How to Grow Manufacturing and Create Jobs in a Digital Economy: 10 Policy Priorities for Kenya

Karishma Banga and Dirk Willem te Velde, November 2018

The global manufacturing landscape is changing rapidly with the increasing use of digital technologies such as robotics and artificial intelligence, presenting both important opportunities and challenges for manufacturing and job creation. While Kenya has emerged as the leader of digitalisation in the African context, there is still a significant digital divide within the country, when compared with developed countries and Asian economies, in terms of access to and use of available technologies. At the same time, there are growing fears that rapid digitalisation might hamper job creation efforts, particularly in the manufacturing sector.

Karishma Banga and Dirk Willem te Velde, November 2018

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The global manufacturing landscape is changing rapidly with the increasing use of digital technologies such as robotics and artificial intelligence, presenting both important opportunities and challenges for manufacturing and job creation. While Kenya has emerged as the leader of digitalisation in the African context there is still a significant digital divide within the country, when compared with developed countries and Asian economies, in terms of access to and use of technology. At the same time, there are growing fears that rapid digitalisation might hamper job creation efforts, particularly in the manufacturing sector.

This report, produced in partnership with the Kenya Association of Manufacturers (KAM), develops a framework of 10 policy priorities to support the successful digital transformation of Kenyan manufacturing, by building digital capabilities, fostering competitiveness and managing inclusive digital change.

This report was launched at a workshop in Nairobi on 28 November 2018. For more detail, click here.

Media coverage

‘Kenya’s manufacturers urged to embrace robotics, artificial intelligence’, The Exchange, 26 November

‘New report roots for robotics and artificial intelligence’, Capital FM Business, 29 November

‘Kenyan manufacturing at risk if government and firms fail to embrace digitalization future – report’, Soko Directory, 29 November

‘Kenyan gov’t, firms urged to embrace innovation to spur manufacturing’, Xinhua, 29 November

‘More Kenyans tipped to lose jobs to machines’, Standard Digital, 30 November

‘Low digitisation to stunt Kenya’s competitiveness’, The Star, 1 December

‘SGR doing more harm than good, says KAM’, The Star, 1 December

 

Photo: Use of computer-aided design software/computer-aided manufacturing for t-shirt production at New Wide Garments, Kenya (2018). Karishma Banga/SET programme. All rights reserved.

 

 

 

Monitoring Policies to Support Industrialisation in Tanzania

Josaphat Kweka, November 2018

Industrialisation has been recognised as the overarching policy priority guiding the design and implementation of all policies and strategies within and around Tanzania’s Five-Year Development Plan 2016/17–2021/22 (FYDP II). The Government of Tanzania has taken tangible steps to spur implementation of the industrialisation objective, including by preparing a national strategy, identifying priority projects, strengthening the institutional framework to address coordination challenges and developing supportive infrastructure projects.

Josaphat Kweka (Talanta International), November 2018

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Industrialisation has been recognised as the overarching policy priority guiding the design and implementation of all policies and strategies within and around Tanzania’s Five-Year Development Plan 2016/17–2021/22 (FYDP II). The Government of Tanzania has taken tangible steps to spur implementation of the industrialisation objective, including by preparing a national strategy, identifying priority projects, strengthening the institutional framework to address coordination challenges and developing supportive infrastructure projects.

The key elements for developing a competitive manufacturing sector appear to exist in Tanzania but a number of constraints prevent it from being realised. Some constraints affect the implementation capacity of the government, while others affect the competitiveness of firms.

‘Monitoring policies to support industrialisation’ explores recent progress made against the FYDP II and offer policy suggestions for overcoming some of the constraints that have emerged, while ‘Harnessing SEZs’ provides illustrative examples of industrial developments in SEZs, regulatory reforms that could support their development and effectiveness, and again offers policy reforms that could drive further progress.

Photo: Dar es Salaam port, Tanzania, 2014. Photo: Rob Beechey / World Bank. 

28 November 2018 | Digital Transformation in Kenyan Manufacturing and Job Creation

Wednesday 28 November 2018
Intercontinental Hotel, Nairobi

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While Kenya has emerged as leader of digitalisation in the African context, there is still a significant digital divide within Kenya in terms of access to and use of technology. Kenya therefore needs to engage with the digital economy actively by developing a well-informed digital industrial policy that aims at improving efficiencies of firms but also boosts employment opportunities and inclusive development. For this to occur, the digital industrial policy needs to be embedded within the wider industrial policy so that all segments of society can gain.

Amidst the many opportunities associated with the use of digital technologies in Kenya manufacturing, one concern expressed is the impact on labour. Since manufacturing forms part of Kenya’s Big Four agenda, the implications of growing digitalisation, both within Kenya and globally, brings into question the very role of manufacturing as a development pathway towards employment generation.

This event, hosted in partnership with the Kenya Association of Manufacturers (KAM), explores how digital technologies are affecting labour in Kenyan manufacturing and the discussion will identify policy priorities for digitally transforming Kenyan’s manufacturing sector and creating more productive jobs.

Photo: Real-time monitoring of the production line, through digitalisation, at New Wide Garments factory in Kenya’s Athi River EPZ, July 2018. Karishma Banga, all rights reserved.

Using Data to Assess the Contribution of Development Finance Institutions to Economic Transformation

Alberto Lemma, October 2018

Recent studies have analysed the investment activities of development finance institutions (DFIs), attempting to understand if these are, or could be, contributing to economic transformation. DFIs frequently report their portfolio activities, including the sectoral composition, and employment and gross value added (GVA) data can be used to compute sectoral productivity level at sector level and over time. When combined, such data help us understand if DFI investments are targeting sectors that have higher productivity or activities to increase productivity levels within a sector.

Alberto Lemma, October 2018

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Recent studies have analysed the investment activities of development finance institutions (DFIs), attempting to understand if these are, or could be, contributing to economic transformation. DFIs frequently report their portfolio activities, including the sectoral composition, and employment and gross value added (GVA) data can be used to compute sectoral productivity level at sector level and over time. When combined, such data help us understand if DFI investments are targeting sectors that have higher productivity or activities to increase productivity levels within a sector.

The data used for this analysis can be found here (link to PDF) on the SET data portal. 

Photo: Ethiopia, 2008. Antony Robbins. License: CC BY-NC 2.0.

Large and Mega-Projects in Mozambique: Negotiations Management for Creating Linkages and Jobs in Manufacturing

Peter E. Coughlin, October 2018

Since the Lusaka Peace Accords of 1992, Mozambique has relied heavily on large and mega-investments by multinational corporations to spur economic transformation in manufacturing. To understand what has been done well or badly in the negotiations for these and what can be learnt to improve the country’s negotiation capabilities and the consequent benefits, this study examines six negotiations for large and mega-projects. Though the document files for these cases are far from complete, their analysis reveals major structural, technical and legal deficiencies affecting the ability of Mozambique’s negotiators to shape agreements for large and mega-projects to best promote jobs, upstream and downstream linkages and economic and social development.

Peter E. Coughlin, October 2018

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Since the Peace Accords of 1992, Mozambique has relied heavily on large and mega-investments by multinational corporations to spur economic transformation in manufacturing. This has entailed negotiations that have often been from an ill-prepared and professionally and competitively disadvantaged position.

To understand what has been done well or badly and what can be learnt to improve the country’s negotiation capabilities and the consequent benefits, this study examines six negotiations for large and mega-projects with investors in sectors outside of coal and gas mining—namely aluminium, aluminium rods and cables, steel, petroleum refining, transport vehicles and beverages. Though the document files for these cases are far from complete, their analysis revealed major structural, technical and legal deficiencies affecting the ability of Mozambique’s negotiators to shape agreements for large and mega-projects to best promote jobs, upstream and downstream linkages and economic and social development.

Photo: Maputo, Mozambique. Via Pexels. 

4 October 2018 | Financing Tanzania’s Five-Year Development Plan 2016/17 – 2020/21

The Tanzanian government laid out ambitious industrialisation goals in its Five-Year Development Plan (FYDP II) 2016/17 – 2020/21, and the subsequent implementation plan. However, for those goals to be realised, progress must be made in a number of key development projects identified in the plan across the energy, transport, industry, agriculture, and minerals sectors. The challenge for the government lies in garnering sufficient finance from the private sector to move these projects forward.
This high-level workshop, hosted by the government of Tanzania and ODI, aims to address this challenge by bringing together government and potential investors and financiers to discuss constraints to financing for the key projects and to explore how, through public-private partnerships and other mechanisms, Tanzania’s industrialisation vision can be realised.

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The Tanzanian government laid out ambitious industrialisation goals in its Five-Year Development Plan (FYDP II) 2016/17 – 2020/21, and the subsequent implementation plan. However, for those goals to be realised, progress must be made in a number of key development projects identified in the plan across the energy, transport, industry, agriculture, and minerals sectors. The challenge for the government lies in garnering sufficient finance from the private sector to move these projects forward.

This technical working session, hosted by the government of Tanzania and ODI, aimed to address this challenge by bringing together government and potential investors and financiers to discuss constraints to financing for the key projects and to explore how, through public-private partnerships and other mechanisms, Tanzania’s industrialisation vision can be realised.

Photo: Tanzania’s new bus transit system, 2016. World Bank. CC BY-NC-ND 2.0.

Financing Special Economic Zones: Different Models of Financing and Public Policy Support

Judith E. Tyson, September 2018

An SEZ is a piece of serviced land, typically industrial, that provides infrastructure and connectivity for private firms investing within it. Such zones can support economic transformation in developing countries by helping to overcome some of the typical constraints to private firms’ growth, such as the high-cost of energy and poor-quality infrastructure.

