Using data available to download from the Supporting Economic Transformation (SET) data portal, this briefing shows that labour and total factor productivity differentials exist at all levels in the economy, both between sectors and with sectors. This suggest there are significant opportunities for promoting economic transformation. This data briefing first discusses productivity differentials between sectors and then productivity differentials between firms within sectors.
Using data available to download from the Supporting Economic Transformation (SET) data portal, this briefing shows that labour and total factor productivity differentials exist at all levels in the economy, both between sectors and with sectors. This suggest there are significant opportunities for promoting economic transformation.
This data briefing first discusses productivity differentials between sectors and then productivity differentials between firms within sectors.
Key messages
Data available on the SET data portal show that productivity differentials exist both between, and within sectors in low-income countries, which points to significant opportunities for promoting economic transformation.
Data show the recent pattern of economic growth in Africa has involved little structural change across sectors.
Labour productivity differentials between sectors decrease as levels of income increase, suggesting further opportunities for economic transformation in LICs
Firm-level productivity data suggest large productivity differentials between firms within sectors.
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.
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.
Giles Henley, Sonia Hoque, Alberto Lemma, Posh Raj Pandey and Dirk Willem te Velde, October 2017 Building a consensus view of how Nepal can transform and create jobs in the future is crucial to incentivise policy action. However, there seems to be little or no political debate on job creation. This presents an opportunity to agree a consensus view and a unifying, practical vision on how the country can transform and create jobs. This project examines credible pathways to prosperity and inclusive job creation from a scenario perspective. It discusses the type of sectors that can help grow and transform Nepal to reduce its import dependency and increase its exports and what implications different sectors have for inclusive job creation.
Giles Henley, Sonia Hoque, Alberto Lemma, Posh Raj Pandey and Dirk Willem te Velde, October 2017
In January 2017, a study was commissioned which examined Nepal’s potential for economic transformation, with an in-depth case study of four sectors with strong potential to drive transformation.
This paper ‘Pathways‘ examines credible pathways to prosperity and inclusive job creation from a scenario perspective. It discusses the type of sectors that can help grow and transform Nepal and what implications different sectors have for inclusive job creation.
The paper ‘Four Sector Study‘ analyses the state of Nepal’s labour market and examines what can be done to ease the country’s constraints to job creation on the basis of a new firm-level survey of over 40 firms carried out in January 2017 in four promising sectors for economic transformation and job creation. It also discusses policy suggestions on how to develop sectors. In addition to informing the government of Nepal, the paper also aims to inform the design of a policy component for the Department for International Development (DFID) Nepal Skills for Employment Programme.
The results of the surveys, for each sector, are presented in greater detail in individual sectoral papers for:
Agro-processing
Light manufacturing
Tourism
Information and Communication Technology (ICT)
Two briefing papers are available to download above, summarising the key findings from the main papers.
Jun Hou, Stephen Gelb and Linda Calabrese, October 2017 Chinese manufacturers, in particular in labour-intensive industries, are striving hard for ways to withstand the pressures emerging during the ‘New Normal’ transition– such as slowing economic growth, labour force shortages and rising factor costs. As a result, many are in the process of, or at least considering, relocation of production to other low-cost destinations, or replacing workers with machines by upgrading technological capability levels. The relocation of Chinese manufacturing is forecast to open up major employment opportunities for low-cost regions and countries, with the potential for one to become the new global centre for manufacturing.
Stephen Gelb, Linda Calabrese and Jun Hou, October 2017
Chinese manufacturers, in particular in labour-intensive industries, are striving hard for ways to withstand the pressures emerging during the ‘New Normal’ transition– such as slowing economic growth, labour force shortages and rising factor costs. As a result, many are in the process of, or at least considering, relocation of production to other low-cost destinations, or replacing workers with machines by upgrading technological capability levels. The relocation of Chinese manufacturing is forecast to open up major employment opportunities for low-cost regions and countries, with the potential for one to become the new global centre for manufacturing.
Light manufacturing offers growth solutions for under-developed regions and economies as it is driven by low-factor costs and an abundant workforce. These background papers, which have informed the direction of a large-scale survey of Chinese firms currently underway and led by SET and the Centre for New Structural Economics, look at light manufacturing in China across four sub-sectors: clothing and footwear, toys, household appliances and information and communication technology. The first paper explores the patterns of the shift of light manufacturing employment within China, focusing on regional and industrial disparities, while the second focuses on the enabling factors in Africa and Asia that are driving this change. The summary paper brings these themes together and concludes that there remain low-cost opportunities for manufacturers within China, and that if other developing countries are to capitalise on the current opportunity, they must seek to address the challenges associated with their location-specific costs, while also engaging directly with Chinese firms in relevant sectors.
Neil Balchin, Peter Coughlin, Phyllis Papadavid, Dirk Willem te Velde and Kasper Vrolijk, October 2017 Mozambique’s gross domestic product (GDP) has grown annually by 5–7% in real terms over the past decade, but this has not been accompanied by structural change or sufficient job creation. The country requires a different focus towards economic transformation to address the very challenging short-term macroeconomic situation and create much-needed jobs in a sustainable way. This report on economic transformation and job creation in Mozambique synthesises 30 recent studies to understand commonalities and differences on promising sectors and value chains in Mozambique, binding constraints to developing these activities, and policies that have been suggested to achieve these.
Neil Balchin, Peter Coughlin, Phyllis Papadavid, Dirk Willem te Velde and Kasper Vrolijk, October 2017
Mozambique’s gross domestic product (GDP) has grown annually by 5–7% in real terms over the past decade, but this has not been accompanied by structural change or sufficient job creation. The country requires a different focus towards economic transformation to address the very challenging short-term macroeconomic situation and create much-needed jobs in a sustainable way.
The SET report on economic transformation and job creation in Mozambique synthesises 30 recent studies to understand commonalities and differences on promising sectors and value chains in Mozambique, binding constraints to developing these activities, and policies that have been suggested to achieve these. Thus, rather than undertaking new analysis, this synthesis paper reflects on existing analyses broadly related to industrialisation and economic transformation in Mozambique in order to provide a base from which to move forward on the specifics of how to transform the economy.
The summary paper outlines the most pressing development challenges facing Mozambique and how they affect prospects for transformation and job creation; discusses the promising sectors for future transformation; and highlights the actions needed to accelerate transformation based on a review of 30 studies in the recent literature on economic transformation. It then discusses next steps for the Government of Mozambique (GoM) and its partners, such as the UK Department for International Development (DFID), around the development models (the what) and institutional capabilities (the how) required to implement a distinctly Mozambican transformation and job creation strategy.
