Fiscal multipliers: A review of fiscal stimulus options and impact on developing countries
The socio-economic collapse induced by the Covid-19 pandemic in 2020 has called for stronger government intervention to support the most vulnerable households, firms and sectors. In response, fiscal stimulus packages announced globally from January 2020 to June 2021 have reached $17 trillion (IMF, 2021b). Options for spending fiscal resources have evolved from measures to address immediate health needs, to addressing the economic fall-out from social distancing measures and lockdown, and to building the foundations for more resilient, climate-friendly, gender-sensitive and transformative economic recovery. However, the fiscal resources available to low-income countries (LICs) remain extremely limited, pushing governments to be highly selective in deploying the interventions that would have the most positive short-term and long-term impact.
This paper reviews 94 cross-country, regional and country-level empirical and descriptive studies to identify evidence on fiscal multipliers – the output growth impact of fiscal policy – to provide evidence-based insights to low- and middle-income countries on using fiscal interventions to have the most impact in boosting inclusive and sustainable economic growth. Across countries and all else being equal, a 1% increase in public expenditure tends to increase output by 1%, or a fiscal multiplier close to 1. In reality, countries are not equal, and specific characteristics and economic circumstances influence the effectiveness of fiscal policy on stimulating growth. The following are the key findings from the literature review.
Promoting Kenya’s exports: A country- and – product – specific analysis
Kenya’s imports and exports have been growing for the past two decades, except in periods of external shocks. By value, exports of goods and services have grown by 40% over the past decade from $8.3 billion in 2010 to $11.5 billion in 2019. However, exports of goods and services as a percentage share of GDP has been gradually falling, from 22% in 2010 to 10% in 2019. This means there is much to explore around promoting the role of exports in Kenya’s economic development.
Many papers examining Kenyan exports either include statistical analyses, some of which are product specific, or are more descriptive of the value chain characteristics. But few bring these components together in a detailed way. The questions we raise in this paper relate to product- and export-market-related details. Not only does the paper ask which detailed products appear promising for export promotion, but also which products are promising for which export destination. And finally, it reviews specific export barriers based on the literature and links this to general policy efforts at international and domestic levels to boost Kenya’s exports. The information we gain from undertaking such analysis can be used to inform financial institutions or institutions that support financial sector development relevant to the development of exports.
A gender approach to monetary and financial policies in the COVID-19 recovery
carers and consumers. Recent recovery interventions from central banks have not explicitly considered the impacts of their policies on gender equality, which is a missed opportunity. This paper discusses the gender implications of monetary policies, arguing that they are not gender neutral. We examine the evolution of monetary policies in Bangladesh, Kenya, Peru, Sri Lanka and Tanzania and discuss the indirect gender equality implications of these policies. The aim is to complement the country case studies of the project ‘Shaping the Macro-Economy in Response to Covid-19: A Responsible Economic Stimulus, a Stable Financial Sector and a Revival in Exports’.
Supporting UK foreign direct investment in ASEAN
The stock of UK foreign direct investment (FDI) in ASEAN1 has been volatile in the past five years – recording strong growth
of 15% (to £23 billion) in 2018 and 27% (to £29 billion) in 2019, following double-digit contractions in 2016 to 2017 (owing to
negative FDI flows). The level in 2019 was nearly the same as in 2015.
The share of ASEAN in UK’s FDI stock abroad fell by a quarter from 2.6% in 2015 to 1.9% in 2019. However, profits on UK
FDI in ASEAN have been consistently more than double those in Organisation for Economic Co-operation and Development
(OECD) countries, and there is now a government push to increase trade and investment links with the region.
The stock of UK FDI in the region is currently invested largely in Singapore (50%), Indonesia (22%) and Malaysia (14%). UK
investment in relatively lower-income ASEAN members remains low and stagnant, but UK FDI in Vietnam has been
increasing at a fast rate.
The UK has been investing relatively less (in terms of percentage share of FDI stock) in ASEAN compared to Chinese and
US investors. As with other major investment partners, UK FDI in the region is concentrated in financial services.
The UK’s Indo-Pacific tilt: a trade and development perspective
The UK has expressed interest in enhancing its trade and investment links with Asia, most recently through the Integrated Review, which emphasises the Indo-Pacific. Many free trade agreements (FTAs) and partnerships have been set in motion.
The UK’s development objectives prioritise trade and development. Trade, investment and global value chains have been crucial in helping Asian countries to develop and transform. The share of Asia is 16.8% in UK goods exports, 11.8% in UK services exports and 12.3% in UK foreign direct investment stock.
The UK’s new international development strategy and putting the ‘Indo-Pacific tilt’ into operation could lead to new, enhanced and differentiated aid and trade relationships between the UK and countries across Asia.
Digital trade provisions in the AfCFTA: What can we learn from South–South trade agreements?
The Heads of State and Government of the African Union in their decisions Assembly/AU/4(XXXIII) of 10 February 2020 and Ext/Assembly/AU/Decl.1(XII) of 5 January 2021 mandated negotiations for an E-commerce Protocol to the African Continental Free Trade Area and endorsed December 2021 as the deadline for its conclusion, respectively. This paper analyses digital trade provisions in existing South–South (S–S) trade agreements, with the aim of helping negotiators and policymakers from Africa better understand the practical policy implications behind typically existing and upcoming digital trade-related provisions. This can help guide the design of an effective E-commerce Protocol in the AfCFTA that facilitates inclusive development in Africa.