This paper focuses on one aspect of SEZ execution – their financing. It includes case studies on existing SEZ financing and examines in detail the possibilities for private financing of SEZs.

Judith E. Tyson, September 2018

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A special economic zone (SEZ) is a piece of serviced land, typically industrial, that provides infrastructure and connectivity for private firms investing within it. Such zones can support economic transformation in developing countries by helping to overcome some of the typical constraints to private firms’ growth, such as the high-cost of energy and poor-quality infrastructure.

However, SEZs have a mixed history of success. Risks associated with their implementation are greater in developing countries where the institutional environment is weaker, including in relation to government capacity, legal and regulatory frameworks and construction capabilities.

This paper focuses on one aspect of SEZ execution – their financing. The purpose is to provide guidance on financing options and their advantages and disadvantages. The paper includes case studies on existing SEZ financing and examines in detail the possibilities for private financing of SEZs.

Photo: A woman irons fabric at a garments factory at the Sihanoukville special economic zone, Cambodia, 2013. Chhor Sokunthea / World Bank. CC BY-NC-ND 2.0.

5-6 June 2018 | Financing the development of special economic zones in Tanzania

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Tanzania has registered relatively little progress to date in establishing industrial parks and special economic zones (SEZs). None of the SEZ projects included in the country’s Second Five-Year Development Plan (FYDP II) have yet been realised. SEZs and industrial parks were not mentioned in the Minister of Finance and Planning’s latest speech to present the estimates of government revenue and expenditure for 2018/19, and the government appears to be prioritising spending on other infrastructure development over zones.

Instead, the private sector is increasingly expected to step in to develop new zones. Securing the necessary finance to develop these zones still appears to be challenging, although negotiations to attract investment into certain zones, such as the Bagamoyo Port project, are more advanced.

Against this backdrop, the SET  programme held a two-day workshop in Dar es Salaam on 5–6 June 2018 to discuss options for financing the development of SEZs and related infrastructure in Tanzania.

The workshop agenda and focus were designed in collaboration with Tanzania’s Export Processing Zones Authority (EPZA). It was attended by a range of different stakeholders, including representatives of Tanzanian development finance institutions, Tanzania’s Ministry of Industry, Trade and Investment (through the ministry’s Textile Development Unit) and a range of external experts with knowledge of, or interest in, financing and other elements of developing industrial parks and SEZs in Tanzania and elsewhere in the East African region.

Photo: Dar es Salaam waterfront, 2017. David Stanley via Flickr. CC BY 2.0.

10 September 2018 | Kick-Starting Economic Transformation in Rwanda: Main Takeaways

Rwanda has committed itself to economic transformation as a pillar of its seven-year government programme, the National Strategy for Transformation (NST, 2017-24). The strategy has at its core the goal of generating 214,000 new jobs per year for the next seven years.
On 10 September 2018, the Rwandan Ministry of Trade and Industry (MINICOM) and the Supporting Economic Transformation (SET) team hosted a high-level roundtable: ‘Kick-starting Rwanda’s economic transformation: what needs to be done, when and by whom?’.

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Rwanda has committed itself to economic transformation as a pillar of its seven-year government programme, the National Strategy for Transformation (NST, 2017-24). The strategy has at its core the goal of generating 214,000 new jobs per year for the next seven years.

On 10 September 2018, the Rwandan Ministry of Trade and Industry (MINICOM) and the Supporting Economic Transformation (SET) team hosted a high-level roundtable: ‘Kick-starting Rwanda’s economic transformation: what needs to be done, when and by whom?’.

The objective of the roundtable was to stimulate discussion of the practical questions raised by the SET research programme, as set out in the briefing paper: Kick-starting economic transformation in Rwanda: four policy lessons and their implications.

Photo: Kigali factory, 2010. George Barya/Commonwealth Secretariat via Flickr. CC BY-NC 2.0.

17 July 2018 | Financing Garment Manufacturing in Kenya

On 17 July 2018, the SET programme at ODI, in partnership with the Kenyan Ministry of Industry, Trade and Cooperatives, convened a group of manufacturing firms, financers, Government representatives and others, to discuss Kenyan manufacturing within the industrialisation ‘pillar’ of President Kenyatta’s ‘Big Four’ agenda, and opportunities and challenges in the financing of textiles and garment manufacturing.

The workshop sought to bring firms and potential investors together to talk through constraints on both sides, and to begin to build relationships to support investments in the long term.

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On 17 July 2018, the SET programme at ODI, in partnership with the Kenyan Ministry of Industry, Trade and Cooperatives, convened a group of manufacturing firms, financers, Government representatives and others, to discuss Kenyan manufacturing within the industrialisation ‘pillar’ of President Kenyatta’s ‘Big Four’ agenda, and opportunities and challenges in the financing of textiles and garment manufacturing.

The workshop sought to bring firms and potential investors together to talk through constraints on both sides, and to begin to build relationships to support investments in the long term.

Photo: Dominic Chavez/World Bank.

8 August 2018 | Presentation | Skills Development Funds: Lessons from Asia

The SET programme is working with the Aung Myin Hmu (AMH) Garment Skills Training Centre, based in Yangon, Myanmar, to support its long-term sustainability, and to influence the development of the Myanmar Government’s skills development law, specifically a proposed skills development fund (SDF). Initial analysis of SDF models in other Asian countries was presented to stakeholders including senior figures at the Myanmar Ministry of Labour, Immigration and Population (MOLIP) at a meeting in Yangon in August 2018. Following the meeting, a multi-stakeholder SDF Technical Committee was set up by MOLIP, and Dr Krishnan addressed its first meeting on 11 August.

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The SET programme is working with the Aung Myin Hmu (AMH) Garment Skills Training Centre, based in Yangon, Myanmar, to support its long-term sustainability, and to influence the development of the Myanmar Government’s skills development law, specifically a proposed skills development fund (SDF).

Initial analysis of SDF models in other Asian countries was presented to stakeholders including senior figures at the Myanmar Ministry of Labour, Immigration and Population (MOLIP) at a meeting in Yangon in August 2018. Following the meeting, a multi-stakeholder SDF Technical Committee was set up by MOLIP, and Dr Krishnan addressed its first meeting on 11 August.

A final report, drawing out lessons specifically for policymakers in Myanmar, will be presented to government and other stakeholders in September 2018.

Photo: Shopkeeper working in a souvenir shop at the Bogyoke Market in Yangon. Asian Development Bank via Flickr. CC BY-NC-ND 2.0. 

Measuring the Potential Contribution of Development Finance Institutions to Economic Transformation

Alberto Lemma, September 2018

With the UK Department for International Development (DFID) channelling increasing amounts of UK Aid through development finance institutions (DFIs) as part of the department’s core goal of reducing poverty, it is important to evaluate the extent to which the investments made by DFIs are contributing to economic transformation.

Alberto Lemma, September 2018

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Economic transformation is defined as the continuous process of moving labour and other resources from low- to high-productivity sectors (structural change) and raising within-sector productivity growth. Evidence suggests the economic transformation of developing countries drives job creation and improves livelihoods by increasing per capita incomes.

With the UK Department for International Development (DFID) channelling increasing amounts of UK Aid through development finance institutions (DFIs) as part of the department’s core goal of reducing poverty, it is important to evaluate the extent to which the investments made by DFIs are contributing to economic transformation.

This report provides an overview of the economic transformation potential of DFIs (focusing on DFID’s strategic priority DFIs – the CDC Group UK and the International Finance Corporation) based on publicly available portfolio data. It finds some exposure and capacity to channel investments towards economic transformation sectors. Finally, the report proposes 13 indicators that DFIs could use to assess the transformational potential of their investments. Such indicators can be used both ex-ante for investment decision-making and ex-post for impact monitoring and evaluation.

Photo: The port at Tema, Ghana. Jonathan Ernst / World Bank, 2006.
Licence: CC BY-NC-ND 2.0.

20 July 2018 | Kenya Trade Week & Exposition Breakfast: Launch of Kenya-UK Trade Study

On 20th July 2018, the Kenyan Export Promotion Council (EPC) hosted the breakfast launch of SET’s latest report, Kenya-UK trade and investment relations: taking stock and promoting exports to the UK.  The event also served as the opening of the EPC’s Trade Week, to celebrate 25 years of promoting Kenya’s exports.

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On 20th July, the Kenyan Export Promotion Council (EPC) hosted the breakfast launch of SET’s latest report, Kenya-UK trade and investment relations: taking stock and promoting exports to the UK.  The event also served as the opening of the EPC’s Trade Week, to celebrate 25 years of promoting Kenya’s exports.

Media coverage

‘Government urges exporters to rebrand products’, KBC Channel, 20 July

‘Kenya’s share of UK market shrinks by 13.2 per cent’, Mediamax Network, 20 July

‘Kenya’s UK export slack opens door to regional rivals’, Citizen Digital, 20 July

‘Rwanda, Ethiopia edge out Kenya in UK trade’, The Star (Kenya), 21 July

‘Kenya loses market share to Rwanda, Dar’, Rwanda Today, 23 July (also printed in Business Daily Africa)

‘Kenya losing her UK-market to neighbouring countries’, Soko Directory, 23 July

‘Kenya’s export value to UK declining’, Kenyan Citizen TV (via YouTube)

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‘Brexit offers Kenya an opportunity to negotiate beneficial trade deals’, Business Daily Africa (via YouTube)

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Photo credit: EPC. All rights reserved.