Neil McCulloch, Neil Balchin, Max Mendez-Parra and Kingsley Onyeka, October 2017 Nigeria has experienced rapid but low-quality growth over the past decade. This has been accompanied by limited structural change and little economic transformation. The share of manufacturing in Nigeria’s gross domestic product (GDP) is low relative to that in comparator countries, and the country’s heavy reliance on oil and gas exports has meant little attention has been paid to developing the manufacturing sector or diversifying into more complex products. This report, produced in partnership with the Nigerian Economic Summit Group (NESG) and launched at the Group’s annual Economic Summit in Abuja, analyses the different local policies options to increase backward and forward linkages in the Nigerian manufacturing sector.
Neil McCulloch, Neil Balchin, Max Mendez-Parra and Kingsley Onyeka, October 2017
Nigeria has experienced rapid but low-quality growth over the past decade. This has been accompanied by limited structural change and little economic transformation. The share of manufacturing in Nigeria’s gross domestic product (GDP) is low relative to that in comparator countries, and the country’s heavy reliance on oil and gas exports has meant little attention has been paid to developing the manufacturing sector or diversifying into more complex products.
There is a clear need for greater diversification of the Nigerian economy to promote quality growth, economic transformation and employment. This can be aided by the development of value chains that facilitate higher-value added processing and manufacturing activities within Nigeria and make greater use of locally produced inputs and services in production through the creation of backward linkages. The latter can have positive effects in terms of stimulating economic development; promoting the development of local industries; creating economic linkages; building local capacity, capabilities and technologies; developing skills within the workforce; boosting employment; and minimising capital flight. Greater use of local content and more extensive backward linkages can also help Nigeria avoid the resource curse.
This report, produced in partnership with the Nigerian Economic Summit Group (NESG) and launched at the Group’s annual Economic Summit in Abuja, analyses the different local policies options to increase backward and forward linkages in the Nigerian manufacturing sector. This includes a review of the legislation that supports local content policies in the country, a literature review to identify how said policies have operated in different sectors in Nigeria as well as international experience in comparable countries such as Brazil and Indonesia, firm data to quantify backward integration in Nigeria, and finally, policy recommendations for the Nigerian government to move forward on this agenda.
Neil Balchin and Dirk Willem te Velde, August 2017 Following extensive work done by the SET Programme on supporting the preparation of Tanzania’s Second Five-Year Development Plan (FYDP II), SET has continued to support the Planning Commission within the Ministry of Finance and Planning (MoFP). The Government of Tanzania launched the FYDP II – Nurturing Industrialisation for Economic Transformation and Human Development in 2016, and is currently finalising the FYDP II Implementation Strategy, for which SET has provided continued support.
Neil Balchin and Dirk Willem te Velde, August 2017
The Government of Tanzania launched the FYDP II – Nurturing Industrialisation for Economic Transformation and Human Development in 2016, and is currently finalising the FYDP II Implementation Strategy, for which SET has provided continued support.
These three briefings cover:
1) A summary of FYDP II published last year
2) A summary of FYDP II implementation strategy including actions and financing, and progress so far
3) A briefing linking FYDP II and the implementation strategies to other important actors (including donors/private sector).
Judith Tyson, August 2017 Zimbabwe has suffered from economic decline in the recent past, with a 60% reduction in its gross domestic product over the past two decades. There have been multiple acute crises and a deep structural regression in its economy. This has included deindustrialisation with degradation of capital stock and low capacity utilisation in the manufacturing sector. The paper on ‘A Roadmap for Economic Transformation’ argues that the most viable is a ‘single sector, single agent’ approach – whereby transformation is focused on a single sector with high potential and led by a single reformist agent within government – and this could ‘kick-start’ change.
Zimbabwe has suffered from economic decline in the recent past, with a 60% reduction in its gross domestic product over the past two decades. There have been multiple acute crises and a deep structural regression in its economy. This has included deindustrialisation with degradation of capital stock and low capacity utilisation in the manufacturing sector. The agriculture sector has suffered from declining productivity and only the mining sector has thrived, but this is mainly because of the commodity ‘super cycle’ that ended in 2015. Ideally, there would be broad and deep macroeconomic reforms but many commentators see this as unrealistic without significant political change. Instead, new strategies that are feasible in the political economy of Zimbabwe are needed to get the country’s economy back on track.
The paper A Roadmap for Economic Transformation argues that the most viable is a ‘single sector, single agent’ approach – whereby transformation is focused on a single sector with high potential and led by a single reformist agent within government – and this could ‘kick-start’ change. First, Zimbabwe has inherent competitive advantages. These include rich natural endowments in agriculture and extractives, including gold, platinum and diamonds; proximity to key regional markets in South Africa, Zambia and other neighbouring countries; and good levels of education and business skills. These provide Zimbabwe with the potential to develop value-added, export-led manufacturing and processing of its products, with resultant and much-needed formal, higher-wage employment and fiscal revenues. Second, experiences in comparator countries show that, under such a strategy, there is no need for pre-existing ‘good governance’ for transformation to begin. Conditions such as a well-functioning democracy, transparency, civil society empowerment or the absence of corruption are not necessary. Indeed, there is no need for comprehensive change in institutions and power structures.
In the period from 1999 to 2008, Zimbabwe’s GDP declined by 52%. This ended in 2008 in a period of hyperinflation and dollarisation of the economy. Subsequently, the economy experienced anaemic growth which averaged 2.9% from 2009 to 2016. However, the Zimbabwean economy did more than simply underperform in relation to economic growth on a comparative basis with the region. It underwent a significant structural degeneration, which is characterised by a number of factors, and which are discussed in the Outlook of the Zimbabwe Economy background paper.
David Booth, Linda Calabrese and Frederick Golooba-Mutebi, July 2017
One of the keys to economic transformation across Africa today is a greater role for employment-intensive, export-oriented manufacturing. After taking due account of differences in contexts and time periods, international experience – especially in Asia but also in Africa-region leaders such as Mauritius – points to employment-intensive manufacturing as a crucial and indispensable step in the transition from poverty to development.
David Booth, Linda Calabrese and Frederick Golooba-Mutebi, July 2017
One of the keys to economic transformation across Africa today is a greater role for employment-intensive, export-oriented manufacturing. After taking due account of differences in contexts and time periods, international experience – especially in Asia but also in Africa-region leaders such as Mauritius – points to employment-intensive manufacturing as a crucial and indispensable step in the transition from poverty to development.