How the G20 can make the global recovery from Covid-19 more inclusive
The poorest countries are experiencing a double blow to their recovery from Covid-19. They have significantly lower resources for fiscal stimulus (2% of GDP) as well as low vaccination order coverage (27% of population). This is compared to G20 counterparts whose fiscal packages reach 17% of GDP and who have already secured orders for vaccines covering 58% of their population.
The G20 can play a significant role in promoting a more globally inclusive recovery by facilitating greater global policy coordination on: access to vaccines, debt restructuring, allocation of resources for a liquidity and sustainability facility to support low income countries, and monetary policy accommodation.
A transfer of resources would be efficient as the cost of finance is lower in the G20, while fiscal multipliers tend to be higher in countries which have lower capital stocks and higher share of credit constrained firms and/or households.
Shaping the macro-economy in response to COVID-19: A responsible economic stimulus, a stable financial sector and a revival in exports. Methodology Paper
Countries around the world are shaping the macro-economy in response to the Covid-19 crisis and have an opportunity to introduce fiscal, monetary and trade policies that support a fast recovery that can also build back better.
This paper provides a methodology that can be used to assess macroeconomic policy options in Bangladesh, Kenya, Peru, Sri Lanka and Tanzania.
It suggests five steps (in three core tasks) that can be applied at country level to assess macroeconomic policy options. These broad steps will be supported by detailed analyses at a later stage, for example through trade policy modelling.
An inclusive digital trade policy in 2021
Digitalisation is rapidly changing the nature of trade, in terms of both what and how trade is conducted. The Covid-19 crisis has reinforced this trend.
A range of trade policy events in 2021 could shape a new digital trade policy, to (i) support an economic recovery; (ii) modernise the policy environment; and (iii) accommodate the needs of the poorest countries.
AfCFTA, CHOGM, the WTO, (UK) FTAs and the G7 should all be used to enhance inclusive digital trade in 2021.
Supporting UK foreign direct investment in Africa in 2021
UK FDI flows to Africa fell 42% to $7.9 billion (£6.2 billion) in 2019, but the stock increased 10% to $64.6 billion (£50.6 billion), driven by increases in the extractives and finance sectors. Profits on UK FDI in Africa are double those in OECD countries.
UK FDI stocks and flows to Africa are higher than FDI by other major investors such as the US and China, but they remain more concentrated in extractives and financial services than those from US and China.
After the second UK-Africa investment summit on 21 January 2021, the UK should work more closely with its African partners and the AfCFTA to step up aid, trade and investment relationships with a focus on sustainable finance and the digital economy this year.
Max Mendez-Parra and Dirk Willem te Velde (ODI) |An ambitious UK trade for development policy in 2021
Ensuring a trade-based recovery from Covid-19, promoting digital trade and e-commerce, making trade climate-compatible, promoting a new post-Brexit trade policy and delivering effective Aid for Trade are some of the key issues facing UK trade policy-makers at present.
In 2021, the UK will make a number of crucial decisions, for example about its own trade policy and trade preference scheme, and chair and/or make commitments at international fora such as the WTO, the UNFCCC/COP, the G7/20 and CHOGM.
The UK should aim for an ambitious trade for development agenda in 2021.
Carbon border adjustment: a discussion on effectiveness and efficiency
If the European Union adopts BCAs unilaterally, this instrument is likely to be ineffective in bringing down global emissions in the most critical sectors. For example, most steel production is for domestic markets.
BCAs efficiency is questionable compared to standards, if they do not reflect significant shifts in consumers’ choices.
Even if developing countries – with historically low emissions – are excluded from BCAs they may still be affected through knock-on effects on complex supply chains.
Assessment of World Bank Prioritisation of Economic Transformation in Country Strategies and Country Project Portfolios
The World Bank has introduced jobs and economic transformation (JET) as a core objective of the Eighteenth Replenishment of the International Development Association (IDA18). To monitor and measure the JET content in country partnership frameworks (CPFs), the World Bank (WB) has introduced four economic transformation indicators in the IDA18 results measurement system (RMS). The IDA18 mid-term review (MTR) awarded six out of eight CPFs a transformation tag. The IDA Deputies and Borrowers call for a strengthened role of the JET special theme under the IDA19 and this offers scope to reflect on the appropriateness of these RMS indicators.
This paper assesses the extent to which economic transformation is prioritised in the recent CPFs of Benin, Burkina Faso, Guinea, Mauritania, Moldova, Nicaragua, Niger and Tanzania . It also reviews and provides suggestions on how the IDA18 RMS indicators on economic transformation might be improved. The analysis further includes a complementary examination of economic transformation content of active IDA project portfolios in Benin and Tanzania from 2015 to 2019. The project level analysis can also serve as an indicator of the WB effort in pushing the economic transformation theme through time, especially after the IDA18. The paper concludes by offering suggestions for how the WB can improve the focus of and reporting around IDA projects for economic transformation and job creation.
