Neil Balchin, Karishma Banga , Sonia Hoque and Dirk Willem te Velde, June 2018
Moving labour out of low-productivity agriculture and into higher-productivity manufacturing is crucial for structural change in Africa (McMillan et al., 2017). Expanding manufacturing production and exports, and increasing their sophistication, can drive industrialisation and create much-needed jobs. Indeed, export-led manufacturing is the only proven model to drive economic transformation and boost employment (Balchin et al., 2017). This is evident in the experiences of many Asian countries, which show that export-intensive manufacturing can generate significant numbers of jobs. Countries such as Bangladesh, China, Malaysia and Viet Nam have developed light manufacturing – by building textiles and garment industries – to kick-start industrialisation.
Many African countries have a desire to industrialise, as witnessed in national and regional policy statements. Significant progress is being made in selected countries (e.g. real manufacturing value added grew at around or more than 7% annually over 2005–2015 in Ethiopia, Rwanda and Tanzania). However, without a greater practical focus on implementing a consistent strategy to promote manufacturing, many African countries will miss the significant opportunities presented by their comparative and natural advantages, rising wages in Asia and growing regional markets (Balchin et al., 2016a).
This paper discusses key characteristics of a good industrial policy regime and factors behind effective implementation. It also uncovers a range of successes. Using country examples, we recognise that, while there are broad commonalities, the specifics will always vary across different contexts.
Photo credit: Factory workers producing fruit drinks at Blue Skies, in Accra, Ghana on October 13, 2015. Dominic Chavez/World Bank via Flickr