Keynote at The Third Voice of Social Sciences Conference (VSS) on Industrialization and Social Transformation University of Dar es Salaam, Tanzania, 24-25 November 2016

1. Keynote at The Third Voice of Social Sciences Conference (VSS)
on Industrialization and Social Transformation
University of Dar es Salaam, Tanzania, 24-25 November 2016
Finn Tarp
Growth, Structural Transformation
and Development

2. Introduction

3. Context
• The Economist (11 May 2000): Hopeless Africa
• The Independent (15 July 2009): Africa – the lost
continent
• The Economist (3 December 2011): The hopeful
continent – Africa rising
• A recent Afrobarometer survey suggests that ‘despite
high reported growth rates, lived poverty at the
grassroots remains little changed’ (Dulani et al. 2013);
and others even question the growth revival referring to
poor data

4. UNU-WIDER’s 2014-18 Research Programme
• 3 Challenges
– Transformation
– Inclusion
– Sustainability
• 3 Concerns
– Africa’s inclusive growth
– Gender equity
– Development finance
• 3 Audiences
– Decision-makers in developing countries
– International agencies, both bilateral and multilateral
– Global research community

5. Focus Today on Two Large Scale Projects
• Growth and Poverty Project (GAPP)
• Re-examined Africa’s growth, poverty and
inequality developments and asked:
– What explains the trends in monetary and
non-monetary poverty and their links to
growth and inequality in 16 of the 24 most
populous African countries?
– What should policy makers do looking
forward?
– We cover almost 75% of the African
population and 9 of the largest 10
countries.
• Learning to Compete (L2C)
• Tried to answer a simple question:
– Why is there so little industry in Africa?
• And addressed other questions such as:
– Does it matter?
– Is it realistic for Africa to break into global
markets?
– What makes firms more competitive?

6. UNU-WIDER Research Output
• Growth and Poverty in Sub-Saharan Africa: Oxford University Press, edited by Channing Arndt, Andy McKay and Finn Tarp
• Measuring Poverty and Wellbeing in Developing Countries: Oxford University Press, edited by Channing Arndt and Finn Tarp
• Made in Africa: The Brookings Press, by Carol Newman, John Page, John Rand, Abebe Shimeles, Måns Söderbom, and Finn Tarp
• Manufacturing Transformation: Comparative Studies of Industrial Development in Africa and Emerging Asia: Oxford University Press, edited by
Carol Newman, John Page, John Rand, Abebe Shimeles, Måns Söderbom, and Finn Tarp
• Africa’s Lions: The Brookings Press, edited by Haroon Bhorat and Finn Tarp
Forthcoming:
• Beating the Odds: Jumpstarting and Sustaining Inclusive Structural Transformation: Princeton University Press, by Celestin Monga and Justin Lin
(see also Justin Lin’s WIDER Annual Lecture)
• Building State Capability: Evidence, Analysis, Action: Oxford University Press, by Matt Andrews, Lant Pritchett, and Michael Woolcock, (see also
Pritchett’s WIDER Annual Lecture)
• The Practice of Industrial Policy: Business Coordination in Africa and East Asia: Oxford University Press, edited by John Page and Finn Tarp
• Growth, Structural Transformation and Rural Change in Vietnam: A Rising Dragon on the Move: Oxford University Press, edited by Finn Tarp
• A LOT MORE: see https://www.wider.unu.edu/publications and https://www.wider.unu.edu/ including a series of special issues of journals and
stand alone articles

7. GROWTH AND POVERTY PROJECT: GAPP

8. LEARNING TO COMPETE: L2C

9. Key Messages
• There is a lot to celebrate in African development (two cheers)
– But not every where, and major challenges remain (not three cheers)
• Africa has a chance to break into the global market for industrial goods
– But business as usual will not deliver desired for results

10. GAPP Background

11. The African Growth Turn-Around

12. Child Mortality – Nearly Halved Since 1995
15
35
55
75
95
115
135
155
175
195
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Europe & Central Asia (developing only) East Asia & Pacific (developing only)
Middle East & North Africa (developing only) Sub-Saharan Africa (developing only)
Latin America & Caribbean (developing only)
Mortality rate, under-5 (per 1,000 live births)

13. Substantial Variability: The 16 GAPP Country Cases

14. GAPP Approach and Country
Categorisation

15. The GAPP Approach
• Bring together:
– Available macroeconomic data
– Comparable household budget surveys
– Demographic and Health Survey data
– A host of other information (prices)
• Critically examine validity and consistency of existing data
(triangulation)
• Develop coherent country case stories