 

Kenya-UK Trade and Investment Relations: Taking Stock and Promoting Exports to the UK

Aarti Krishnan, Dirk Willem te Velde and Anzetse Were, July 2018

The UK and Kenya have historically close trade and investment ties; however, both the value of Kenyan exports to the UK and Kenya’s share of the UK’s imports have been declining for a decade, with regional competitors such as Rwanda and Ethiopia capturing Kenya’s market share in key export products like tea, coffee, fresh vegetables and cut flowers. This paper explores the state of UK-Kenya trade and sets out recommendations to support Kenya to regain competitiveness and increase its share of UK imports.

Aarti Krishnan, Dirk Willem te Velde and Anzetse Were, July 2018

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The UK and Kenya have historically close trade and investment ties; however, both the value of Kenyan exports to the UK and Kenya’s share of the UK’s imports have been declining for a decade, with regional competitors such as Rwanda and Ethiopia capturing Kenya’s market share in key export products like tea, coffee, fresh vegetables and cut flowers.

This research, produced in partnership with the Kenyan Export Promotion Council to inform its new export strategy, explores the current state of trade patterns and investment flows between the two countries and proposes a prioritisation tool to help policymakers identify promising products and sectors for export. The report posits that unless Kenya diversifies its export offer and improves the quality and marketing of its existing core export products, it will continue to lose out to its trading competitors.

Media coverage

‘High costs taking shine off tea, coffee exports to UK’, Daily Nation, 17 May (also published by Business Daily Africa)

‘High production costs could lose Kenya its competitive edge in coffee, tea and flower exports to the UK’, Brits in Kenya, 30 May

‘Government urges exporters to rebrand products’, KBC Channel, 20 July

‘Kenya’s share of UK market shrinks by 13.2 per cent’, Mediamax Network, 20 July

‘Kenya’s UK export slack opens door to regional rivals’, Citizen Digital, 20 July

‘Rwanda, Ethiopia edge out Kenya in UK trade’, The Star (Kenya), 21 July

‘Kenya loses market share to Rwanda, Dar’, Rwanda Today, 23 July (also printed in Business Daily Africa)

‘Kenya losing her UK-market to neighbouring countries’, Soko Directory, 23 July

‘Kenya’s export value to UK declining’, Kenyan Citizen TV (via YouTube)

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‘Brexit offers Kenya an opportunity to negotiate beneficial trade deals’, Business Daily Africa (via YouTube)

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‘Kenya-UK trade activities suffer glitches due to new policies’, Standard Media, 25 July

 

Photo credit: Pete Lewis/Department for International Development via Flickr

Dirk Willem te Velde (ODI) | Sports balls, disruptive change and opportunities for manufacturing production

Dirk Willem te Velde (Principal Research Fellow, ODI)

15 June 2018

The production of footballs, tennis balls, table tennis balls, golf balls and baseballs is highly concentrated in a few countries. However, much production is frequently subject to disruptive change, which involves opportunities – and challenges – in relation to attracting manufacturing production. Understanding how change happens and how it is managed is crucial for those wanting to transform their economy. This blog discusses geographical location in the production of balls, the influence of disruptive change on this and the lessons it offers for managing transformation.

Concentration of production

The 2018 Football World Cup started in Russia this week but not everyone will know that all footballs used at the World Cup have been produced in the city of Sialkot, near the border between Pakistan and India. One Pakistani company, Forward Sports, is the core provider of footballs to this World Cup, producing some 700,000 balls per month and employing 3,000 workers, of whom 900 are women.

Sialkot gained an international brand name in the 1980s when it produced the Tango Ball for the Football World Cup in 1982. Major international brands such as Adidas, Nike, Puma, Umbro, Diadora and others have sourced their supply of footballs from this export-oriented cluster. Pakistan currently earns an annual $1bn from sports goods exports, which includes $350mn–$500mn from footballs, or 10% of Pakistani exports, creating some 200,000 jobs. Around 60-70% of the world’s hand-stitched footballs, or between 40mn and 60mn per year, are made here.

Such significant concentration has also been a factor in the production of table tennis balls for more than a century. Halex used to be the world’s biggest manufacturer, with almost every single table tennis ball in the world made in Highams Park in London.

A similar level of concentration applies to the production of tennis balls. Slazenger Dunlop, a leading UK manufacturer, produces 300mn tennis balls per year, worth nearly £200mn (a fifth of its turnover). Previously produced in the UK, the tennis balls for the Wimbledon tournament have since 2002 come from the special economic zone in Bataan in the Philippines. Before the finished product reaches the UK, inputs come from the US (clay), Greece (silica), Malaysia (rubber), New Zealand (wool) and the UK (felt), with processing taking place in Bataan. A ball travels 50,000 miles, through 11 countries.

A differential picture is thrown up by the production of golf balls and baseballs for US consumption. Some 1.2bn golf balls are produced each year in what is a capital-intensive process, mainly in the US. Companies such as Spalding and Titleist have traditionally dominated production, which has involved significant research activities and creation of patents. Some 40% of the production of golf balls for the US is carried out in New Bedford, Massachusetts. Baseballs, on the other hand, have remained labour-intensive. Rawlings has had an exclusive contract to supply the major leagues with baseballs since 1977. A plant in Costa Rica produces 2.2mn balls a year, worth around $35mn.

Production of sports balls is highly concentrated and it is difficult, but not impossible for poor countries to enter this market.

Managing disruptive change

Disruptive change has had a major impact on the manufacturing of balls. Allegations of child labour and then a change in regulations requiring a move from hand-stitched to machine-stitched footballs have had major implications. The share of Pakistan in football production dropped significantly between 2006 and 2010 (see chart below) in part because orders from Nike to Sialkot were dropped, with the Football World Cup in 2010 sourcing Adidas Jabulani footballs from China. Only after the manufacturers invested in equipment and skills and introduced machine-stitched footballs did Sialkot regain its status as supplier for the 2014 World Cup and again for the 2018 World Cup. The cluster is supported by private infrastructure (e.g. airports) and streamlined border procedures.

Disruptive change in the production of footballs

Note: Share in value of world exports of inflatable balls (950662), which includes mainly footballs.
Source: ITC Trade Map

Changes in the production of raw materials led to the end of table tennis ball production in London. Celluloid balls replaced rubber and cork ones in 1900, but by the 1990s celluloid was being produced only to make table tennis balls. It rapidly became an obsolete material when it was replaced by plastic in most applications except for the production of table tennis balls. Demand for the material decreased and celluloid production ceased in Europe as it became too costly. This left only two Chinese factories producing celluloid, solely for table tennis balls, a material which remained flammable and difficult to transport. In 2014, producers began working with the International Table Tennis Federation to move towards production of plastic balls. This is now dominated by two plastic tennis ball producers in China and one in Germany and in Japan, fighting for official recognition.

Political changes led to the production of baseballs moving from Haiti to Costa Rica. Rawlings came to Costa Rica after a 1986 coup deposed the dictator Jean-Claude Duvalier. Production is still based on hand-stitching, despite efforts as early as 1949 to move to machine-stitching. Production of Wimbledon tennis balls took place in Barnsley for a hundred years until 2002 when the factory moved its equipment to the Philippines because of cost-efficiency reasons.

All this shows that changes can be disruptive (whether for regulatory or economic reasons), relocating all or most of production to other countries. This observation opens up opportunities for other countries that have so far not yet benefitted.

Lessons

Disruptive change happens and poses major challenges for manufacturing but countries can seize the opportunities by being prepared and working in a targeted way. Pakistan lost market share through a policy change (a change in standards) but then regained the contract to produce World Cup footballs through innovation, supported further by investment in skills and equipment and targeted (privately operated) infrastructure. China used an opportunity presented by a change in the raw material base of table tennis balls, again working with standard setting bodies. Political instability led to the relocation of baseball production from one low-wage location to another (Costa Rica). Some processes, such as the production of golf balls, have remained capital-intensive, located in developed countries (US); meanwhile, baseballs have not caught up yet with mechanisation. But, as disruptive change continues, geographical concentration in the manufacturing of balls may again change considerably in the future (consider e.g. the effects of a change in UK trade policy, or a change in international regulation of say baseballs), offering opportunities for some, challenges for others– and policy and regulation matters for this.

 

Photo credit: File photo, Ary News

Kick-Starting Economic Transformation in Rwanda: Four Policy Lessons and their Implications

David Booth, Linda Calabrese and Frederick Golooba-Mutebi, June 2018

Rwanda has committed itself to economic transformation as a pillar of the current seven-year government programme, the National Strategy for Transformation (NSTP1, 2017-24). Whether the country succeeds in this endeavour will depend in good part on whether it learns a small set of key policy lessons from international experience in economic transformation. This briefing sets out four such lessons, drawing on the most distinguished global thinking on the subject, as well as past research on Rwanda by the SET programme.

David Booth, Linda Calabrese and Frederick Golooba-Mutebi, June 2018

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Rwanda has committed itself to economic transformation as a pillar of the current seven-year government programme, the National Strategy for Transformation (NSTP1, 2017-24). Whether the country succeeds in this endeavour will depend in good part on whether it learns a small set of key policy lessons from international experience in economic transformation.

This briefing sets out four such lessons, drawing on the most distinguished global thinking on the subject, as well as past research on Rwanda by the SET programme:

(i) Specialising wisely

(ii) Clustering and concentrating

(iii) Coordinating foreign and domestic capabilities

(iv) Organising for steering and learning.

 

Photo credit: Sarah Farhat/World Bank. Licence: CC BY-NC-ND 2.0.