Rwanda is – along with Ethiopia – exceptional in Africa in that it has in place a nation-building project centred on the aim of economic transformation. Features of its political economy also mean Rwanda lends itself easily to comparison with the best-documented experiences in Asia. This paper explores the ways in which international experience of success in manufacturing-based economic transformation can provide valuable insight for Rwanda, in the areas of government coordination, engagement with and representation of the private sector, and the experimental learning process.
Since the downturn in global commodity prices in 2015, sub-Saharan Africa’s macroeconomic conditions have deteriorated, with 2016 seeing the worst economic growth in more than two decades. To maintain progress in economic transformation, employment-intensive and higher-productivity sectors need to be developed. Manufacturing – including agricultural processing – offers this opportunity, including through participation in regional and global value chains. In order for the sector to get the investment it needs, the promotion and mobilising of private financing will be crucial.
Since the downturn in global commodity prices in 2015, sub-Saharan Africa’s macroeconomic conditions have deteriorated, with 2016 seeing the worst economic growth in more than two decades. To maintain progress in economic transformation, employment-intensive and higher-productivity sectors need to be developed. Manufacturing – including agricultural processing – offers this opportunity, including through participation in regional and global value chains. In order for the sector to get the investment it needs, the promotion and mobilising of private financing will be crucial; however, this mobilisation is currently muted and, despite growing in absolute terms in the past decade, is not sufficient to support strong growth in the manufacturing sector.
These two complementary papers explore the current financing environment for manufacturing in sub-Saharan Africa including constraints on both investors and manufacturers, and offer suggestions for how barriers might be overcome with tailored policy solutions. The paper on conditions examines macroeconomic financing constraints in Kenya, Rwanda and Liberia in order to assess why manufacturing growth may have fallen behind services in these three countries at various stages of development. The paper on mobilising financing, meanwhile, looks at disparities between finance flows to the manufacturing sector and to others such as financial services, as well as the disparity between the financing of manufacturing in larger economies such as Ethiopia and Nigeria (which together account for 66% of financing manufacturing in the region) and in fragile and conflict-affected states. Finally, it offers policy recommendations to tackle these issues that include the expansion of impact accelerator funds and the supporting of value chain development.
This study has been released alongside a blog on East African manufacturing in Africa which can be found here.
Linda Calabrese, Phyllis Papadavid and Judith Tyson, June 2017
Rwanda is one of Africa’s “rising stars”. The country’s economy has seen solid rates of economic growth since the civil conflict in the mid-1990s. Strength in investment flows has followed in the path of this macroeconomic and institutional stability. As this paper highlights, a large part of Rwanda’s success has been the result of proactive policies undertaken by the government of Rwanda in facilitating a good domestic investment climate, which have been conducive to strong rates of growth in FDI into the economy.
Linda Calabrese, Phyllis Papadavid and Judith Tyson, June 2017
Rwanda is one of Africa’s “rising stars”. The country’s economy has seen solid rates of economic growth since the civil conflict in the mid-1990s. Strength in investment flows has followed in the path of this macroeconomic and institutional stability. As this report highlights, a large part of Rwanda’s success has been the result of proactive policies undertaken by the government of Rwanda in facilitating a good domestic investment climate, which have been conducive to strong rates of growth in foreign direct investment (FDI) into the economy.
Despite the country’s successes, though, developments in manufacturing have not been as encouraging: the sector’s share of the economy and exports is still small. The report aims to analyse Rwanda’s financial backdrop, and the composition of its investment flows into manufacturing, with a view to exploring constraints and opportunities in manufacturing.
In analysing financial and economic challenges, this paper concludes that high transport and utility costs, the elevated real effective exchange rate and weakness in bank lending are key challenges to be tackled. Looking ahead, special economic zones should continue to be a focus alongside export-oriented investments; prudential measures could target manufacturing finance and disincentivise overly high levels of real estate lending
Anzetse Were, Dirk Willem te Velde and Gituro Wainaina, June 2017
Developed by SET in partnership with the Kenya Association of Manufacturers (KAM), this booklet addresses Kenya’s current economic predicament and makes the case for political and financial investment in manufacturing. The central 10-point policy plan lays out seven policies and regulations that should be enacted to create a conducive environment for manufacturing to flourish, and three further suggestions for how to implement them in practice.
Anzetse Were, Dirk Willem te Velde and Gituro Wainaina, June 2017
The Kenyan manufacturing sector has the potential to transform the Kenyan economy and kick-start a process of industrialisation that could create hundreds of thousands of jobs and improve livelihoods across the country. However, to make this a reality by 2022 will take a concerted and coordinated effort by both government and the private sector.
Developed by SET in partnership with the Kenya Association of Manufacturers (KAM), this booklet addresses Kenya’s current economic predicament and makes the case for political and financial investment in manufacturing. The central 10-point policy plan lays out seven policies and regulations that should be enacted to create an environment in which the sector can flourish, and three further suggestions for how to implement them in practice.
The 10-point policy plan aims to support Kenya’s manufacturing sector, by presenting seven priorities for public policy and regulation to improve manufacturing competitiveness, and a further three recommendations on implementation explain how to make this happen.
Margaret McMillan, John Page, David Booth and Dirk Willem te Velde, March 2017
Launched alongside Supporting Economic Transformation: An Approach Paper, these briefings summarise the central tenets of SET’s approach to the challenge of promoting economic transformation and explore its importance for driving sustainable, inclusive development in the world’s poorest countries.
Margaret McMillan, John Page, David Booth and Dirk Willem te Velde, March 2017
As continuous and sometimes remarkably fast economic growth has become more usual in much of the developing world over recent decades, attention has shifted to the pattern and quality of that growth. Issues of concern include the persistence of extreme poverty in many countries, despite growth in gross domestic product, and the weak capacity of many sectors to produce sustained increases in employment. Much of recent growth in sub-Saharan African economies has been due to factors like buoyant urbanisation, and an expansion in the service economy that serves only the middle- and upper-classes. This pattern of growth is both highly skewed and non-inclusive. Another way to express this is that these economies are achieving growth without depth, or economic growth without economic transformation.
Launched alongside Supporting Economic Transformation: An Approach Paper, these briefings summarise the central tenets of SET’s approach to the challenge of promoting economic transformation and explore its importance for driving sustainable, inclusive development in the world’s poorest countries.
