.63 3.65 Middle Africa Industry 34.23 38.41 34.08 50.40 57.88 59.79 Manufacturing 10.27 11.81 11.19 8.24 7.25 6.36 Mining & utilities 19.11 21.19 18.88 39.26 47.87 50.52 Northern Africa Industry 34.21 50.02 37.40 37.81 44.97 46.01 Manufacturing 13.63 9.68 13.39 12.77 11.26 10.72 Mining & utilities 15.70 33.02 17.15 19.48 28.16 29.81 Southern Africa Industry 38.18 48.24 40.63 32.69 31.71 34.45 Manufacturing 22.03 20.90 22.89 18.37 17.94 18.20 Mining & utilities 11.98 24.01 14.32 11.65 11.18 13.07 Western Africa Industry 26.70 43.27 34.52 39.81 36.66 37.42 Manufacturing 13.28 16.78 13.10 7.75 6.00 5.01 Mining & utilities 7.65 21.26 18.81 29.29 27.72 29.61

Source: UNCTAD Database

• Linkages are needed between agriculture and industry.

• Interaction and coordination between the government and the private sector is necessary.

• Political stability is a necessary condition for industrial development.

• Sustainability is as important as initiating an industrial programme.

Selected lessons learnt from the past

• II. Stylised facts about industrial development in Africa

Key points: a detailed outlook on Africa’s poor industrial performance today.

II. Stylised facts about industrial development in Africa (1)

• The contribution of manufacturing to GDP peaked in 1990 and fell thereafter

• Africa still accounts for a very low share of global manufacturing

• Manufacturing in Africa is small relative to other developing-country regions and has been falling as a share of both GDP and exports

Figure 1: Structural transformation of Africa's economy vis-à-vis other developing regions

Figure 2: Structural transformation of Africa's exports vis-à-vis other developing regions

• But progress has been made in boosting medium and high technology manufactures.

• Africa is losing ground in labour-intensive manufacturing sectors.

• Africa has very good performance in resource-based manufactures.

Stylised facts about industrial development in Africa (2)

Figure 3: importance of low technology manufacturing exports and trade balance

• African manufacturing is dominated by small firms

• African firms have weak technological capabilities

• Industrial clusters play an important role in African manufacturing

Stylised facts about industrial development in Africa (3)

• Informality is a feature of African manufacturing

• Manufacturing performance varies across African countries

• Overall, structural transformation towards manufacturing has been slow across Africa

Stylised facts about industrial development in Africa (4)

III. Typology of African economies

Key points: Situating African countries in terms of their industrial performance and their potential for industrial development.

III. Typology of African economies (1)

Based on two indicators:• The industrialisation level of each country

is captured by its manufacturing value-added per capita.

• The industrial growth performance is captured by the compound annual growth rate of MVA per capita.

Typology of African economies (2)

African countries are divided into five groups based on UNCTAD/UNIDO research.

• Forerunners• Achievers• Catching-up• Falling behind• Infant stage

Typology of African economies (3)

Typology of African economies (4)

Only 10 out of 53 African countries have a relatively more advanced manufacturing base

Top performing 15 countries

• 4 Forerunners: long-term sustained-growth path; industrialization level at least twice the African average; an industrial growth performance of at least 2.5 percent

• 6 Achievers: dynamic but industrial growth performance below 2.5 percent

• 5 Catching up: high industrial growth rates but less than $200 MVA per capita

Visual classification of African countries

Next steps

• Industrial diagnosis and international benchmarking per country.

• First step: government must collect all relevant information in collaboration with all stakeholders

Thank you !

Source: recent joint research by UNCTAD and UNIDO

Additional notes and references will be provided in final CD of the course.