Karishma Banga (ODI) | A globally competitive, locally relevant Africa: managing the new oil, currency and commodities of the digital era

Karishma Banga (Senior Research Officer, ODI)

5 June 2018

An African digital industrial strategy is needed to consolidate a common stance on data governance and control; build digital trust in African countries for regional e-commerce; re-equip workers with suitable skills; and protect digital labour against exploitation.

Africa in the digital era

In March 2018, 44 countries signed the African Continental Free Trade Agreement (AfCFTA), as an important step towards increasing market integration, infrastructure development and industrialisation. It is, however, increasingly important to look at regional trade through a ‘digital lens’. Digitalisation presents important opportunities to boost the historically low intra-Africa trade but also important challenges.

Not only is there a digital gap between African countries and others but also Africa benefits less from digital technologies, once installed (Banga and te Velde, 2018). There are many reasons for this – poor internet access, limited information on e-commerce platforms, lack of e-payment services and cost-effective logistics, lower purchasing power, unreliable power supply and basic infrastructure, poorer ICT infrastructure and skills and an inconducive legal and fiscal framework. Africa thus lags behind in the digital era as a result of a poorer ‘systems infrastructure’.

To leverage the benefits of digitalisation, African countries need to ‘think globally’ but ‘act locally’. Growth in e-commerce has remained low compared with in other regions, and mainly serves foreign demand. If this continues to be the trend, AfCFTA will not be able to deliver on the continent’s much-needed economic transformation. Countries need to address issues pertaining to and develop collective actions on 1) governing data- the ‘new oil’; 2) building consumers’ digital trust – the ‘new currency’ and 3) protecting digital labour – the ‘new commodity’ in the digital economy.

Collective actions on data governance

In recent years, Big Data has emerged as a key aspect of the digital economy, as essential as oil is to the industrial economy. Mined freely from developing countries, it is converted into ‘digital intelligence’ in developed countries, further feeding the power of giant e-commerce platforms- such as Amazon and eBay (and also Alibaba in China). Earlier, these platforms operated on a ‘lean economy’ model – they owned data but not any actual physical assets. However, such models are not sustainable in the long run, and these e-commerce platforms are slowly transforming into ‘intelligent infrastructures’. For example, Amazon has started buying planes and Alibaba is investing in physical stores.

While international rules on e-commerce can help foster trade in the digital era, there has been resistance to some of the recent proposals developed countries have made to the World Trade Organization, on the grounds that these threaten to further increase the control of powerful monopolies. Several common provisions in such proposals aim to create an even more digital and borderless economy. These include:

  • liberalisation or removal of tariffs on digital goods and services and removal of preferential treatment for domestic companies or products and services
  • free cross-border flow of data, which can prohibit countries from ensuring their data remains within their borders (in this case, data is governed not by the country that owns it but by the laws of the country where it is held)
  • removal of localisation laws that require foreign providers to set up in host countries and
  • removal of compulsions on technology transfers – for instance through sharing of source code – from foreign providers to host countries.

Such rules may be detrimental to job creation and infant industries in African economies, and risk deepening the digital divide across countries. They threaten to increase ‘platform capitalism’, making it even more important for African countries to ensure data-sharing arrangements that will increase their competitiveness globally.

African sellers can sell on third-party international e-commerce platforms, but 75% of the time Amazon will push its own product first, and there is also a hefty commission charge in getting on these platforms, sometimes as high as 45%. Domestic or regional ownership of e-commerce platforms is thus important. African countries must take a continental approach and put in place regional strategies ensuring ‘collective rights to collective data’, with AfCFTA as an effective platform to consolidate a common stance on e-commerce rules.

This can also make AfCFTA significantly more effective in boosting regional integration, as it will help countries attain commodity diversificationa long-standing challenge in intra-Africa trade. At present, intra-Africa trade remains  at only about 10%, mainly because of the higher costs of trading within Africa, which means primary products dominate such trade: the share of manufacturing in fact declined from 18% in 2005 to 15% between 2010 and 2015 (AFDB, 2017). If most African countries continue to export raw materials, and not processed goods, regional demand for their products will remain low. Having deindustrialised prematurely, and in the context of the increasing extractive nature of powerful monopolies in developed economies, Africa faces key development challenges related to export diversification and commodity dependence.

In this regard, important lessons can be learnt from Asia. Here, online trade has not only reduced the costs of trading and coordination but also led to successful diversification of exports in some least developed countries. Research by the International Trade Centre looks at demand for e-commerce products on Alibaba in five Asian LDCs – Bangladesh, Cambodia, Lao PDR, Myanmar and Nepal – and finds that products in which these countries have comparative advantage, such as textiles and agriculture, feature prominently in online trade, but that new products are also emerging . For example, in Bangladesh, apparel and clothing dominate offline trade (accounting for 86% of total exports), but online demand is much lower (47%), and the country has diversified into agriculture, food and beverages and consumer electronic products. In Cambodia, e-commerce has enabled diversification into higher value-added segments; fresh mangoes and cashew nuts have replaced cereals as top-demanded agricultural products in online trade.

Collective actions on building digital trust

Domestically or regionally owned e-commerce platforms are not enough; for successful regional integration through e-commerce, African countries also need to boost demand for products sold through online trade. African e-commerce platforms such as Jumia and KiliMall have gained popularity, but the consumer ‘digital trust’ remains a crucial factor constraining growth. For example, privacy concerns in Kenya grew by 19% from 2014 to 2016, which may in part explain why there is still a 40–50% gap between the proportion of Kenyans with access to the internet and that using it for e-commerce.

As transactions become increasingly digital, affecting several aspects of people’s lives, so does the importance of digital trust. Tufts University ascribes four dimensions to digital trust: 1) the trustworthiness of each country’s digital environment, 2) the quality of users’ experiences, 3) attitudes towards key institutions and organisations and 4) people’s behaviour when they interact with the digital world. Countries where digitalisation is highly evolved, or evolving rapidly, typically have strong government/policy support. Again in Kenya, the government is taking steps to build digital trust: government services are increasingly being digitalised to familiarise consumers with using the internet for making payments in a ‘cash-less’ culture. Policy challenges remain context-specific, but all African countries need to develop laws on data protection and privacy.

Collective actions on re-skilling labour and protecting digital labour

If Africa takes no collective actions to address the issues of the digital economy, labour will continue to face a two-pronged threat. Job losses in  manufacturing are likely to increase as tasks are re-shored to the advanced developed economies. Meanwhile, there may be a further fall in the bargaining power of African workers engaged in digital labour platforms.

The possible decline in jobs can, to some extent, be offset if Africa can leverage digitalisation to increase regional integration. As intra-Africa trade increases, so will the demand for skills, since such trade has a higher skill and technology content than does Africa’s trade with others (UNCTAD, 2017). Successfully selling to regional markets through e-commerce platforms will thus require investment in skilling the workforce. This not only can make labour more productive directly but also may increase the impact of internet penetration on labour productivity (Banga and te Velde, 2018). For e-commerce in particular, labour needs to be re-skilled with an ‘e-commerce skills set’, which includes ICT and digital skills but also skills pertaining to strategy, sales and advertising, project management and social media. Collective actions on reorienting curricula in African institutions around STEM subjects and TVET can be effective, along with integrating local knowledge of the private sector within curricula.

In terms of digital labour – labour performing digital tasks that are outsourced online – demand comes mainly from wealthy countries, with workers across the world competing. This distributed supply and concentrated demand have led to a significant increase in competition, and poorer or unfair work. Digital labour is increasingly being treated as a commodity, with online work being re-outsourced under worse conditions. African countries have no compensating mechanisms in place, and thus need to promote unions and social protection for digital labour, and through this workers’ collective bargaining power.

 

Photo credit: © Arne Hoel / The World Bank. Licence: CC BY-NC-ND 2.0.

Economic Development in Fragile Contexts: Learning from Success and Failure

Alastair McKechnie, Andrew Lightner and Dirk Willem te Velde, May 2018

Fragile and conflict-affected developing countries face major challenges in transforming their economies. As with low-income countries generally, some countries affected by fragility experience periods of rapid economic growth, particularly at the end of a conflict, but this growth is typically low quality and unsustainable. Governments of the g7+ group of fragile states are growing increasing critical of the lack of attention paid by their development partners to job creation and infrastructure investment. 

Alastair McKechnie, Andrew Lightner and Dirk Willem te Velde, May 2018

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Fragile and conflict-affected developing countries face major challenges in transforming their economies. As with low-income countries generally, some countries affected by fragility experience periods of rapid economic growth – particularly at the end of a conflict – but this growth is typically unsustainable and of low quality.

Promotion of economic transformation is not typically a priority in such states, despite the fact that it may help reduce the risk of future conflict and increase resilience to shocks. As a result, governments of the g7+ group of fragile states are becoming increasing critical of the lack of attention paid by their development partners to issues such as job creation and infrastructure investment.

There have been a number of success cases in some fragile states – such as where political opportunities have arisen in specific sectors at the conclusion of armed conflict. Notable examples include the growth of the telecommunications sector (specifically mobile phones) in Afghanistan after 2001 and the development of cocoa farming in Sierra Leone after 2003.

This paper seeks to understand not only the reasons why economic transformation is so challenging in fragile contexts, but to examine case studies of success. By doing so, we hope to draw out lessons and identify practical steps that can be taken by governments and development partners to replicate these successes and support a sustainable, peaceful path to prosperity for fragile states.

 

As part of this project, an interactive data portal was developed to showcase the available data on economic development indicators in fragile and conflict-affected states. 