Stephen Gelb, Linda Calabrese and Xiaoyang Tang, March 2017, June 2017
The paper and briefing reviews the foreign (Chinese) presence in four sectors in Myanmar and its impact on economic transformation. Significant positive effects include employment and exports in garments, local enterprise development and downstream user costs in construction (and infrastructure), and exports, technology transfer and product market competition in agriculture and agro-processing and finally makes a number of policy recommendations for UK DFID.
Stephen Gelb, Linda Calabrese and Xiaoyang Tang, March 2017
This study assesses the potential for foreign direct investment (FDI) to contribute to Myanmar’s economic transformation, by raising productivity and growth. The study focuses on four sectors – agriculture and agro-processing, garments, construction and tourism – selected for their significance for both transformation and FDI in Myanmar, particularly FDI from China.
The paper begins with a brief review demonstrating that economic transformation over the past two decades has been limited, though data limitations make it difficult to reach firm conclusions. Following this, a review of trade and investment looks at overall performance, as well as in the four selected sectors, and at relations with China. Exports have grown especially into China, but are dominated by extractives (particularly natural gas and precious stones). Garment export potential has raised manufacturing FDI since 2012. The trade and investment regimes are still undergoing liberalisation to encourage entry. Forty firms in the selected industries were interviewed, of which 31 were Chinese investors which suggest the Chinese firms are fairly satisfied with their performance in Myanmar, and with the productivity of low-skilled Myanmar labour (adjusted for wages). The Chinese and non-Chinese firms are not very different with respect to their main concerns: the quality of infrastructure (energy and transport particularly) and trade facilitation; the quality of local employees in higher-level managerial and technical positions; the limited breadth of the financial system, including the narrow scope of financial and foreign exchange instruments; and the unpredictability or absence of regulation.
The paper reviews in some detail the foreign presence in each of the four sectors and its impact on economic transformation. Significant positive effects include employment and exports in garments, local enterprise development and downstream user costs in construction (and infrastructure), and exports, technology transfer and product market competition in agriculture and agro-processing. The paper also concludes with a number of policy recommendations for UK DFID.
This study has contributed to a comment on factory jobs for the poor which can be read here.
Margaret McMillan, John Page, David Booth and Dirk Willem te Velde, March 2017
This approach paper seeks to define economic transformation, offers an approach to measuring progress towards it, and examines case studies from African and Asian economies where transformative policies have been successful to greater and lesser extents. The paper concludes by presenting a multi-disciplinary approach to identifying opportunities, diagnosing constraints and mapping out realistic policy options for countries to use to turn their economic growth into genuine transformation.
Margaret McMillan, John Page, David Booth and Dirk Willem te Velde, March 2017
As continuous and sometimes remarkably fast economic growth has become more usual in much of the developing world over recent decades, attention has shifted to the pattern and quality of that growth. Issues of concern include the persistence of extreme poverty in many countries, despite growth in gross domestic product, and the weak capacity of many sectors to produce sustained increases in employment. Much of recent growth in sub-Saharan African economies has been due to factors like buoyant urbanisation, and an expansion in the service economy that serves only the middle- and upper-classes. This pattern of growth is both highly skewed and non-inclusive. Another way to express this is that these economies are achieving growth without depth, or economic growth without economic transformation.
This approach paper seeks to define economic transformation, offers an approach to measuring progress towards it, and examines case studies from African and Asian economies where transformative policies have been successful to greater and lesser extents. The paper concludes by presenting a multi-disciplinary approach to identifying opportunities, diagnosing constraints and mapping out realistic policy options for countries to use to turn their economic growth into genuine transformation.
Edited by Bernard Hoekman and Dirk Willem te Velde, February 2017
Services play a vital role in economic transformation and job creation in poor countries, but the effects are different from those in agriculture or manufacturing. While much of the discussion on economic transformation centres on transforming agriculture and moving into manufacturing, services are an under-explored component of economic transformation strategies. This set of essays analyses the role of services, and especially trade in services, in economic transformation.
Edited by Bernard Hoekman and Dirk Willem te Velde, February 2017
Services play a vital role in economic transformation and job creation in poor countries, but the effects are different from those in agriculture or manufacturing. While much of the discussion on economic transformation centres on transforming agriculture and moving into manufacturing, services are an under-explored component of economic transformation strategies.
This set of essays analyses the role of services, and especially trade in services, in economic transformation. The essays are divided into three parts. The first set of contributions is about understanding the role of services in economic transformation and what the donor community could do over the next few years to support increases in economy-wide productivity and employment by focusing more on services policies and the performance of services sectors. The second part discusses the need to improve data on trade in services and where the focus should be. The third and final part examines ways to support developing countries through trade agreements and preferential access to markets, and help poorer countries benefit from greater trade opportunities. What should be the priorities for promoting services trade and providing services preferences for developing countries?
Neil Balchin, Bernard Hoekman, Hope Martin, Maximiliano Mendez-Parra, Phyllis Papadavid, David Primack and Dirk Willem te Velde, November 2016
While much of the debate on economic transformation centres around transforming agriculture and moving into manufacturing, the potential of services is often left unexplored. It is crucially important for policy-makers in low-income countries, many of whom may not regard services, or trade in services, as a prime focus of action on economic transformation. This paper explores how policies both directly and indirectly affecting trade in services can have a major impact in terms of increasing the contribution of services to economic transformation.
Neil Balchin, Bernard Hoekman, Hope Martin, Maximiliano Mendez-Parra, Phyllis Papadavid, David Primack and Dirk Willem te Velde, November 2016
While much of the debate on economic transformation centres around transforming agriculture and moving into manufacturing, the potential of services is often left unexplored. A proper understanding of the trade dimension of services lies at the frontier of new analytical work on economic transformation. It is crucially important for policy-makers in low-income countries, many of whom may not regard services, or trade in services, as a prime focus of action on economic transformation. This paper explores how policies both directly and indirectly affecting trade in services can have a major impact in terms of increasing the contribution of services to economic transformation.
It is often assumed that services follow transformation, but as in reality services also enable other sectors, it is important for economies to follow a balanced growth path where services and other sectors grow in tandem. Policy-makers need to update their evidence base on such linkages so they realise how services and other sectors grow together.
What is the role of trade in services in economic transformation and what can be done to improve the contribution? This paper seeks to answer these questions by reviewing what is known about the relationships between trade in services and economic development and identifying areas for further research, quantifying how these relationships work and exploring short case studies where countries have actively promoted exports of services.