The evolving fiscal and liquidity stimulus packages in response to COVID-19 in Sub-Saharan Africa
Huge size disparities in economic stimulus packages persist between G20 (27% of GDP) and SSA (3% of GDP) countries.
The financing of COVID-19 responses in SSA has evolved over time from accommodative monetary policy at the onset of the pandemic to more fiscal support measures but policy space remains very limited.
The IMF and World Bank are providing funding to COVID-19 the economic policy response in most SSA countries but this so far falls short of what is needed.
Given significant existing funding gaps and limited fiscal space, COVID-19 stimulus packages in SSA are mostly supporting immediate short-term responses to the crisis; funding for long-term ‘building back better’ recovery measures is elusive.
‘Smarter’ economic and social policies are needed to mitigate the impacts of the crisis and promote an inclusive and sustainable recovery.
Assessing Sri Lanka’s economic transformation pathways, 1977-2019
This study analyses Sri Lanka’s transformation pathways, particularly the country’s shift from an agriculture-based society to a more industrial and services-based economy. It undertakes a granular exploration of economic transformation at a sectoral level in Sri Lanka from the late 1970s to 2019. It focuses on the garments sector within the industrial sector, and two services sectors – the tourism sector and the information and communications technology/business process management (ICT/BPM) sector.
Digitally enabled economic transformation and poverty reduction: Evidence from Kenya and Cambodia
Economic transformation is crucial to poverty reduction, through transforming production opportunities, lowering the costs and increasing the variety of consumption and enabling government services and other factors to provide better services. Digitalisation affects all of these channels in fundamental ways. This paper develops a framework to understand how. It argues that digitalisation can have positive and less positive or even negative effects in all of these channels but with likely overall net positive effects, sometimes large. It applies the framework to the cases of Kenya and Cambodia. It also argues that policy matters greatly for whether these positive effects materialise.
Enhancing the resilience of global value chains to climate change: lessons from Covid-19
Climate shocks often translate into trade shocks for countries. Building resilience – the capacity to cope with crises – within different types of global value chains (GVCs) is essential to sustain and support socioeconomic development and welfare gains.
Resilience to trade shocks within GVCs comes from stock management and just-in-time strategies as well as investing in trading relations and supporting export diversification.
While promotion of the shortening and reshoring of GVCs can score short-term political gains, it risks increasing economic and climate vulnerability, with mixed evidence on climate mitigation gains.
Promoting prosperity: Ten opportunities on economic development for the new Foreign, Commonwealth and Development Office
The recent merger of the FCO and DFID into the FCDO provides a range of opportunities in the area of economic development.
We list 10 opportunities:
1. Publish a coherent UK-Africa strategy
2. Co-ordinate an effective import policy for national security
3. Promote resilient value chains
4. Incentivise the City of London for development
5. Promote UK outward investment to poor countries
6. Make a step change in business partnerships
7. Transform UK development finance
8. Support job creation and economic transformation for self-reliance
9. Using aid to provide global public goods in middle-income countries
10. Liaise with China
Each presents an opportunity from a trade or investment angle for both the UK and developing counties. However, there is also a risk that economic development may not feature prominently in the new FCDO, whose organogram has matrix management across several themes and geographies.
FCDO management will need to ensure the economic development agenda in the above 10 points land well in the upcoming discussions.
AG-Platforms in East Africa: National and regional policy gaps
The growth of the platform economy, within agriculture, is increasingly becoming an important pathway to development. In the context of Sub-Saharan Africa, this is critical as, according to Cleland (2017), about 65% of the population relies on farming and about 20% on the non-agricultural informal sector; only around 15% are wage earners working in services and less than 3% are employed in industry. Agricultural digital platforms (such as farming apps) are driving e-commerce and the servicification of agriculture in developing regions. Côte d’Ivoire, Ghana, Kenya, Nigeria, Senegal, South Africa, Uganda and Zimbabwe have been described as hotspots for digital-tech solutions (GSMA, 2018). Of these, Ag-platforms, or farming apps, are some of the most common forms through which farmers have been ‘platformised’ in agricultural value chains. Our research paper on ‘AgriTech Disruptors in East Africa’ shows that, of a sample of 70 AgriTech innovative firms (e.g. Ag biotech, Precision Ag and robotics, innovative food and data-connected agriculture) in 2018 in the East African Community (EAC), between 66% and 86% of firms specialised in data-connected agriculture – that is, farming apps or providing enabling services for app development (Krishnan et al., 2020).
Platforms in agricultural value chains: emergence of new business models
This report aims to develop typologies of business models of the Ag-platforms that exist, identifying the challenges and opportunities of using these business models and the extent to which they can create value capture opportunities for farmers, youth and women in agriculture. These opportunities include Ag-productivity gains; value addition and diversification; creation of more, decent and formal jobs for youth; gender inclusion; knowledge accumulation; and absorptive capacity. Drawing on case study evidence from Uganda and Rwanda, we deep-dive into the business models of Ag-platforms, unpacking the 3Cs of Costs, Complexity and Capabilities, to indicate the potential ways in which platformisation may exacerbate existing inequalities rather than supporting value creation for the poorest. Ultimately, we develop a roadmap for policy-makers to facilitate the development and proliferation of sustainable Ag-platforms.