 

Photo: Billboards displaying advertisements for international money transfer companies, are seen new the Kilometre 4 junction in the Somali capital Mogadishu. AU/UN IST Photo/ Stuart Price.

Alberto Lemma (ODI) | Making Firms Work Series | Harnessing the power of digital technology in Nepal: CloudFactory

This blog is part of our ‘Making Firms Work’ series. Read other blogs in the series: on textile manufacturer A to Z and Kenyan garment firm Hela. 

Alberto Lemma (Research Fellow, ODI)

4 May 2018

CloudFactory is a remarkable example of a multinational digital firm. Operating from Nepal, it has 2,000 well-paid jobs worldwide, with around 1,300 workers in Nepal itself. This firm shows how digital technology can provide a lifeline and a link to the global economy for some of the most remote places in the world if they have appropriate skills and internet access.

Growing digitalisation is an opportunity for Nepal

Digitalisation is playing and will continue to play a crucial role in Nepal’s economic transformation process. As a landlocked and resource-limited country, Nepal’s economic activities are constrained by limited transport links with India to export its manufactured goods. However, digital goods and services do not have such limitations.

Development of a digital economy requires a stable and fast-enough connection to the internet, a workforce that can speak global languages (e.g. English, etc.) and appropriate skills. Nepal already has these ingredients, which, combined in the right way, can help promote a high-value services sector in the country.

This will not only provide benefits in terms of jobs and exports but also promote productivity across other sectors. For example, a recent SET study on digitalisation and the future of manufacturing highlights the need for developing countries to invest in digitalisation to help their manufacturing sectors improve productivity. If they fail to do this, they will be left behind and face a growing global digital divide, making it harder for them to promote sectors that are increasingly dependent on digital processes.

CloudFactory: harnessing the potential of digital technology

Some Nepalese firms are already taking part in this process. A remarkable example is CloudFactory, an information and communication technology business process outsourcing (ICT-BPO) company that provides services to enterprises worldwide. CloudFactory uses a cloud-based platform (hence its name) to allocate various tasks that firms around the world require to teams of workers based in Nepal and Kenya.

Software developer Mark Sears founded the company in 2008, training young Nepali computer engineers and developing web applications for start-up companies around the world. As the company grew, it seized the opportunity to create a platform to connect the technical routine data-oriented work that various companies demanded with the untapped pools of human capital that Nepal had in supply.

Human resources are crucial. The workforce strategy is based on the traditional assembly lines Ford introduced more than 100 years ago. Rather than having a few highly skilled workers completing one large complex task, the task is broken down into several simple reproducible steps that low-skilled workers can work on. Essentially, CloudFactory has created a virtual assembly line where workers can contribute to tasks that used to be limited to individuals with advanced programming degrees. Each day, CloudFactory employees process over 1,000,000 tasks. These include:

  • Document transcriptions, whereby physical documents such as receipts, business cards and financial statements are scanned and sent to workers to turn into digital files;
  • Recognition work – that is, helping software automatically recognise faces, printed words and inputs for algorithms to improve automatic chat-bots; and
  • Commercial data aggregation and analysis, such as financial report analysis and real estate information aggregation and analysis.

CloudFactory shows great promise for Nepal for several reasons.

The first is the fact that it now employs over 2,000 workers, who are paid, at the least, two and half times the local minimum wage rate. Although these are contract-based staff (hence not permanent employees), the sheer number of them has already made CloudFactory a success story in terms of employment creation in high-value and high-productivity services in Nepal. This is the kind of employment that Nepal needs if it is to grow into a middle-income country, as discussed in a previous SET study on skills in Nepal, which pointed to ICT as a key driver of economic transformation in the country.

Second, the firm plans to expand to open more offices across the country. The fact that its employees could be spread out across the country, requiring only simple infrastructure such as a computer and an internet connection, will eliminate the geographic barriers that limit access to employment for workers in disadvantaged (or resource-constrained) areas. This is very significant for a country with mountainous and remote areas like Nepal. Employing people in remote areas can help stimulate the local economy without putting pressure on larger urban centres such as Kathmandu. Workers also have the freedom to choose their work hours through flexible scheduling that allows them to devote time to other areas of their life, such as education and family. Upskilling is also an important part of the employment process. In 2015, the company provided 837 hours of training to its employees, reporting that 27% of the workforce gained new technical skills and 47% new management skills.

Finally, CloudFactory has become an international organisation. The firm does not operate just in Nepal. In 2013, it expanded its operations to Kenya, with plans to cover other locations too. The company also has a sales office in the US and a new corporate office in the UK. This expansion, five years after it first opened in Nepal, shows that developing country ICT-BPOs can evolve into successful global production networks based on the human resources rather than the physical attributes of the country. These networks benefit Nepal as they foster greater trade flows between countries, further boosting growth and improving the economic resilience of Nepal as it expands into a more diversified export basket.

How Nepal’s ICT sector can be developed 

The ICT sector faces a serious challenge retaining staff in Nepal, with high constant turnover rates, fuelled by employee migration, limiting the capacity of Nepalese ICT firms like CloudFactory to grow. If Nepal is serious about its commitment to the ICT sector, as the Government of Nepal’s Investment Board states, it needs to look at some policy shifts to help local ICT firms further integrate into the global market. While some great strides have been taken to fortify the country’s ICT infrastructure, considering investments in local data centres could help increase data security and access speeds for local firms and improve security perceptions for international investors.

At the policy level, three key moves could help the sector evolve. Reforms to capital account systems could incentivise international investors to set up regional ICT-BPO hubs in Nepal and, at the same time, help local firms strengthen links to the global economy by facilitating international transactions. Allowing more talent into the country can, conversely to logic, help keep workers in the Nepalese market. Some key skills are still in short supply in the Nepalese ICT sector (marketing, high-level managerial skills, etc.); allowing local ICT firms to recruit from abroad can only help strengthen them, promoting firm growth, better wages and the retention of local workers. Finally, the promotion of healthy state–business relations could prove invaluable for the sector. If businesses can promote their growth and employment potential and highlight the challenges they face to the Nepalese government, through business associations such as the Computer Association of Nepal, issues could be rapidly addressed and opportunities harnessed to ensure the ICT sector, like tourism, becomes a pillar of exports for the country.

 

Photo credit: A Nepalese young man works on a computer in a small photo lab in Kathmandu on May 2, 2011. © ILO/ Pradip Shakya.

Five Policy Priorities to Facilitate East African Trade and Investment

With 3.9 million people predicted to join the labour market each year from now until 2030, there is a huge jobs challenge facing the East African Community (EAC): the creation of 7,000 jobs per day.
SET has worked with the East African Business Council (EABC) to develop a five-point plan for EAC governments to increase investment and intra-EAC trade and in doing so, help tackle the jobs crisis. The plan launches at the EABC’s 22nd anniversary celebrations in Nairobi. 

With 3.9 million people predicted to join the labour market each year from now until 2030, there is a huge jobs challenge facing the East African Community (EAC): the creation of 7,000 jobs per day.

SET has worked with the East African Business Council (EABC) to develop a five-point plan for EAC governments to increase investment and intra-EAC trade and in doing so, help tackle the jobs crisis:

  1. Eliminate non-tariff barriers to trade
  2. Reform the EAC Common External Tariff
  3. Improve regional infrastructure
  4. Fast track liberation of intra-EAC services trade
  5. Promote local sourcing

Further reading:

Balchin, N., Hoekman, B., Martin, H., Mendez-Parra, M. , Papadavid, P., Primack, D. and te Velde, D.W. (2016) Trade in services and economic transformation. SET Report. London: Overseas Development Institute (ODI) (https://set.odi.org/wp-content/uploads/2016/11/SET-Trade-in-Services-and-Economic-Transformation_Final-Nov2016.pdf).

Eberhard-Ruiz, A. and Calabrese, L. (2017) Trade facilitation, transport costs and the price of trucking services in East Africa. ODI Working Paper. London:  ODI (https://www.odi.org/publications/10868-trade-facilitation-transport-costs-and-price-trucking-services-east-africa).

Gasiorek, M., Mendez-Parra, M. and Willenbockel, D. (2017) ‘The costs of logistical and transport barriers to trade in East Africa’. ODI Briefing Paper. London: ODI (https://www.odi.org/publications/10816-costs-logistical-and-transport-barriers-trade-east-africa).

te Velde, D. W. (2017) ‘Supporting Kenya’s industrialisation: Mombasa port, SEZs and targeted development cooperation’. Supporting Economic Transformation (SET) Blog. London: ODI (https://set.odi.org/supporting-kenyas-industrialisation-mombasa-sezs-development/).

UNDESA Population Division (2017) World population prospects: the 2017 revision. DVD Edition.

The East African (2017) ‘Disputes are eroding intra-EAC trade gains’. 11 December (http://www.theeastafrican.co.ke/business/Disputes-are-eroding-intra-EAC-trade-gains-/2560-4223074-nr3bvd/index.html).

 

Photo credit: Salahaldeen Nadir / World Bank. License: CC BY-NC-ND 2.0.

Digitalisation and the Future of Manufacturing in Africa

Karishma Banga and Dirk Willem te Velde, March 2018

The growing digitalisation of economies and the associated rapid spread of advanced technologies like 3D printers, robots and cloud computing, is having a significant impact on manufacturing production globally. While the digital divide between developed and developing countries (particularly those in sub-Saharan Africa) is still significant, this does not mean developing countries will not be affected in the coming decades. With wages rising even in low-income countries, automation may become an increasingly attractive option to domestic firms, and furthermore, creeping automation of manufacturing in developed countries will have a knock-on effect globally.