Milan Brahmbhatt, Russell Bishop, Xiao Zhao, Alberto Lemma, Ilmi Granoff, Nick Godfrey and Dirk Willem te Velde, November 2016
Africa’s “Growth Miracle” in the 21st century has reversed a long standing narrative of pessimism about the region. It has emboldened hope for the future. GDP growth reached around 5% annually from 2001-2014. Rates of extreme poverty fell substantially. Yet big challenges remain.
Milan Brahmbhatt, Russell Bishop, Xiao Zhao, Alberto Lemma, Ilmi Granoff, Nick Godfrey and Dirk Willem te Velde, November 2016
Africa’s “Growth Miracle” in the 21st century has reversed a long standing narrative of pessimism about the region. It has emboldened hope for the future. GDP growth reached around 5% annually from 2001-2014. Rates of extreme poverty fell substantially.
Yet big challenges remain. Growth slumped in 2015 and 2016. The region lags far behind on most measures of human development. And climate change is taking an increasing toll on many countries: the region is warming faster than the world as a whole, and many areas will experience more frequent and intense droughts and floods. The economic impacts of climate change are expected to be severe, with agriculture and poor people especially at risk.
In this uncertain environment, policymakers in African countries and Pan- African institutions – the African Union in its “Agenda 2063”, the African Development Bank, and the United Nations Economic Commission for Africa – have identified economic transformation as a critical strategy to help boost the pace of inclusive growth in decades to come.
This report aims to help decision-makers take stock of the extraordinarily rich experience of recent years and draw lessons for the future. The choices made now will have implications for the decades ahead. This report lays out five key action areas for economic transformation and social and environmental progress in Africa: getting the fundamentals right, transforming agriculture and land use, diversifying into manufacturing and other high-productivity sectors, unleashing the power of urbanisation and fostering a modern energy transition.
This report was produced in collaboration with The New Climate Economy, part of The Global Commission on the Economy and Climate.
Neil Balchin, Tim Kelsall, Blandina Kilama, Alberto Lemma, Max Mendez-Parra, Donald Mmari, Dirk Willem te Velde, Sam Wangwe, Leah Worrall, May 2016
The Government of Tanzania launched the second Five-Year Development Plan (FYDP II) (2016/17-2021/22) in June 2016, focusing on the theme Nurturing Industrialisation for Economic Transformation and Human Development. This study informed the preparation of FYDP II.
Neil Balchin, Tim Kelsall, Blandina Kilama, Alberto Lemma, Max Mendez-Parra, Donald Mmari, Dirk Willem te Velde, Sam Wangwe, Leah Worrall, May 2016
The Government of Tanzania, through the Planning Commission in the Ministry of Finance and Planning (MOFP), launched the second Five-Year Development Plan (FYDP II) (2016/17-2021/22) in June 2016, focusing on the theme Nurturing Industrialisation for Economic Transformation and Human Development. This study informed the preparation of FYDP II. It takes stock of Tanzania’s industrialisation and economic transformation record, policies and strategies, identifies activities for nurturing a semi-industrialised economy, introduces a range of measurable targets that could be considered for the next FYDP, presents a resource mobilisation framework and considers new ways to make industrialisation and economic transformation a reality.
The summary paper argues that Tanzania needs a radically different approach in the coming five years in order to seize the opportunities for industrialisation in a rapidly evolving environment and concludes that there are some early signs of structural transformation in Tanzania. The country needs to build on these by addressing generally agreed policy options, but in a different way compared to the past. It can best do this in practical terms by considering a number of collaborative projects that would illustrate how it can nudge the economy further onto a more transformational path in the following areas: infrastructure development, human capital development, tax policy reform, investment climate reform and practical industrial policy. But this requires learning and adaptive development throughout the duration of the plan – a new approach that is appropriate given the new challenges.
Dirk Willem te Velde, David Booth, Danny Leipziger and Ebere Uneze, May 2016 Nigeria has enjoyed fast economic growth over the past decade but has seen low-quality growth. Now, with oil prices down significantly, and weak growth, new areas of economic growth need to be identified. Business-as-usual will not safeguard productive jobs for the future or reduce poverty significantly. Promoting quality growth and economic transformation is crucial. This paper discusses the issues, drawing on economic analysis and political-economy assessment.
Dirk Willem te Velde, David Booth, Danny Leipziger and Ebere Uneze, May 2016
Nigeria has enjoyed fast economic growth over the past decade but, compared with other large oil exporters and many other African countries, it has experienced little economic transformation and has seen low-quality growth. Now, with oil prices down significantly, and weak growth, new areas of economic growth need to be identified. Business-as-usual will not safeguard productive jobs for the future and will not reduce poverty significantly. This is a cul-de-sac. Promoting quality growth and economic transformation is crucial. But how can this be done?
This paper addresses that question, drawing on a combination of economic analysis, to identify potential areas for action, and political-economy assessment, to clarify the conditions under which such action may be able to succeed. We draw on relevant international experience, especially from large countries that have managed to transform the structure of their economies, as well as on the record of economic policy reform in Nigeria to date.
The paper written by Nigerian and international experts draws on international experience from large developing countries that have managed to transform the structure of their economies, as well as the record of economic transformation and economic policy in Nigeria to date, to chart a way forward for Nigeria’s economic transformation efforts.
Neil Balchin, Stephen Gelb, Jane Kennan, Hope Martin, Dirk Willem te Velde and Carolin Williams, March 2016 Strong growth in the African region, rebalancing and rising wages in China, and improvements in the policy and institutional context provide a unique opportunity that African countries can use to attract investment in higher value-added, export-led manufacturing. This paper describes how production, employment, trade and FDI in the manufacturing sectors in nine selected Sub-Saharan African (SSA) countries has increased and identifies opportunities for promising sectors.
Neil Balchin, Stephen Gelb, Jane Kennan, Hope Martin, Dirk Willem te Velde and Carolin Williams, March 2016
This report describes how production, employment, trade and foreign direct investment (FDI) in the manufacturing sectors in nine selected sub-Saharan African (SSA) countries has increased in the recent decade and identifies opportunities for the development of promising manufacturing sectors in the future.
The paper employs a number of techniques to examine country specific promising sectors. Africa already has a share that is greater than 2% of world trade in fertilizers, chemicals, leather products, apparel, oil, iron and steel. Qualitative accounts and calculations using standard techniques indicate that there are some very interesting opportunities in the following African manufacturing sectors: garments, agri-business, mineral processing, manufactures of consumer goods, pharmaceuticals, automobiles and food, beverages and tobacco.
