Supporting Economic Transformation: Briefing Papers

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Margaret McMillan, John Page, David Booth and Dirk Willem te Velde, March 2017

Launched alongside Supporting Economic Transformation: An Approach Paper, these briefings summarise the central tenets of SET’s approach to the challenge of promoting economic transformation and explore its importance for driving sustainable, inclusive development in the world’s poorest countries.


Foreign Direct Investment and Economic Transformation in Myanmar

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Stephen Gelb, Linda Calabrese and Xiaoyang Tang, March 2017

The paper reviews in some detail the foreign (Chinese) presence in four sectors in Myanmar and its impact on economic transformation. Significant positive effects include employment and exports in garments, local enterprise development and downstream user costs in construction (and infrastructure), and exports, technology transfer and product market competition in agriculture and agro-processing and finally makes a number of policy recommendations for UK DFID.


Supporting Economic Transformation: An Approach Paper

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Margaret McMillan, John Page, David Booth and Dirk Willem te Velde, March 2017

This approach paper seeks to define economic transformation, offers an approach to measuring progress towards it, and examines case studies from African and Asian economies where transformative policies have been successful to greater and lesser extents. The paper concludes by presenting a multi-disciplinary approach to identifying opportunities, diagnosing constraints and mapping out realistic policy options for countries to use to turn their economic growth into genuine transformation.


Trade in Services and Economic Transformation: A New Development Policy Priority

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Edited by Bernard Hoekman and Dirk Willem te Velde, February 2017

Services play a vital role in economic transformation and job creation in poor countries, but the effects are different from those in agriculture or manufacturing. While much of the discussion on economic transformation centres on transforming agriculture and moving into manufacturing, services are an under-explored component of economic transformation strategies.
This set of essays analyses the role of services, and especially trade in services, in economic transformation.


Trade in Services and Economic Transformation

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Neil Balchin, Bernard Hoekman, Hope Martin, Maximiliano Mendez-Parra, Phyllis Papadavid, David Primack and Dirk Willem te Velde, November 2016

While much of the debate on economic transformation centres around transforming agriculture and moving into manufacturing, the potential of services is often left unexplored. A proper understanding of the trade dimension of services lies at the frontier of new analytical work on economic transformation. It is crucially important for policy-makers in low-income countries, many of whom may not regard services, or trade in services, as a prime focus of action on economic transformation. This paper explores how policies both directly and indirectly affecting trade in services can have a major impact in terms of increasing the contribution of services to economic transformation.


Africa’s New Climate Economy: Economic Transformation and Social and Environmental Change

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Milan Brahmbhatt, Russell Bishop, Xiao Zhao, Alberto Lemma, Ilmi Granoff, Nick Godfrey and Dirk Willem te Velde, November 2016

Africa’s “Growth Miracle” in the 21st century has reversed a long standing narrative of pessimism about the region. It has emboldened hope for the future. GDP growth reached around 5% annually from 2001-2014. Rates of extreme poverty fell substantially.
Yet big challenges remain.


Supporting the Preparation of Tanzania’s Second Five-Year Development Plan (FYDP II)

Dar es Salaam Port, Tanzania. Photo: Rob Beechey / World Bank

Neil Balchin, Tim Kelsall, Blandina Kilama, Alberto Lemma, Max Mendez-Parra, Donald Mmari, Dirk Willem te Velde, Sam Wangwe, Leah Worrall, May 2016

The Government of Tanzania launched the second Five-Year Development Plan (FYDP II) (2016/17-2021/22) in June 2016, focusing on the theme Nurturing Industrialisation for Economic Transformation and Human Development. This study informed the preparation of FYDP II.


Supporting Economic Transformation in Nigeria

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Dirk Willem te Velde, David Booth, Danny Leipziger and Ebere Uneze, May 2016
Nigeria has enjoyed fast economic growth over the past decade but has seen low-quality growth. Now, with oil prices down significantly, and weak growth, new areas of economic growth need to be identified. Business-as-usual will not safeguard productive jobs for the future or reduce poverty significantly. Promoting quality growth and economic transformation is crucial. This paper discusses the issues, drawing on economic analysis and political-economy assessment.