16. Four Categories of Countries
• Relatively rapid economic growth and corresponding poverty reduction:
Ethiopia, Ghana, Malawi, Rwanda, and Uganda
• Relatively rapid economic growth but limited poverty reduction: Burkina
Faso, Mozambique, Nigeria, Tanzania, and Zambia
• Uninspiring or negative economic growth with corresponding stagnation
or increasing poverty: Cameroon, Côte d’Ivoire, Kenya, Madagascar, and
South Africa
• Low-information countries: DRC

17. Selected Findings and Lessons

18. Three Selected GAPP Findings
• Socio-economic progress in Sub-Saharan Africa has been markedly
better than almost anyone expected 25 years ago
• But progress has not been even, the development process has without
exception been highly non-linear, and the fragility of gains evident
• The regional powerhouses of Kenya, Nigeria, and South Africa not
among the better performers in terms of growth or poverty reduction

19. Selected Lessons
• Volatility of monetary poverty measures: extreme care in
analysis and interpretation warranted
• Importance of multi-dimensional assessments: speaking to
non-money metrics of development
• The role of agriculture remains critical

20. L2C

21. L2C Conference – Industrial development and policy in Africa
www1.wider.unu.edu/L2Cconf

22. Ending up where it began
Africa has deindustrialized since the 1980s
Manufacturing as a Percentage of GDP Sub-Saharan Africa, 1965-2012
5
6
7
8
9
10
11
12
13
14
15
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
PercentofGDP

23. Africa’s deficit in manufacturing
• Africa’s share of manufacturing in
GDP is less than half of the
average for all developing
countries
• Per capita manufactured exports
are about 10 per cent of the
developing country average
• Africa’s share of global
manufacturing is smaller today
than in 1980
Mfg.
Exports
PC 2008
(US$)
Growth
Exports
PC 00-
08
(%)
Mfg.
Value
Added PC
2008
(US$)
Share of
Mfg. in
GDP 2008
(%)
Africa
Average 49.0 2.85 138.6 9.4
All
Developing
Countries
487.2 10.05 412.9 21.7

24. The L2C country comparative framework
• Eleven countries
– Nine African : Ethiopia,
Ghana, Kenya, Mozambique,
Nigeria, Senegal, Tanzania,
Tunisia and Uganda.
– Two Asian: Vietnam,
Cambodia.
• National researchers
– Teamed with global experts
• Three track approach
– Detailed case studies
of industrialization and
the evolution of public
policies
– Econometric analysis of
the stock of firm level
surveys
– Qualitative surveys of
FDI firms and linked
domestic firms

25. New Directions

26. New Directions for Industrial Policy (1)
Reform the Investment Climate Agenda
• Stop Doing (monkey) Business
• Focus on infrastructure and skills
development relevant to industry
• Support institutional
development for FDI and SEZs
0
5
10
15
20
25
30
35
40
45
50
PercentofTotalODACommittments
ODA for Economic Infrastructure 1973-2009

27. New Directions for Industrial Policy (2)
Mount an “Export Push”
• Potential productivity gains high, but also high private costs of
entry
– Knowledge of potential markets is the most serious constraint for international
market entry
• Entering global markets will need an “East Asian style” export push
– A broadly owned strategy and effective institutions (leadership from the top)
– Trade related infrastructure and trade logistics
• Support for regional institutions and infrastructure

28. New Directions for Industrial Policy (3)
Capabilities and Clusters
• Building Firm Capabilities
– An export push would be a major
source of capabilities
(demanding buyers; repeated
relationships)
– Build effective FDI agencies
– Strengthen domestic value chain
relationships
• Creating Clusters
– Agglomeration economies
associated with a collective action
problem
– SEZs are a means of creating
clusters
– Bring Africa’s SEZs up to world class
– Strengthen the links between firms
in the SEZ and domestic
suppliers/purchasers

29. Conclusion

30. Outstanding Challenges
• Global demographic projections (2015-2050): from 7.3 to 9.7 billion, and Africa’s population
is set to double to 2.5 billion (bigger than both China and India and Nigeria bigger than US)
• Structural transformation slow
• Jobs and employment creation lagging
• Agriculture and industrialization constrained
• The potential pitfalls are many, but there is every reason – and a distinct need – to push
decisively forward in African development over the next 15-20 years (remembering T x G =
69)
• Trickle down alone will not do the trick – see the ”Stockholm Statement”
https://www.wider.unu.edu/news/stockholm-statement-%E2%80%93-towards-new-
consensus-principles-policy-making-contemporary-world