Finally, the report examines rankings for selected countries in the area of geographical advantages, market size, economic fundamentals, general investment climate, and specific policies. Some countries are well positioned in relation to comparators. For example, Nigeria’s size and growth in Tanzania and Ethiopia stand out, as do Ethiopia’s low labour costs, Rwanda’s investment climate and Ghanaian skills.
The paper concludes that while some are positioned better than others, all of the countries we examined will need to improve in several areas if they are going to attract high levels of investment into export-based manufacturing sectors. African countries should act to take advantage of recent trends such as African regional growth and rising wages in Asia.
Louise Fox, March 2016. The government of Tanzania is currently preparing its next Five Year Development Plan (FYDP II). Ensuring women benefit from the development processes envisaged in the plan is instrumental to achieving its objectives. Analysis of recent data on employment and time use shows women have benefited from a decade of economic transformation in Tanzania. This paper discusses many issues, including how they have gained access to new employment opportunities in higher-productivity sectors such as manufacturing, trade and hotel and food services and the expansion of public services has increased the education of women in in the labour force.
The government of Tanzania is currently preparing its next Five Year Development Plan (FYDP II). Ensuring women benefit from the development processes envisaged in the plan is instrumental to achieving its objectives. Analysis of recent data on employment and time use shows women have benefited from a decade of economic transformation in Tanzania. They have gained access to new employment opportunities in higher-productivity sectors such as manufacturing, trade and hotel and food services. The expansion of public services made possible by a decade of growth has increased the education of women in in the labour force, as well as bringing about longer life expectancy.
Some disadvantages have persisted, however. Yields per hectare in agriculture are still lower on land worked primarily by women compared with those on land worked by men. While men’s time taken up by household chores has reduced, women’s has not; this burden begins as early as 10 years old for females. Too many young women still marry before age 18 and start their families soon after, reducing their education and employment options in the future.
To the extent possible, FYDP II should include measures to reduce longstanding gender inequities, especially those that both reduce growth and transformation and worsen poverty. In non-agriculture sectors, programmes can help women gain access to new opportunities by supporting them to enter sectors and occupations from which they have been excluded. This may involve using tools such government procurement to encourage the private sector to be involved in this effort. In the agriculture sector, existing investments need to analyse why and how women have been left out. Plans for new investment and project designs need to diagnose the constraints to women’s participation at the start, with results monitored as projects proceed. Plans for service delivery improvements should prioritise investments that will reduce the time burden on women of housework and caring for household members.
In developing the FYDP II monitoring plan, efforts should be made to target the collection of data on employment and earnings by gender. This will require a review of how employment data are collected. Additional surveys should not be needed; instead, the current programme should be strengthened and streamlined to yield the necessary data. Client survey data need to be collected regularly for publicly provided services, and published in gender-disaggregated formats to ensure women have the access they need.
Photo credit: Russell Watkins, Department for International Development
Yaw Ansu, David Booth, Tim Kelsall and Dirk Willem te Velde, March 2016. Achieving a pattern of economic growth where productivity, export competitiveness and employment are continuously increased calls for an active search for solutions to numerous specific problems currently blocking or delaying needed investments. This paper looks at how to establish a strategic relationship between government and private sector actors that makes it possible to address these problems without repeating the errors that derailed transformational ventures in the past.
Yaw Ansu, David Booth, Tim Kelsall and Dirk Willem te Velde, March 2016
The goal of economic transformation raises the stakes for policy-making in Africa. Achieving a pattern of economic growth where productivity, export competitiveness and employment are continuously increased is not just a matter of agreeing a higher level of ambition. It calls for an active search for solutions to numerous specific problems currently blocking or delaying needed investments. Underlying each of those particular challenges, moreover, is a deeper and more general issue: how to establish a strategic relationship between government and private sector actors that makes it possible to address these problems without repeating the errors that derailed transformational ventures in the past.
Reviewing global experience, the roles of state and private enterprises, of large and small firms and of formal or informal business associations have been very different among countries. The successful models have in common, however, that they have been able to satisfy a small number of basic requirements that appear universally relevant. This finding seems to be reinforced, in both positive and negative ways, by Africa’s so far limited success in constructing more transformation-friendly state–business relations. The basic requirements seem to include:
constructing a consensus among key actors that establishes economic transformation as a nation-building project, with shared commitments extending well beyond a single electoral term
giving at least one public agency sufficient autonomy, budgetary control and political authorisation to override interdepartmental coordination problems and engage in a practical way with credible private sector organisations
creating institutional arrangements that can coordinate a sufficient set of powerful public and private actors so as to ensure (1) an appropriate level of technically justified public support to promising sectors or firms; and (2) that this support is conditioned on mutually enforceable performance standards
enabling discovery of approaches that work for transformation in the particular country context by means of explicit experimentation, good feedback and timely correction
Key issues to be considered are:
Which types of public agency are most suited to providing authoritative policy coordination and to leading engagement with the private sector? How can they be empowered to perform effectively?
What kinds of private sector organisations are likely to prove the most credible strategic partners of governments seeking to support transformation?
How do we ensure that annual budgets align with the transformation strategy and are implemented effectively? What works best to obtain value-for-money in government investments? What should be the roles of the ministry of finance, the ministry of planning and the coordinating agency, where the three are not the same?
Are there feasible mechanisms for ensuring that discretionary support to promising sectors or firms is consistent with transformation objectives and governed by enforceable performance standards, so as to achieve results and avoid patronage and corruption? What should they look like?
What forms of state–business consultation are most likely to deliver fast feedback on the way policies and programmes are working, allowing timely correction of errors and joint discovery of paths of transformation that work?
Joe Amoako-Tuffour, Neil Balchin, Linda Calabrese and Max Mendez-Parra, March 2016 Trade facilitation can stimulate economic transformation in Africa by raising exports, supporting export diversification, reallocating resources to more productive activities, improving access to cheaper and better-quality imported inputs and enabling participation in value chains. Many African regions have begun to formulate regional approaches to trade facilitation, and there are important examples of particular approaches working well.