Developing Export-Based Manufacturing in Sub-Saharan Africa

Dignity factory workers producing shirts for overseas clients, in Accra, Ghana on October 13, 2015. Photo © Dominic Chavez/World Bank

Neil Balchin, Stephen Gelb, Jane Kennan, Hope Martin, Dirk Willem te Velde and Carolin Williams, March 2016
Strong growth in the African region, rebalancing and rising wages in China, and improvements in the policy and institutional context provide a unique opportunity that African countries can use to attract investment in higher value-added, export-led manufacturing. This paper describes how production, employment, trade and FDI in the manufacturing sectors in nine selected Sub-Saharan African (SSA) countries has increased and identifies opportunities for promising sectors.


Gender, Economic Transformation and Women’s Economic Empowerment in Tanzania

A woman mixing dough to make bread in the town of Masi Manimba, DRC

Louise Fox, March 2016. The government of Tanzania is currently preparing its next Five Year Development Plan (FYDP II). Ensuring women benefit from the development processes envisaged in the plan is instrumental to achieving its objectives. Analysis of recent data on employment and time use shows women have benefited from a decade of economic transformation in Tanzania. This paper discusses many issues, including how they have gained access to new employment opportunities in higher-productivity sectors such as manufacturing, trade and hotel and food services and the expansion of public services has increased the education of women in in the labour force.


Public and Private Sector Collaboration for Economic Transformation

Ethiopia's capital Addis Ababa is a bustling centre of business and trade – with new buildings towering upwards each week.

The country is experiencing a major building boom as it becomes one of the fastest-growing economies in Africa.

British aid has funded investment in a new factory to the east of the country, to helping meet the growing demand for cement as well as support jobs in the flourishing construction industry.

Yaw Ansu, David Booth, Tim Kelsall and Dirk Willem te Velde, March 2016. Achieving a pattern of economic growth where productivity, export competitiveness and employment are continuously increased calls for an active search for solutions to numerous specific problems currently blocking or delaying needed investments. This paper looks at how to establish a strategic relationship between government and private sector actors that makes it possible to address these problems without repeating the errors that derailed transformational ventures in the past.


Trade Facilitation and Economic Transformation in Africa

A market stall holder in northern Uganda, December 2011. Northern Uganda was once the breadbasket of the country, but twenty years of war have ravaged the land and traumatised the people. 

Now that two million internally displaced people have returned home from camps, and refugees have come back from overseas, there is hope that the region can once again become a thriving base for agriculture. 

DFID is supporting the recovery of the region with a five year programme that has helped 10,000 vulnerable people to return home, provided vocational training for 4,000 young people who missed out on education, and is providing match-funding for the private sector to help kick-start the local economy.

Joe Amoako-Tuffour, Neil Balchin, Linda Calabrese and Max Mendez-Parra, March 2016
Trade facilitation can stimulate economic transformation in Africa by raising exports, supporting export diversification, reallocating resources to more productive activities, improving access to cheaper and better-quality imported inputs and enabling participation in value chains. Many African regions have begun to formulate regional approaches to trade facilitation, and there are important examples of particular approaches working well. The introduction of one-stop border posts (OSBPs) at Chirundu (on the Zambia–Zimbabwe border) and at the Busia border crossing between Kenya and Uganda have reduced the time and costs involved in moving goods across borders. The OSBP at Busia has also made it easier for small traders to cross the border, giving them access to a wider market and improving their livelihoods. Similar improvements in border crossing times have been recorded along the Trans Kalahari, Maputo Development and Northern Corridors.


Promoting Manufacturing in Africa

The Vastache company makes industrial valves inTekiRda, a town outside Istanbul, Turkey

Yaw Ansu, Margaret McMillan, John Page and Dirk Willem te Velde, March 2016.
Industrialisation, particularly the expansion and increased sophistication of manufacturing production and exports, and also the expansion of manufacturing employment, remains an essential part of Africa’s economic transformation. Unfortunately, manufacturing as a share of gross domestic product has declined over the past few decades in most African countries, even though in absolute terms it is growing.