Securing climate-compatible trade for development
Climate, development and trade need to be articulated together for fair and efficient outcomes for all nations. Improved trade policies that work for climate and development require strengthened international governance, as well as regional and domestic alignment.
The ClimXTrade Discussion series seeks to identify how to secure climate-compatible trade for development, with triple wins for trade, development and the climate, ahead of COP26.
Fostering an inclusive digital transformation in Cambodia
Cambodia’s digital transformation is gathering pace but with different results and prospects across different groups in the economy. Mobile phone and social media use has grown rapidly. New apps are being developed, tested and implemented frequently. There is a budding digital start-up sector. And new sectors with new job opportunities based on digital technology are emerging.
Such positive developments are helping Cambodia advance significantly in economic and social terms. But there is another side, and that is the uneven impacts. While business and financial services have implemented more digital apps, the agriculture sector, which remains the main source of employment, is catching up more slowly through blockchain or precision agriculture. The tourism sector, a major source of forex, has untapped opportunities, and, crucially, the manufacturing sector, which is a major source of female employment and foreign exchange, will be highly vulnerable unless it embraces innovation and digitalisation more fully. Further, digitalisation within the public sector is lagging behind that in the private sector.
Cambodia, COVID-19 and inclusive digital transformation: a seven-point plan
Cambodia has one of the lowest numbers of coronavirus cases in the world, but it is facing amongst the world’s highest economic losses in the wake of the COVID-19 crisis. The IMF expects incomes to contract by 1.6% in 2020 in the baseline scenario due to major disruptions in tourism, garments and construction. Some sectors are expected to fare better, such as the information and communication technology and e-commerce, but these industries need to be nurtured more actively and the opportunities need to be made more inclusive if they are to be a significant base for a prosperous and more inclusive recovery.
Monetary policy and financial stability in Africa during COVID-19.
African countries will not only see a contraction in economic activity, but also a likely resurgence in financial instability. African central banks have lowered interest rates and reserve rations, bought government bonds, and provided additional liquidity, but in some countries, there are now limits to more action (e.g. lower interest rates).
Ensuring both financial stability and increased economic activity in Africa needs careful monitoring and additional steps.
Donor responses to COVID-19: country allocations
We examine IMF, World Bank and European Commission country allocations in response to the COVID-19 pandemic. IMF allocations cover around 1–1.5% of GDP whereas World Bank allocations are worth 0.1% of GDP. Whereas only a small portion of total funding is dedicated to loan facilities, grants and debt relief for the poorest economies, overall donors allocate more (as a share of GDP) to poorer countries. The IMF allocates more to countries that are more dependent on exports and remittances and to countries expected to see output cut the most. However, donors do not allocate more resources to countries with less health spending or that are overall more vulnerable
A global action plan for developing countries to address the coronavirus crisis: Southern perspectives
Developing countries face the deepest recession in a generation. Complying with lockdown guidance in developing countries will be very challenging, given the level of informality and the state of poverty and health capacities. The G20 and UN need to address shortcomings to enable inclusive, collective and coherent global leadership. Urgent actions required to address the health and socio-economic costs include global actions plans on aid and finance, trade and food security, and free flows of knowledge and mobility of health workers.
The COVID-19 pandemic in the Caribbean: exposing existing economic vulnerabilities
The Caribbean faces an unprecedented economic shock from COVID-19 as demand for its major export service (tourism) has collapsed.
In response, many countries have initiated fiscal stimulus packages, some with support from international donors. However, many countries in the region are already heavily indebted and, while the effects of the current shock must be mitigated, more systemic issues also require tackling. Countries should avoid increasing their debt service obligations and instead secure debt for resilience swaps in order to build resilience to natural disasters, confront the imminent threat of climate change and build the climate-resilient infrastructure needed to boost trade and export diversification. G20 members must acknowledge the need for specific measures to assist small states to adapt to the global pandemic; this includes the role of remittances, for which costs of transfer must be reduced.
Can the digital economy help mitigate the economic losses from COVID-19 in Kenya?
The digital economy is playing a key role in Kenya’s response to the pandemic, with opportunities rising in the sectors of (i) digital and digitally deliverable services; (ii) e-commerce; and (iii) online work.
As businesses shift online and people work from home, there is a rise in demand for digital services, particularly cloud computing services; however, less than 25% of MSMEs use cloud computing, compared with over 40% of large Kenyan firms. Digitally deliverable services can offer new employment opportunities but less than 50% of firms in the services sector in Kenya- barring IT and transport- have a website. E-commerce is taking off, with increasing demand for Fast-Moving Consumer Goods, entertainment electronics and productivity tools.
The role of trade in recovering from the COVID-19 crisis
Trade lies at the core of the global current economic crisis; it will be also the cornerstone of the global recovery. The use of protectionist measures will put the recovery at risk and must be avoided.