Joe Amoako-Tuffour, Neil Balchin, Linda Calabrese and Max Mendez-Parra, March 2016
Trade facilitation can stimulate economic transformation in Africa by raising exports, supporting export diversification, reallocating resources to more productive activities, improving access to cheaper and better-quality imported inputs and enabling participation in value chains. Many African regions have begun to formulate regional approaches to trade facilitation, and there are important examples of particular approaches working well. The introduction of one-stop border posts (OSBPs) at Chirundu (on the Zambia–Zimbabwe border) and at the Busia border crossing between Kenya and Uganda have reduced the time and costs involved in moving goods across borders. The OSBP at Busia has also made it easier for small traders to cross the border, giving them access to a wider market and improving their livelihoods. Similar improvements in border crossing times have been recorded along the Trans Kalahari, Maputo Development and Northern Corridors.
Outside of these examples, however, the implementation of trade facilitation agreements has generally been problematic. It remains a challenge to translate the good intentions expressed in Africa’s regional trade agreements into concrete actions towards trade facilitation.
Key issues to be considered are:
What more can be done to harmonise regional trade facilitation instruments in cases where countries have overlapping membership in more than one regional economic community?
What are the remaining constraints (political and other) to the elimination of NTBs hampering cross-border trade flows in Africa? How can these be addressed?
What can be done to ensure effective implementation of mutually agreed protocols, programmes or schemes aimed at promoting intra-regional trade in Africa?
Do governments provide enough space for engagement with the private sector on issues related to trade facilitation?
Why are African countries not jumping to ratify the World Trade Organization Trade Facilitation Agreement? Is it a governance problem? Or is it because of a lack of policy coherence?
In addition, the paper raises issues related to specific regions:
SADC
How can SADC countries improve coordination in the management of regional transit systems?
What should be done to address concerns about the potentially adverse effects of trade facilitation on local employment, revenues and the livelihoods of the most vulnerable?
EAC
How can cross-country coordination in the operationalisation of trade facilitation be improved in a way that takes into account the varying levels of commitment to regional integration across EAC member states?
ECOWAS
How can ECOWAS countries mitigate internal constraints hampering them from being more effective partners in regional development and integration processes?
How can ECOWAS countries enhance the role of the private sector in regional integration in order to promote economic transformation?
ECCAS
What are the remaining bottlenecks hampering implementation of the free trade area in the ECCAS region? How can they be addressed?
Yaw Ansu, Margaret McMillan, John Page and Dirk Willem te Velde, March 2016. Industrialisation, particularly the expansion and increased sophistication of manufacturing production and exports, and also the expansion of manufacturing employment, remains an essential part of Africa’s economic transformation. Unfortunately, manufacturing as a share of gross domestic product has declined over the past few decades in most African countries, even though in absolute terms it is growing.
Yaw Ansu, Margaret McMillan, John Page and Dirk Willem te Velde, March 2016
Industrialisation, particularly the expansion and increased sophistication of manufacturing production and exports, and also the expansion of manufacturing employment, remains an essential part of Africa’s economic transformation. Unfortunately, manufacturing as a share of gross domestic product has declined over the past few decades in most African countries, even though in absolute terms it is growing.
Although African countries face difficult challenges in breaking into world manufacturing markets, new developments work in their favour. These include rising wages in China and a rebalancing in Asia away from export-led towards domestic and regional consumption-led growth; Africa’s growing regional markets; falling transport costs; greater access to abundant natural resources; improved firm productivity and access to global value chains; and better general economic policy environments. But governments should not stand aloof; to seize these new opportunities they will have to formulate and implement coherent industrial development strategies. The key elements of such strategies must include:
continued improvements in the basics, including sound macroeconomic management, stronger general investment climate and support for the private sector and development of public infrastructure and relevant skills
an export push, including regional trade and integration
agglomeration through building and running efficient special economic zones (SEZs) and industrial parks
active foreign direct investment (FDI) promotion and building linkages with local firms
supporting productivity enhancement of local small and medium enterprises (SMEs) and their access to technology and long-term finance to help them venture into production of new or technologically more sophisticated products
improved coherence and implementation coordination within government and
strengthened consultation and collaboration between government and the private sector
Key issues
Separate panels at the African Transformation Forum were dedicated to several of the elements of the strategy above (e.g. panels on public infrastructure, skills development, regional trade and integration, public–private consultation mechanisms). For this panel, the key issues participants may wish to consider are as follows:
How do countries raise their focus and commitment to manufacturing and develop a coherent strategy to promote it? In what visible forms should this be expressed?
What key measures can countries take to improve their FDI promotion efforts and link the FDI firms to domestic suppliers?
How can the performance of SEZs and industrial parks be improved? Should the private sector’s role in developing and managing SEZs and industrial parks be increased? How can public–private collaboration be increased in this area?
How best can the state support access of local SMEs to technology?
How do we increase access of SMEs to long-term finance? In particular, how can development banks (and similar institutions) be made more market- and performance-oriented? What are the changes needed in their governance? What is the scope for public–private sector collaboration in improving SME access to long-term finance for manufacturing?
Anupam Khanna, Phyllis Papadavid, Judith Tyson and Dirk Willem te Velde, February 2016. Much of the debate on economic transformation in low-income countries (LICs) has centred on moving out of agriculture and into manufacturing, but this fails to appreciate the role services can play in driving growth in developing countries. This paper examines the role of services in economic transformation, by discussing the main conceptual issues and applying these to the case study of Kenya. The analysis suggests we need to update our traditional, often negative, views on the role of services in economic transformation.
Anupam Khanna, Phyllis Papadavid, Judith Tyson and Dirk Willem te Velde, February 2016
Much of the debate on economic transformation in low-income countries (LICs) has centred on moving out of agriculture and into manufacturing, but this fails to appreciate the role services can play in driving growth in developing countries. This paper examines the role of services in economic transformation, by discussing the main conceptual issues and applying these to the case study of Kenya. The analysis suggests we need to update our traditional, often negative, views on the role of services in economic transformation.
Presenting a new framework, the authors argue that services can lead economic transformation through direct, indirect, induced and second-order/productivity effects, depending on the specific services sector. Two observations are behind this positive view. Firstly, services are increasingly important for their direct contribution to gross domestic product (GDP), exports and employment. Secondly, a balanced view of services also considers their role in creating indirect effects through second-order productivity effects. However, there are potentially negative implications from too much focus on services when service sector development leads to an exchange rate appreciation.
The paper applies a comprehensive framework of the services sector to four sectors in Kenya (financial sector, IT services, transport services and tourism services) and finds Kenya’s exports of services are buoyant in these sectors, providing real potential for growth and economic transformation, but the linkages with the domestic economy are too few.