Karishma Banga and Dirk Willem te Velde, March 2018

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The growing digitalisation of economies and the associated rapid spread of advanced technologies like 3D printers, robots and cloud computing, is having a significant impact on manufacturing production globally. While the digital divide between developed and developing countries (particularly those in sub-Saharan Africa) is still significant, this does not mean developing countries will not be affected in the coming decades. With wages rising even in low-income countries, automation may become an increasingly attractive option to domestic firms, and furthermore, creeping automation of manufacturing in developed countries will have a knock-on effect globally.

With investment and growth in manufacturing traditionally seen as one of the most promising pathways to industrialisation and economic transformation for developing economies, the question of how governments can prepare for this inevitable change is a crucial one for Africa’s long-term growth trajectory.

This paper presents new empirical analysis of the potential impact of growing digitalisation in manufacturing on Africa, and discusses what policymakers can do to exploit their current window of opportunity, address constraints in traditional manufacturing and prepare for the ‘digital wave’, which will bring with it a whole host of new opportunities and challenges.

Selected media and other coverage

‘US robots set to become cheaper than wages in Kenya’, East Africa Business Week, 16 March

‘Robots and automation: how Africa is at risk’, BBC Africa, 19 March

World Business Report, BBC World Service, 19 March (at 19.30)

Focus on Africa, BBC World Services, 19 March (at 4.18)

‘Selon l’Overseas Development Institute : Les robots seront moins chers que la main d’œuvre africaine à partir de 2034’, L’eral.net, 20 March (in French)

‘Will US robots take over African people’s jobs?‘ Software Testing News, 20 March

‘US robots ‘set to take’ African jobs’, Business Ghana, 20 March

‘US robots set to take African jobs’, Modern Ghana, 20 March

‘I robot e l’automazione dei processi, le nuove minacce per l’economia africana’, La Stampa Economia, 20 March (in Italian)

‘África se encuentra en riesgo en lo que respecta al servicio de automatización’, Blasting News, 20 March (in Spanish)

Infographics

Graphics: SET Programme. All rights reserved.

Photo: Factory workers producing shirts at Sleek Garment Export, in Accra, Ghana on October 13, 2015. © Dominic Chavez/World Bank.
License: CC BY-NC-ND 2.0.

23 March 2018 | Digitalisation and the future of manufacturing in Africa

The growing digitalisation of economies and the associated rapid spread of advanced technologies like 3D printers, robots and cloud computing has a significant impact on manufacturing production globally. While the digital divide between developed and developing countries (particularly those in sub-Saharan Africa) is still significant, implying that low-income countries benefit less from digitalisation, there are important international pathways that affect the future of manufacturing-led development in Africa. Given this, the panel will discuss the major opportunities and threats that the fast-expanding digital economy poses for low and middle-income countries, which have traditionally used manufacturing as a first step towards economic transformation.

Session at the Global Development Network (GDN)’s 18th Global Development Conference: Science, Technology & Innovation for Development (#STI4D)

14.00-15.30 (GMT+5.30), Institute for Studies in Industrial Development, New Delhi (Auditorium, Ground Floor, Block B)

Watch the event below (from 5:27):

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The growing digitalisation of economies and the associated rapid spread of advanced technologies like 3D printers, robots and cloud computing has a significant impact on manufacturing production globally. While the digital divide between developed and developing countries (particularly those in sub-Saharan Africa) is still significant, implying that low-income countries benefit less from digitalisation, there are important international pathways that affect the future of manufacturing-led development in Africa. Given this, the panel will discuss the major opportunities and threats that the fast-expanding digital economy poses for low and middle-income countries, which have traditionally used manufacturing as a first step towards economic transformation.

ODI will present new empirical evidence of the impact of digitalisation on labour productivity in low-income and sub-Saharan African countries and discuss the policy implications. An expert panel will then discuss factors driving development in the digital economy, experiences from Kenya on how to become digitally-ready, and what policy makers can do to prepare for the ‘digital wave’ whist also exploiting the current window of opportunity to address constraints and upgrade traditional manufacturing.

With investment and growth in manufacturing traditionally seen as one of the most promising pathways to job creation and economic transformation for developing economies, the question of how governments can prepare for inevitable changes is a crucial one for Africa’s long-term growth trajectory.

Chair

Dirk Willem te Velde  – Principal Research Fellow and Head, International Economic Development Group, ODI @DWteVelde

Speakers

Karishma Banga – Senior Research Officer, ODI @karishma_banga

Anupam Khanna – Former Chief Economist & Director-General for Policy Outreach, NASSCOM

Edward Brown – Director of Country Engagement and Operations, African Center for Economic Transformation (ACET) @AcetforAfrica

Aruna Bolaky – Economic Affairs, Division for Africa, Least Developed Countries and Special Programmes (ALDC), United Nations Conference on Trade and Development (UNCTAD) @arunabolaky

 

For further information on the conference, including a full agenda and how to register to attend, visit the GDN website.

22 February 2018 | How ‘smart’ trade policy can help Africa industrialise

Despite promising signs of economic growth, many African countries are struggling to develop the strong industrial sector required for economic transformation and job creation. Fresh thinking is needed on how to achieve Africa’s industrialisation objectives, with trade and trade policy increasingly being looked to as key tools for the task. Much recent research has explored this idea by analysing the extent to which current trade policies and tariff structures are positively contributing to the content’s industrialisation policy, and providing assessments of what African economies can do to industrialise ‘smartly’ through trade. This event sees an expert panel debate these issues and seeks to put forward concrete policy recommendations for African economies looking to realise their industrialisation ambitions.

Thursday 22 February, 16.30-18.00
Overseas Development Institute
203 Blackfriars Road, London SE1 8NJ

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Despite promising signs of economic growth, many African countries are struggling to develop the strong industrial sector required for economic transformation and job creation. Fresh thinking is needed on how to achieve Africa’s industrialisation objectives, with trade and trade policy increasingly being looked to as key tools for the task.

Much recent research has explored this idea by analysing the extent to which current trade policies and tariff structures are positively contributing to the content’s industrialisation policy, and providing assessments of what African economies can do to industrialise ‘smartly’ through trade.

This event sees an expert panel debate these issues and seeks to put forward concrete policy recommendations for African economies looking to realise their industrialisation ambitions.

Chair

Dirk Willem te Velde @DWteVelde – Principle Research Fellow, Overseas Development Institute (ODI)

Panel

David Luke – Coordinator, African Trade Policy Centre at the United Nations Economic Commission for Africa (UNECA)

Linda Calabrese @lindacalab – Research Fellow, Overseas Development Institute (ODI)

Abbi M. Kedir – Senior Lecturer/Associate Professor in International Business, Sheffield University

Chi Atanga @ck_atanga – Founder, Walls of Benin

Photo credit: Jonathan Ernst/World Bank. Licence: CC BY-NC-ND 2.0.

4 December 2017 | Launch event: Adjusting to rising costs in Chinese light manufacturing

On 4 December 2017, the Overseas Development Institute (ODI) and the Center for New Structural Economics (CNSE) at Peking University, Beijing, hosted the launch of the ODI–CNSE joint report, Adjusting to rising costs in Chinese light manufacturing: what opportunities for developing countries?
The report presents the findings of a survey of 640 light manufacturing firms in China’s Pearl River and Yangtze River Deltas, in an effort to understand the pressures facing Chinese light manufacturing firms and such firms’ responses to these challenges, and especially their interest in investing ‘out’ into countries in Africa and the rest of Asia.
Regional launch events were held in Ningbo in the Yangtze River Delta region and in Guangzhou in the Pearl River Delta on 11 and 12 December 2017.

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On 4 December 2017, the Overseas Development Institute (ODI) and the Center for New Structural Economics (CNSE) at Peking University, Beijing, hosted the launch of the ODI–CNSE joint report, Adjusting to rising costs in Chinese light manufacturing: what opportunities for developing countries?

The report presents the findings of a survey of 640 light manufacturing firms in China’s Pearl River and Yangtze River Deltas, in an effort to understand the pressures facing Chinese light manufacturing firms and such firms’ responses to these challenges, and especially their interest in investing ‘out’ into countries in Africa and the rest of Asia.

Regional launch events were held in Ningbo in the Yangtze River Delta region and in Guangzhou in the Pearl River Delta on 11 and 12 December 2017.

Media coverage

‘Chinese manufacturing may not be moving to Africa all that soon’, Quartz Africa, 5 December

‘China Light Industry Survey Report: Labor costs have become the number one challenge’, Shanghai Securities News, 5 December (in Mandarin)

‘China Light Industry Enterprises “Going Global” Survey: Nearly 30% of shoe companies have plans or have invested abroad’, 21st Century Business Herald, 6 December (in Mandarin)

‘China must focus on innovation in manufacturing as wages rise, says Apple’s Cook’, South China Morning Post, 6 December

‘Costs push shoemakers to set foot abroad’, Global Times, 7 December

‘Labor costs rose, 27% of China’s footwear companies surveyed to be “going out”‘, Yangcheng Evening News, 12 December

‘”Promote economic restructuring – China’s manufacturing enterprises to upgrade and go global research report” successfully released in Guangzhou’, Southern Network, 13 December

‘China’s manufacturing enterprises to upgrade and go out, research report released’, Guangming, 13 December

 

Photo credit: CNSE. All rights reserved.