There is a need to rethink the operation of value chains during the recovery to prepare them for crises in the future. Stimuli provided by developed countries will contribute to the global recovery if they are adopted fairly. The government share in the economy is rising. Flexibilised procurement rules will contribute to the recovery. Developing countries will need more and better-targeted support to maintain and restart their productive capabilities.
A G20 safe and resilient supply chain action plan
The coronavirus crisis has laid bare the fragility of global supply chains that link G20 and poorer countries. Supply chains covering medical supplies, agricultural products and garments provide access to critical imports for G20 and other countries and generate important job opportunities in poorer countries.
A G20 supply chain action plan consisting of a package of trade, migration, finance, aid and business measures will benefit G20 and poorer countries. The UK should lead a dialogue suggested by the B20 and convene buyers, factories and a targeted range of countries around a targeted set of supply chains (medical supplies, food products, garments).
How can the European Union help developing countries address the socioeconomic impacts of the coronavirus crisis?
The EU’s response package of aid, development finance, trade and business should be a crucial part of a more ambitious G20 action plan that addresses the socioeconomic cost of coronavirus in developing countries.
The EU should step up, fast-track, front-load and leverage its aid and development finance, and foster coordination
The coronavirus pandemic and the governance of global value chains: emerging evidence
Global value chains (GVCs) had already begun to shorten after the Global Financial Crisis; the coronavirus outbreak may intensify this process, affecting the trade and development trajectories of some suppliers. Relaxing competition policy to support purchases and maintain supply by UK retailers should be accompanied by policy measures to support developing country producers; many face drastic reductions in orders and prices, which will prompt bankruptcies and induce new firm-level reorganisation. Lead firms have a duty of care towards their employees and the countries in which they operate; UK-led GVCs should stand by their employees across the value chain, in line with other social commitments. Development partners can do more to support links in the GVC; some lead firms are already supporting diversification efforts related to COVID-19; trade-related adjustment support should be provided.
Trade in services and the coronavirus: many developing countries are at risk
The pandemic, travel bans and lockdowns are reducing demand for transportation and travel services. Communications and internet commerce services are increasing. Exports of services in many developing countries are above the global average (as a share of total trade), putting them at even greater risk.
Measured exports of services tend to be concentrated in travel and transportation, which are already in decline. Ethiopia, Mauritius and Morocco may be particularly hit through this channel, as 44%, 33 and 25%, respectively, of their combined goods and services exports are vulnerable. Travel exports in Cambodia represent 17% of GDP.
Development finance institutions and the coronavirus crisis
Development finance institutions (DFIs) are mandated by their shareholders to provide finance to the private sector (usually at commercial terms, but subsidised implicitly), crowd in private sector finance and have a development impact.
While DFIs aim to be additional to the market, they have not been sufficiently counter-cyclical in past crises. That has to change, as poor country firms and their workers face major hardship now. Today’s crisis is larger than those in the past. We suggest shareholders provide regulatory and financial space for DFIs to fast-track new investments, allow for some repayment postponements and announce a Bounce Back Better facility, to save companies and workers from bankruptcy and to protect previous transformation efforts so that the bounce-back is faster and better.
The coronavirus pandemic and small states: a focus on Small and Vulnerable Economies
The global coronavirus pandemic has struck at a time when Small and Vulnerable Economies (SVEs) were already facing weak trade growth, with year-on-year trade growth already negative by Q3 2019 for the Caribbean region. Tourism exports could be halved in 2020, with major economic repercussions, with losses that could range between 4% and 26% of gross domestic product, varying by SVE. The value of stimulus packages announced so far by selected SVEs amounts to between 0.03% of GDP (Antigua and Barbuda) and 2.6% of GDP (Fiji), compared with 8% on average by G20 members. Data availability is scarce and assessments are partial, yet we need ongoing tracking of impacts.
Trade and the coronavirus: Africa’s commodity exports expected to fall dramatically
The prices of commodities have fallen by between 9% (coffee) and 61% (oil) since the start of the year mainly because of the fall in global demand generated by the current lockdowns. African countries are extremely exposed to commodity price swings, as half of their merchandise exports is concentrated in 10 commodities. Africa could lose between US$ 36 billion and US$ 54 billion in export revenue. For some countries, this could be as high as 20% of their gross domestic product. Oil exporters such as Nigeria, South Sudan and Angola may see their export revenues falling by more than 20%.
Three proposals to support African garments workers during the coronavirus crisis
US and European orders for garments have ceased, with effects rippling throughout value chains, affecting factories in Asia and Africa. Their workers face extreme hardship.
We explore three options to protect such workers during this recession in an African context: (i) a worker subsidy scheme (ii) a subsidised training package to retain workers and manufacturing capabilities (iii) retooling of garment factories to produce garments to satisfy medical needs.
Each option requires different commitments from buyers, factories, workers, the public sector and donors.
A $100 billion stimulus to address the fall out from the coronavirus in Africa
African leaders and the global community urgently need to agree a $100 billion financial stimulus for sub-Saharan Africa to address the fall-out from the coronavirus crisis. This is just 2.3% of the value of global stimulus packages announced so far, and worth 5.6% of sub-Saharan Africa GDP in line with the global average of stimulus to GDP of 5.1%. A stimulus with appropriate financial instruments will protect the most vulnerable livelihoods from the crisis. African countries need to step up and donors need to support them.