The Role of Services in Economic Transformation – With an Application to Kenya

The control room at the thermal power station at Takoradi, Ghana, June 21, 2006. (Photo by Jonathan Ernst)

Anupam Khanna, Phyllis Papadavid, Judith Tyson and Dirk Willem te Velde, February 2016.
Much of the debate on economic transformation in low-income countries (LICs) has centred on moving out of agriculture and into manufacturing, but this fails to appreciate the role services can play in driving growth in developing countries. This paper examines the role of services in economic transformation, by discussing the main conceptual issues and applying these to the case study of Kenya. The analysis suggests we need to update our traditional, often negative, views on the role of services in economic transformation.


Baseline on Economic Transformation

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Neil Balchin, Claire Mason, Kasper Vrolijk and Leah Worrall, 2015. While the broad definition of economic transformation is relatively consistent across actors in the economic transformation literature, the existing research on policies and strategies designed to support economic transformation varies across different types of country stakeholders and across country contexts. In this paper we conduct a stocktake of the literature on economic transformation in order to determine pre-existing actor discourse on the topic. This is achieved through an overview of published materials that address recent economic transformation, structural transformation (or structural change), industrialisation, and sectoral labour strategies. The paper covers a diverse range of perspectives on economic transformation among several leading academics and think tanks and provides an overview of the international academic, regional and domestic literature.


Economic Transformation Lessons From Large Developing Countries

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Danny Leipziger, November 2015. This paper examines the key lessons for successful economic transformation based on experiences, both positive and negative, of large economies in East Asia and Latin America. As a general guide, it can be noted that countries that have successfully managed major economic transformations have done so with consistent, sustained and coordinated policies across a number of key markets. Many countries err on the side of single policy interventions that are unsupported by the many other policy actions needed to transform economies. Those that have managed their transformations well have had a longterm vision and have been able to sustain policies towards long-run objectives. This paper highlights a number of areas for policymakers to consider in designing their own transformative policies.


Gender and Economic Transformation

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Louise Fox, February 2016.
Economic transformation is defined as the movement of resources (factors of production) to high productivity activities, both within and between sectors. It encompasses both the process of structural change (movement of resources between sectors) and within sector labour productivity improvements. Economic transformation is essential for improving the quality of growth.


Trade Policy and Economic Transformation

Kajiado, Kenya. 2010.

Marie-Agnes Jouanjean, Max Mendez-Parra and Dirk Willem te Velde, July 2015.
Trade has historically played a crucial role in the debate on economic transformation (ET), but the transmission mechanisms of different types of trade policies have not always been clearly articulated and empirical evidence is lacking in specific areas.


Chinese Special Economic Zones in Africa

A couple of young boys stand before the Metro Business Center (store) on Water Street in the Waterside Market area of Monrovia, Liberia.

Tang Xiaoyang, July 2015.
Africa is no longer satisfied with growth that is limited to traditional economic sectors, such as agriculture or mining. Policy-makers aiming to bring in more manufacturing, technology and innovations to the continent are attaching more importance to structural transformation in their vision of development.


Using Hydroelectricity to Power Economic Transformation in Nepal

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Gagan Thapa and Yurendra Basnett, May 2015.
Key messages from the brief include that hydropower can help Nepal decouple growth from rising carbon emissions and propel economic transformation. To do so will require creating agglomeration effects around hydropower development. Nepal should consider investing hydropower revenue to ensure that the country stays on a low-carbon economic growth pathway; to build the much needed transport infrastructure and power it with electricity; and to develop industries.


Reinvigorating Economic Transformation in Nigeria

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Dirk Willem te Velde, David Booth, Danny Leipziger and Ebere Uneze, May 2015
Nigeria’s recent economic growth has not brought about economic transformation. The new administration has an opportunity to address new areas of economic growth and the briefing sets about the six key aspects of policy formulation and implementation from the relevant international experience. One clear conclusion is the importance of emphasising global competitiveness, even in a large economy with a growing domestic market.