 

Dirk Willem te Velde (ODI) | Economic transformation and job creation: trends to watch in 2018

Dirk Willem te Velde (SET Programme Director, ODI)

4 January 2018

Job creation has taken centre stage globally as an issue over the past few years. Failure to create jobs in the inland US was key to the presidential victory of Donald Trump, job losses in northern England contributed to the Brexit referendum outcome in 2016 and new promises related to job creation for the young helped lead to electoral outcomes in Ghana in 2016 and Liberia in 2017. Related to this, countries, regions and social groupings need to adjust and transform themselves continuously or risk political upheaval, social unrest and ‘being left behind’. The year 2018 offers a range of global and national opportunities to improve prospects for job creation.

Harnessing the opportunities of technical change

Globalisation and technical change are creating both challenges and opportunities. The debate here is not new. Tinbergen wrote in the 1970s about a race between technology and education. Widening inequality in the 1990s in developed and emerging markets was blamed on trade, foreign investment, skill-biased technology and institutional weakening. In 2018, the reality is that there is not enough technical change or productivity growth in the poorest countries, especially the sort of change that will enhance the job opportunities of the poorest.

We will be asking whether and how technology and manufacturing feature in ever-changing development strategies in low-income countries to create jobs and transform economies. With the African Center for Economic Transformation (ACET), we are exploring which efforts are effective in promoting manufacturing, which is sorely needed in such countries. We will also continue our work on services. A major question, for countries around the world, is whether groups are prepared to use global value chains, import and export opportunities and new technologies for job creation.

Pursuing smart globalisation

Recent political outcomes in the US and the UK remind us we need to tackle the distributional impacts of (any) economic change at the same time as the economic change occurs. Rodrik recently reiterated the economic origins of populist forces and that detailed economic analysis can help us understand resistance to some types of trade deals. Moreover, the failure of recent WTO negotiations to agree anything substantial suggests we need to work more at a plurilateral level. Smart globalisation means (i) advancing globalisation when it matters (and in developing countries both the static and the dynamic effects of trade are still really important) and (ii) globalising only when complementary policies are in place to address those that may gain the least.

A changed global governance

With the US showing little interest in climate discussions, the WTO and the UN, many are looking to China to provide the global public goods the world needs. We noted this trend in 2014. If anything, a period of increasing governance gaps (a hegemon in retreat with others not yet stepping up) is unrolling faster than anticipated. In 2018, we will be looking how cities, the private sector and the world minus-1 will be progressing on climate change discussions, plurilateral trade negotiations and other forms of global cooperation. Trade, investment and migration may see their greatest chance of progress through bilateral and regional deals. Africa’s continental free trade agreement, to be concluded in 2018, may provide impetus for greater cooperation on Africa’s trade, investment and transformation.

Country trends to watch in 2018

ODI’s work often operates at the interface between new development challenges and country realities. In 2018, we will continue to work with local institutions such as ESRF, REPOA, SAWTEE, ACET, UNECA and EAC to provide national governments with the analysis and practical policy suggestions that can turn rhetoric around transformation into evidence-based policies to create jobs.

After Kenya’s second attempt at elections in October 2017, in which the opposition did not take part, will the two sides join hands to develop the economy, creating jobs and manufacturing activity? SET’s 10 policy priorities developed with the Kenyan Association of Manufacturing need a push towards implementation. A serious look at special economic zones (SEZs) fits into this thinking.

After Nepal’s elections at the end of 2017, the new communist government needs to live up to its promises on job creation. SET will follow up on its recent research and use a manufacturing event to promote the creation of quality jobs that aim to dampen the emigration of young and skilled workers.

We will continue to examine Ethiopia’s evolution from an agriculture-led development model towards an industrialisation-led model. The implementation of SEZs such as Hawassa Industrial Park shows progress can be made. Such lessons need to be shared more widely across Africa.

Recent elections in Liberia and upcoming elections in Sierra Leone provide an opportunity for these countries to show they are now fully on the path of inclusive growth, after a difficult period hit by disease. We are supporting Liberia to attract investment, including by organisations such as CDC.

Zimbabwe’s removal of President Mugabe offers some hope for 2018, but, as SET’s roadmap for economic transformation suggests, nothing is easy. Nonetheless, smart interventions have the potential to generate some limited progress.

Tanzania is continuing to grow but there are questions marks on its models of industrialisation. Its share of manufacturing in GDP has been below 10% for a long time, and has declined further in recent years. The question now is how to implement the second five-year development plan (halfway in and with a focus on industrialisation), and in particular how to pursue practical industrialisation models that will not fall into the traps of either laissez-faire or state ownership.

Mozambique is still some way behind Tanzania. Manufacturing’s share of total employment is below 1%. Will the government be able to seize the considerable opportunities for transformation and job creation in 2018? Can it employ positive public action to use a range of mega deals for local industrialisation?

Opportunities for global cooperation in 2018

A range of global opportunities could support job creation in poorer countries in 2018.

Both the G20 and the G7 are prioritising the future of work on their agendas. This will provide impetus for international organisations to bring together their knowledge on the topic and suggest ways forward. Outreach by the G20 towards poorer countries, especially around the G20 compact with Africa, should be continued under the Argentinian presidency.

The IMF and World Bank aim to support economic transformation and job creation globally. They have contributed to a core objective on economic transformation and job creation (one of five) in IDA18; we now need to see how this will be operationalised from 2018 onwards.

The Commonwealth Heads of Government Meeting in the UK in April 2018 will be the largest gathering of heads of government the UK has ever hosted. While UK trade with the Commonwealth is obviously no substitute for weakening economic ties with the EU, the summit is a key opportunity to strengthen trade and investment ties among the Commonwealth, which consists of more than 50 small and large, developed and developing, landlocked and coastal countries. The APPG–ODI inquiry on the Commonwealth and trade, of which I am a member, will report at the beginning of this year.

Brexit itself requires new thinking around the UK’s future trade relations with developing countries. ODI provided a number of insights in this regard in 2017. Whatever the outcomes of the negotiations, the increased importance given to trade, investment and economic development more generally in development debates is a silver lining.

The UK’s development debate may be polarised as a result of the suggestion that, because we do not like to see UK aid tied only to UK interests (which is also not allowed by law), we should not be thinking about UK interests in development at all, and instead that the UK should provide aid grants to health and education (sometimes irrespective of country priorities). However, for countries to transition out of aid, non-grant aid instruments are needed too (e.g. equity and loans through CDC); for countries to develop and pay for their own health and education needs, real economic transformation, trade, investment and private sector development are needed; and countries often like to see more UK trade and investment, not less. Ensuring further integration among aid, trade and investment to support development will be a key UK development policy trend to watch in 2018.

 

Photo credit: Simon Davis/DFID, 2013. License: CC BY 2.0.

Adjusting to Rising Costs in Chinese Light Manufacturing: What Opportunities for Developing Countries?

Jiajun Xu, Stephen Gelb, Jiewei Li and Zuoxiang Zhao, December 2017
Chinese light manufacturing has undergone a significant transformation in recent decades. As China progresses towards high-income status, real wage growth in the sector has accelerated, between 2014 and 2016 as high as 11% per annum. While this has made a welcome contribution to poverty reduction, it has also put pressure on firms as they struggle with rising costs – with one potential strategy for tacking this problem being partial or full relocation of production to lower-cost locations abroad.

Jiajun Xu, Stephen Gelb, Jiewei Li and Zuoxiang Zhao, December 2017

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Chinese light manufacturing has undergone a significant transformation in recent decades. As China progresses towards high-income status, real wage growth in the sector has accelerated by 11% per year (2014-2016). While this has made a welcome contribution to poverty reduction, it has also put pressure on firms as they struggle with rising costs. One potential strategy for tackling this problem has been the partial or full relocation of production to lower-cost locations abroad.

Optimists maintain that wage growth in China presents an opportunity for low-income countries (LICs) in Africa and elsewhere in Asia to help drive growth and structural transformation by attracting foreign direct investment and jobs from China. But the positive outcomes for LICs are uncertain. Country-level constraints such as poor infrastructure tend to turn-off foreign investors, Chinese manufacturing firms have developed alternative strategies for coping with rising wage costs, and other low-cost location options within China remain due to significant regional differences in wages.

This research report, which was undertaken in partnership with the Center for New Structural Economics (CNSE) at Peking University, presents the findings of a large-scale survey of 640 Chinese light manufacturing firms in the regions of the Yangztse River Delta and Pearl River Delta across four sub-sectors (garments, footwear, household appliances and toys).

This report was launched on 4th December 2017 at an event at Peking University, Beijing.

Media coverage

‘Chinese manufacturing may not be moving to Africa all that soon’, Quartz Africa, 5 December

‘China Light Industry Survey Report: Labor costs have become the number one challenge’, Shanghai Securities News, 5 December (in Mandarin)

‘China Light Industry Enterprises “Going Global” Survey: Nearly 30% of shoe companies have plans or have invested abroad’, 21st Century Business Herald, 6 December (in Mandarin)

‘China must focus on innovation in manufacturing as wages rise, says Apple’s Cook’, South China Morning Post, 6 December

‘Costs push shoemakers to set foot abroad’, Global Times, 7 December

‘Labor costs rose, 27% of China’s footwear companies surveyed to be “going out”‘, Yangcheng Evening News, 12 December

‘”Promote economic restructuring – China’s manufacturing enterprises to upgrade and go global research report” successfully released in Guangzhou’, Southern Network, 13 December

‘China’s manufacturing enterprises to upgrade and go out, research report released’, Guangming, 13 December

Photo credit: Daniel Foster via Flickr. Licence: CC BY-NC-SA 2.0.

 

Karishma Banga (ODI) | The digital industrial revolution: will African countries sink or swim?