The G20 should coordinate a major financial stimulus, and part of this should support Africa.
Economic impacts of and policy responses to the coronavirus pandemic: early evidence from Africa
Dirk Willem te Velde, March 2020
This note marks the beginning of the monitoring of economic impacts (trade, finance and other impacts), social impacts and impacts on government revenues in Africa and considers early economic policy responses in Africa. Previous analyses centred on vulnerability assessments and aggregate impacts. It suggested that Kenya, Zambia, Rwanda, Sudan and Ghana are the African countries most vulnerable to the pandemic. Previous analysis also suggested that Africa was likely to be hit by at least $100 billion in economic costs (or 5% of gross domestic product) this year as a result of the crisis. Beyond this headline number, several detailed impacts are now becoming clearer. Considerable effects (across trade, finance, employment, prices, government revenues, stock prices, exchange rates and bond yields) have already become visible; they differ markedly by country, but overall paint a bleak picture. Data availability is limited and assessments are partial, yet ongoing tracking is needed to inform policy responses. Over time, more systematic analysis will become available.
ECONOMIC VULNERABILITIES TO HEALTH PANDEMICS: WHICH COUNTRIES ARE MOST VULNERABLE TO IMPACT OF CORONAVIRUS
Sherillyn Raga and Dirk Willem te Velde, February 2020 DOWNLOAD REPORT Growth and economic transformation pathways are subject to a range of shocks that will affect economies in varying ways. In the past we have examined the impact of shocks such as financial crises, the eurozone crisis, or a slowdown in China. Health emergencies can … Continue reading “ECONOMIC VULNERABILITIES TO HEALTH PANDEMICS: WHICH COUNTRIES ARE MOST VULNERABLE TO IMPACT OF CORONAVIRUS”
Industrial development in Uganda
The Ugandan economy has experienced sustained growth since the 1990s. During the same period, Uganda has seen some degree of economic transformation, with the industrial and services sectors growing compared with the agriculture sector. However, the manufacturing sector has remained stagnant. This has been accompanied by low levels of job creation, diagnosed as ‘jobless growth’ (MGLSD, 2018).
This is a challenge for Uganda, as its rapid population
growth requires large-scale job creation to absorb new entrants into the labour
market. The Supporting Economic Transformation (SET) programme has estimated
that, between 2015 and 2030, Uganda needs to create 650,000 new jobs annually
(or 1,780 jobs each day) to employ its people (SET, 2018). Large-scale employment
creation can be achieved through labour-intensive manufacturing.
This report aims to review the framework for industrial
policy in Uganda and to assess its potential to support the development of
manufacturing. It looks at the policies and institutions in charge of supporting
the manufacturing sector.
Economic transformation and poverty
Vidya Diwakar, Alberto Lemma, Andrew Shepherd and Dirk Willem te Velde, December 2019
Economic transformation (ET), the continuous movement of resources (such as labour and capital) from low- to higher-productivity activities, is crucial for sustained job creation and a more resilient economy, but little attention is paid to the detailed mechanisms by means of which ET relates to the poorest and most vulnerable people in society. This paper describes the main channels through which ET links to poverty, including through production patterns involving the poor directly or indirectly, consumption by the poor and other routes, including government services and context more generally. There are many direct and indirect ways through which ET supports the livelihoods of the poorest in society, but there may also be unintended effects that exclude benefits because of gender, ethnicity or other factors (unless complementary actions are implemented).
Integrating Kenya’s micro and small firms into leather, textiles and garments value chains: Creating jobs under Kenya’s Big Four agenda
Aarti Krishnan, Dirk Willem te Velde and Anzetse Were, May 2018
The Government of Kenya has developed a range of policies, strategies and measures to promote industrialisation as part of President Kenyatta’s ‘Big Four’ agenda. However, this risks missing the opportunity for broad-based economic transformation if implementation of the strategies occurs without more focus on the role of small, local firms in the manufacturing sector. This study aims to support Kenya’s Executive Office of the President by suggesting ways to better integrate leather, textiles and garments MSMEs into value chains, economic zones and industrial parks. It concludes that Government should focus on three priorities, including Restructuring MSME institutional support structures, introduce dedicated MSME incubator programmes and involve county governments in MSME support.
Economic Transformation in Cambodia: Prospects, Challenges and Avenues for Further Analysis
Dirk Willem te Velde, April 2019.
Cambodia has been the sixth-fastest growing country in the world over the past two decades and it has reduced poverty and inequality significantly. However, Cambodia currently also faces major challenges to its hitherto successful growth model. While the constraints to transformation and the measures to overcome constraints are well known, the question often left unanswered is how to make the next step. This paper introduces a number of options for immediate further policy analysis. It concludes that a crucial concern at present relates to gaining a better understanding of the role of appropriate and good quality education and skills in preparing for a digital economy.