The paper concludes by arguing that there is a need to consider a more comprehensive role of services in economic transformation, in a way that is more complex than only examining the direct GDP or direct employment effects. The new way of looking is by examining the role of services in supporting other sectors through value chain development. This opens up new avenues; for example, it is not necessary to be as pessimistic as Rodrik on the role of services, as we are not looking at services sector indicators alone when assessing the role of services.
Neil Balchin, Claire Mason, Kasper Vrolijk and Leah Worrall, 2015. While the broad definition of economic transformation is relatively consistent across actors in the economic transformation literature, the existing research on policies and strategies designed to support economic transformation varies across different types of country stakeholders and across country contexts. In this paper we conduct a stocktake of the literature on economic transformation in order to determine pre-existing actor discourse on the topic.
Neil Balchin, Claire Mason, Kasper Vrolijk and Leah Worrall, 2015
While the broad definition of economic transformation is relatively consistent across actors in the economic transformation literature, the existing research on policies and strategies designed to support economic transformation varies across different types of country stakeholders and across country contexts. In this paper we conduct a stocktake of the literature on economic transformation in order to determine pre-existing actor discourse on the topic. This is achieved through an overview of published materials that address recent economic transformation, structural transformation (or structural change), industrialisation, and sectoral labour strategies. The paper covers a diverse range of perspectives on economic transformation among several leading academics and think tanks and provides an overview of the international academic, regional and domestic literature.
The paper finds notable variation in the existing research on policies and strategies designed to support economic transformation across different country stakeholders and contexts. The analysis underlines the importance of the specific context in which transformation is occurring. Underlying contextual factors have a bearing on the most appropriate type of policies and strategies to promote economic transformation and, ultimately, influence their effectiveness. The stocktake also highlights the lack of substance in the existing actor discourse on the manner in which policies designed to facilitate economic transformation should be implemented. This suggests that future actor discourse on economic transformation at the international, regional and domestic levels would benefit from increased focus on the practical aspects of the transformation process. This is particularly important with respect to how policies designed to facilitate economic transformation will be implemented and how specific economic transformation targets will be achieved.
Danny Leipziger, November 2015. This paper examines the key lessons for successful economic transformation based on experiences, both positive and negative, of large economies in East Asia and Latin America. As a general guide, it can be noted that countries that have successfully managed major economic transformations have done so with consistent, sustained and coordinated policies across a number of key markets. This paper highlights a number of areas for policymakers to consider in designing their own transformative policies.
This paper examines the key lessons for successful economic transformation based on experiences, both positive and negative, of large economies in East Asia and Latin America. As a general guide, it can be noted that countries that have successfully managed major economic transformations have done so with consistent, sustained and coordinated policies across a number of key markets. Many countries err on the side of single policy interventions that are unsupported by the many other policy actions needed to transform economies. Those that have managed their transformations well have had a longterm vision and have been able to sustain policies towards long-run objectives. They have used price signals from international markets and have been able to craft coordinated policies between the private sector and public policy agendas. This paper highlights a number of areas for policymakers to consider in designing their own transformative policies.
This paper has been prepared by Danny Leipziger (Managing Director of the Growth Dialogue) as part of a wider project on Supporting Economic Transformation in Nigeria. For more information on the work of the Growth Dialogue, go to www.growthdialogue.org.
Louise Fox, February 2016. Economic transformation is defined as the movement of resources (factors of production) to high productivity activities, both within and between sectors. It encompasses both the process of structural change (movement of resources between sectors) and within sector labour productivity improvements. Economic transformation is essential for improving the quality of growth.
Economic transformation is defined as the movement of resources (factors of production) to high productivity activities, both within and between sectors. It encompasses both the process of structural change (movement of resources between sectors) and within sector labour productivity improvements. Economic transformation is essential for improving the quality of growth.
However, economic transformation often leads to heterogeneous outcomes and unexpected consequences. Household outcomes depend on bargaining power within the household, and husbands and wives do not always maximize production. This means that policies that change the opportunities of women may affect bargaining power and through this channel, household outcomes. Women and men are heterogeneous, and how economic transformation affects women is mediated by socioeconomic differences and inequalities, such as spatial differences in livelihoods and opportunities, income differences among households, ethnic differences, and other socioeconomic cleavages.
This paper analyses whether a particular economic change associated with transformation is likely to bring more opportunities for women in low income countries, where the problem of economic transformation is most acute. Does a change have the potential to increase women’s income, power and agency, and effectiveness in their multiple roles? Under what circumstances? We consider how females might be affected by these changes in their roles as labourers, producers, consumers, mothers, children, and citizens.
Overall, the prospects for beneficial effects are good. However, as in other aspects of economic development, the extent of benefits for women depends on whether complementary policies are put in place to increase equality of opportunity. In some cases, potential policies are hard to identify, for example in the face of longstanding occupational segregation. In other cases, complementary policies are already part of development agendas, but they need to be implemented.
Marie-Agnes Jouanjean, Max Mendez-Parra and Dirk Willem te Velde, July 2015. Trade has historically played a crucial role in the debate on economic transformation (ET), but the transmission mechanisms of different types of trade policies have not always been clearly articulated and empirical evidence is lacking in specific areas.
Marie-Agnes Jouanjean, Max Mendez-Parra and Dirk Willem te Velde, July 2015
Trade has historically played a crucial role in the debate on economic transformation (ET), but the transmission mechanisms of different types of trade policies have not always been clearly articulated and empirical evidence is lacking in specific areas.
ET involves moving resources between sectors (for example, from agriculture to manufacturing); and improving productivity within sectors (for example, from subsistence agriculture to high-value crops), including through firm entry and exit, as well as within firms.
ET and trade are intimately linked through, for example: diversification of production and trade; discovery and development of new productive capabilities through trade; and creation higher domestic value added in trade.
Whilst there has been a firm belief in a strong link between trade and transforming productive structures, it remains too ambitious to identify a unique and unambiguous link between trade policy, trade, and economic structures. Import substitution strategies were used during the 1960s and 1970s to move resources from, typically, natural-resource-based sectors to manufactures. In the late 1980s and early 1990s, trade liberalisation was one of the most important policy tools under the so-called Washington Consensus.
This briefing discusses the effects of trade (related) policies and how trade policy affects ET through multiple channels: allocative efficiency, market size, competition, access to inputs and backward linkages, forward linkages, skills and technology, and political economy.
The briefing identifies several areas that require empirical work: (i) empirical evidence on the way in which trade affects the within and between components of productivity change and ET; (ii) building up more evidence on what drives exports of services, incl. the role of trade policy played in this; and (iii) the effects of different forms of global and regional value chains on ET.