Karishma Banga (Senior Research Officer, ODI)
The digital economy is here, and is rapidly growing, ushering in the Fourth Industrial Revolution. Though definitions have evolved over time, it is broadly agreed that the digital economy describes a worldwide network of economic and social activities enabled by digital technologies, including mobile and communication networks, ‘Cloud Computing’, Artificial Intelligence, ‘Machine Learning’, ‘Internet of Things’ and ‘Big Data’. Such new and cutting-edge technologies have led to creation of ‘smart machines’, such as driverless vehicles and cognitive robots, as well as widespread adoption of ‘smart platforms’ like Google, Amazon, Apple, Facebook and Alibaba. Digitalisation of the economy, through the increasing use of digital technologies, is changing the global landscape of manufacturing, presenting both challenges and opportunities in less-developed countries.  Often an alarmist approach is taken while discussing the future of manufacturing-led development in African economies, which have traditionally used manufacturing as a first step towards economic transformation and employment generation.

Karishma Banga (Senior Research Officer, ODI)

13 November 2017

The digital economy is here, and is rapidly growing, ushering in the Fourth Industrial Revolution. Though definitions have evolved over time, it is broadly agreed that the digital economy describes a worldwide network of economic and social activities enabled by digital technologies, including mobile and communication networks, ‘Cloud Computing’, Artificial Intelligence, ‘Machine Learning’, ‘Internet of Things’ and ‘Big Data’. Such new and cutting-edge technologies have led to creation of ‘smart machines’, such as driverless vehicles and cognitive robots, as well as widespread adoption of ‘smart platforms’ like Google, Amazon, Apple, Facebook and Alibaba.

Digitalisation of the economy, through the increasing use of digital technologies, is changing the global landscape of manufacturing, presenting both challenges and opportunities in less-developed countries.  Often an alarmist approach is taken while discussing the future of manufacturing-led development in African economies, which have traditionally used manufacturing as a first step towards economic transformation and employment generation. However, considering that many African countries are yet to industrialise, digitalisation may not directly impact them to the same extent as their developed counterparts. At the same time, it is important to not underestimate the power of technology to bring about disruptive change. It is essential for African countries to not only boost manufacturing but also adapt to the changing nature of manufacturing and prepare for the digital future.

How big is the digital divide?

Internet penetration – that is, the share of population with access to the internet – is often used as a proxy for digitalisation, based on the assumption that internet is the basic and necessary condition to digitalise. Internet penetration has grown by 5% in developed countries, compared to 15-20% in developing countries (World Economic Forum, 2015), and some sub-Saharan African economies have witnessed remarkable growth in internet penetration, particularly Ghana, Nigeria, Rwanda and Uganda. Yet developed countries still dominate the internet economy, with a staggering 78% share overall. In fact, the internet economy’s contribution to GDP in developed countries (3.4%) is more than three times the internet economy’s contribution to GDP in African countries. Moreover, of those countries with less than 10% internet penetration, most are African. These statistics suggest that the capability of African economies to be competitive in digitalised trade is low.

Globally, there is vast disparity in country shares in e-commerce across developed and developing countries: just six countries – China, France, Germany, Japan, the UK and the US – occupy 85% of cross-border e-commerce trade, of which all except China are developed nations. Developing economies are also lagging behind in deployment of ‘Smart Machines’- devices with machine-to-machine and/or cognitive computing technologies. Data from the International Federation of Robotics shows that in 2015, around 75% of robot sales were concentrated in just five markets: China, Germany, Japan, the Republic of Korea and the US. Africa’s share in global robot sales has in fact fallen since 2013, reaching just 0.2% in 2014 – a figure that is almost ten times lower than Africa’s share in global GDP.

Challenges for developing countries

In the race to digitalise, many developing countries (with the exception of China) are clearly falling behind. This is likely due to prohibitive costs of capital in these countries and low ‘digital-readiness’ in terms of infrastructure and skills. Many African countries are still struggling to industrialise, and in some cases lack even basic infrastructure – for instance, a reliable power supply, roads, ports and telecommunication – showing the need to primarily invest in these areas.

While this suggests that the direct impact of the growing digital economy on African countries may be limited, digitalisation can indirectly impact them by affecting global competition and changing the criteria of what constitutes an attractive manufacturing location. The emerging digital technologies may lower the costs of coordination and trading, thereby strengthening global value chains and enabling smaller firms to access international markets. But there are also risks of manufacturing activities being re-shored back to the developed world, as was the case with Phillips shavers and Adidas shoes. Moreover, goods in the digital economy are much more advanced and may require good infrastructure, research and development, and skilled labour at all points along the global value chain, leading to concentration of manufacturing in developed countries, and pressure on wages in less developed economies.

A central concern in the debate on digitalisation is that of a ‘jobless future’. The International Federation of Robotics estimates that that more than 2.5 million robots will be at work by 2019, indicating a 12% growth in deployment of robots between 2016 and 2019. McKinsey’s 2017 report estimates high percentages of jobs in African countries that will be automated away– 52% in Kenya, 46% in Nigeria and 50% in Ethiopia. However, recent case studies suggest that low- and middle-income economies need not be alarmed (Dutz et al., forthcoming); if we break down occupations into tasks, with distinct levels of automatability, then the share of jobs that can be automated away falls to 2-8%, as per Ahmed and Chen’s (2017) estimates. That said, these estimates do not account for the ‘potential’ jobs that may be lost by never being created, and the sizeable number of informal jobs in many developing and less developed countries.

Adapting to the changing nature of manufacturing

  1. Boost manufacturing

Using the window of opportunity in less-automated sectors

The impact of technology depends on the type of technology employed, and varies across countries and sectors. There are some sub-sectors in which technological change has been slow until now – such as food, beverage and tobacco products, basic metals, wood and wood products, paper and paper products, and other non-metallic minerals. These sectors present opportunities for LDCs to undertake local production and regional trade.

Using a dual-track approach to industrialisation

Countries should look to develop agro-processing and attract investment in higher value-added export-based manufacturing activities. A move towards services can also serve as an alternate path to development. Beyond improving the investment climate, effective policies include improving firm capabilities, innovations systems and direct financing opportunities.

  1. Digitalise manufacturing

Become digitally-ready

Emerging SET analysis on the future of manufacturing in Sub-Saharan African countries suggests that both technological progress and digitalisation increases labour productivity. But, while the impact of technological progress is higher in low-income and Sub-Saharan African countries, rendering support to convergence, the impact of digitalisation is lower in these economies. Moreover, the impact of technological progress on productivity increases as a country digitalises, but this impact is also lower for low-income countries and Sub-Saharan African countries. These findings may indicate a significant difference between low-income countries and high-income countries in ‘digital-readiness’; the ability to absorb and utilise digitalisation. Further results confirm that the impact of both technological progress and digitalisation increases as the work-force becomes more skilled, highlighting the importance of becoming digitally-ready by investing in skills development.

Skills for the future

Data is key to examining the sectors into which the labour force should move in the next few years. Previously, skill development strategies focused on moving from agriculture to manufacturing in less developed countries, and from manufacturing to services in more developed economies. On the future of work, Richard Baldwin (Professor, Graduate Institute) discusses that with the rise of digitalisation and consequently ‘tele-migrants’ and robots, soft-skills such as managerial skills, team-building skills and teaching will become more important.  Although the pace of change in adoption of 3D printers has been relatively slow, as 3D printers become more affordable, design capabilities will become important. This can create important opportunities for developing economies to leverage their design and creative skills in the growing digital economy. Spread of 3D printers to developing economies can also lead to de-centralisation of manufacturing and customised production on demand.

With rise and expansion of the ‘digital labour-force’, work may become increasingly precarious. To ensure that workers are not treated as digital commodities, it is important to re-orient social protection in the digital economy to follow people, rather than companies.

 

Photo credit: Andrea Moroni via Flickr. License: CC BY-NC-ND 2.0. 

Private Sector Development in Liberia: Financing Economic Transformation in a Fragile Context

Judith Tyson, October 2017
In recent years, the development community has become focused on how to stabilise fragile and conflict-affected states (FCAS), not only to enhance economic development, but also to safeguard international security and stability. This paper examines Liberia as one instance of a FCAS that, it is hoped, is making this transition. It concentrates on one particular aspect of economic renewal – the revival of private sector growth.
Liberia is of particular interest because, although it remains fragile, it has made significant progress including establishing a stable democratic government. Further, it has set out an economic strategy that is well-grounded in the country’s comparative advantages and has attracted significant donor support. Nevertheless, Liberia remains one of the poorest countries the world and the barriers to moving beyond being a stable but poor country, towards economic prosperity remain significant.

Judith Tyson, October 2017

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In recent years, the development community has become focused on how to stabilise fragile and conflict-affected states (FCAS), not only to enhance economic development, but also to safeguard international security and stability. Political stability and accountability as well as economic stabilisation in FCAS are important in this endeavour. However, relatively few FCAS who have managed to move away from conflict achieve this.

This paper examines Liberia as one instance of a FCAS that, it is hoped, is making this transition. It concentrates on one particular aspect of economic renewal – the revival of private sector growth. Liberia is of particular interest because, although it remains fragile, it has made significant progress including establishing a stable democratic government. Further, it has set out an economic strategy that is well grounded in the country’s comparative advantages and has attracted significant donor support. Nevertheless, Liberia remains one of the poorest countries in the world and the barriers to moving beyond being a stable but poor country, towards economic prosperity, remain significant.

Photo credit: Morgana Wingard/ UNDP. License: CC BY-NC-ND 2.0

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