Enhancing Spillovers from Foreign Direct Investment
Dirk Willem te Velde, March 2019
Public policy plays a crucial role in enhancing the spillovers from foreign direct investment (FDI). The role of FDI in driving economic growth and development has been contested at least since the 1960s. There have always been views in favour of FDI and against it. Some have argued that FDI leads to economic growth and productivity increases in the economy as a whole, and hence contributes to differences in economic growth and development performance across countries. Others have stressed the risk that FDI will destroy local capabilities, extract natural resources without adequately compensation, or introduce inappropriate technologies.
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.
Monitoring Policies to Support Industrialisation in Tanzania
Josaphat Kweka, December 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.
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.
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.
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.
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.
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.
Recent Progress Towards Industrialisation in Tanzania
Professor Amon Mbelle and Hafidh Kabanda (Economic and Social Research Foundation), July 2018
Tanzania has set an ambitious industrialisation agenda in pursuit of the goals articulated in the TDV 2025. The observed status and performance of industry is partly a consequence of past policies, plans and strategies. The FYDP II and its accompanying Implementation Strategy have revitalised the industrialisation agenda by articulating concrete interventions. This briefing provides an update on recent industrialisation progress in Tanzania, with a particular focus on the status of the manufacturing sector.
Manufacturing in Africa: Factors for Success
Neil Balchin, Karishma Banga , Sonia Hoque and Dirk Willem te Velde, June 2018
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.
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.
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.
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.
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.
WTO MC11 Negotiations: Implications for Economic Transformation in Developing Countries
The negotiations at the 11th World Trade Organization Ministerial Conference (WTO MC11) have so far failed to conclude with a comprehensive deal on agriculture, non-agricultural market access (NAMA), services and improvements in WTO rules that would make world trade freer, helping the global economy and developing countries in particular. There have, however, been small achievements in past rounds (MC9 in Bali and MC10 in Nairobi). This analysis examines the possible impact of current negotiating proposals in the main areas being discussed in the run-up to MC11 (agriculture, e-commerce, fisheries).
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.
DATA BRIEFING | Using SET data to identify economic transformation opportunities in low income countries
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.
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.
Pathways to Prosperity and Transformation in Nepal: A Four Sector Study
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.
The Shift of Manufacturing Employment in China
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.
Economic Transformation and Job Creation in Mozambique
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.
Local Content Policies and Backward Integration in Nigeria
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.
Tanzania’s Second Five-Year Development Plan (FYDP II): Briefing Papers
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.
Zimbabwe: A Roadmap for Economic Transformation and Economic Outlook
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.
Coordinating Public and Private Action for Export Manufacturing: International Experience and Issues for Rwanda
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.
Financing Manufacturing in Africa: Macroeconomic Conditions and Mobilising Private Finance
Phyllis Papadavid and Judith Tyson, June 2017
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.
Financing Manufacturing in Rwanda
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.
10 Policy Priorities for Transforming Manufacturing and Creating Jobs in Kenya
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.
Supporting Economic Transformation: Briefing Papers
Margaret McMillan, John Page, David Booth and Dirk Willem te Velde, March 2017
Launched alongside Supporting Economic Transformation: An Approach Paper, these briefings summarise the central tenets of SET’s approach to the challenge of promoting economic transformation and explore its importance for driving sustainable, inclusive development in the world’s poorest countries.
Foreign Direct Investment and Economic Transformation in Myanmar
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.
Supporting Economic Transformation: An Approach Paper
Margaret McMillan, John Page, David Booth and Dirk Willem te Velde, March 2017
This approach paper seeks to define economic transformation, offers an approach to measuring progress towards it, and examines case studies from African and Asian economies where transformative policies have been successful to greater and lesser extents. The paper concludes by presenting a multi-disciplinary approach to identifying opportunities, diagnosing constraints and mapping out realistic policy options for countries to use to turn their economic growth into genuine transformation.
Trade in Services and Economic Transformation: A New Development Policy Priority
Edited by Bernard Hoekman and Dirk Willem te Velde, February 2017
Services play a vital role in economic transformation and job creation in poor countries, but the effects are different from those in agriculture or manufacturing. While much of the discussion on economic transformation centres on transforming agriculture and moving into manufacturing, services are an under-explored component of economic transformation strategies.
This set of essays analyses the role of services, and especially trade in services, in economic transformation.
Trade in Services and Economic Transformation
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.
Africa’s New Climate Economy: Economic Transformation and Social and Environmental Change
Milan Brahmbhatt, Russell Bishop, Xiao Zhao, Alberto Lemma, Ilmi Granoff, Nick Godfrey and Dirk Willem te Velde, November 2016
Africa’s “Growth Miracle” in the 21st century has reversed a long standing narrative of pessimism about the region. It has emboldened hope for the future. GDP growth reached around 5% annually from 2001-2014. Rates of extreme poverty fell substantially.
Yet big challenges remain.
Supporting the Preparation of Tanzania’s Second Five-Year Development Plan (FYDP II)
Neil Balchin, Tim Kelsall, Blandina Kilama, Alberto Lemma, Max Mendez-Parra, Donald Mmari, Dirk Willem te Velde, Sam Wangwe, Leah Worrall, May 2016
The Government of Tanzania launched the second Five-Year Development Plan (FYDP II) (2016/17-2021/22) in June 2016, focusing on the theme Nurturing Industrialisation for Economic Transformation and Human Development. This study informed the preparation of FYDP II.
Supporting Economic Transformation in Nigeria
Dirk Willem te Velde, David Booth, Danny Leipziger and Ebere Uneze, May 2016
Nigeria has enjoyed fast economic growth over the past decade but has seen low-quality growth. Now, with oil prices down significantly, and weak growth, new areas of economic growth need to be identified. Business-as-usual will not safeguard productive jobs for the future or reduce poverty significantly. Promoting quality growth and economic transformation is crucial. This paper discusses the issues, drawing on economic analysis and political-economy assessment.
Developing Export-Based Manufacturing in Sub-Saharan Africa
Neil Balchin, Stephen Gelb, Jane Kennan, Hope Martin, Dirk Willem te Velde and Carolin Williams, March 2016
Strong growth in the African region, rebalancing and rising wages in China, and improvements in the policy and institutional context provide a unique opportunity that African countries can use to attract investment in higher value-added, export-led manufacturing. This paper describes how production, employment, trade and FDI in the manufacturing sectors in nine selected Sub-Saharan African (SSA) countries has increased and identifies opportunities for promising sectors.
Gender, Economic Transformation and Women’s Economic Empowerment in Tanzania
Louise Fox, March 2016. The government of Tanzania is currently preparing its next Five Year Development Plan (FYDP II). Ensuring women benefit from the development processes envisaged in the plan is instrumental to achieving its objectives. Analysis of recent data on employment and time use shows women have benefited from a decade of economic transformation in Tanzania. This paper discusses many issues, including how they have gained access to new employment opportunities in higher-productivity sectors such as manufacturing, trade and hotel and food services and the expansion of public services has increased the education of women in in the labour force.
Public and Private Sector Collaboration for Economic Transformation
Yaw Ansu, David Booth, Tim Kelsall and Dirk Willem te Velde, March 2016. Achieving a pattern of economic growth where productivity, export competitiveness and employment are continuously increased calls for an active search for solutions to numerous specific problems currently blocking or delaying needed investments. This paper looks at how to establish a strategic relationship between government and private sector actors that makes it possible to address these problems without repeating the errors that derailed transformational ventures in the past.
Trade Facilitation and Economic Transformation in Africa
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.
Promoting Manufacturing in Africa
Yaw Ansu, Margaret McMillan, John Page and Dirk Willem te Velde, March 2016.
Industrialisation, particularly the expansion and increased sophistication of manufacturing production and exports, and also the expansion of manufacturing employment, remains an essential part of Africa’s economic transformation. Unfortunately, manufacturing as a share of gross domestic product has declined over the past few decades in most African countries, even though in absolute terms it is growing.
The Role of Services in Economic Transformation – With an Application to Kenya
Anupam Khanna, Phyllis Papadavid, Judith Tyson and Dirk Willem te Velde, February 2016.
Much of the debate on economic transformation in low-income countries (LICs) has centred on moving out of agriculture and into manufacturing, but this fails to appreciate the role services can play in driving growth in developing countries. This paper examines the role of services in economic transformation, by discussing the main conceptual issues and applying these to the case study of Kenya. The analysis suggests we need to update our traditional, often negative, views on the role of services in economic transformation.
Baseline on Economic Transformation
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.
Economic Transformation Lessons From Large Developing Countries
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.
Gender and Economic Transformation
Louise Fox, February 2016.
Economic transformation is defined as the movement of resources (factors of production) to high productivity activities, both within and between sectors. It encompasses both the process of structural change (movement of resources between sectors) and within sector labour productivity improvements. Economic transformation is essential for improving the quality of growth.
Trade Policy and Economic Transformation
Marie-Agnes Jouanjean, Max Mendez-Parra and Dirk Willem te Velde, July 2015.
Trade has historically played a crucial role in the debate on economic transformation (ET), but the transmission mechanisms of different types of trade policies have not always been clearly articulated and empirical evidence is lacking in specific areas.
Chinese Special Economic Zones in Africa
Tang Xiaoyang, July 2015.
Africa is no longer satisfied with growth that is limited to traditional economic sectors, such as agriculture or mining. Policy-makers aiming to bring in more manufacturing, technology and innovations to the continent are attaching more importance to structural transformation in their vision of development.
Using Hydroelectricity to Power Economic Transformation in Nepal
Gagan Thapa and Yurendra Basnett, May 2015.
Key messages from the brief include that hydropower can help Nepal decouple growth from rising carbon emissions and propel economic transformation. To do so will require creating agglomeration effects around hydropower development. Nepal should consider investing hydropower revenue to ensure that the country stays on a low-carbon economic growth pathway; to build the much needed transport infrastructure and power it with electricity; and to develop industries.
Reinvigorating Economic Transformation in Nigeria
Dirk Willem te Velde, David Booth, Danny Leipziger and Ebere Uneze, May 2015
Nigeria’s recent economic growth has not brought about economic transformation. The new administration has an opportunity to address new areas of economic growth and the briefing sets about the six key aspects of policy formulation and implementation from the relevant international experience. One clear conclusion is the importance of emphasising global competitiveness, even in a large economy with a growing domestic market.