Steph- Week 7_ Viability of Labour Based industrialisation in SSA

Steph- Week 7_ Viability of Labour Based industrialisation in SSA

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Labour Based Manufacturing as an Industrialisation Path. A Viable Option for SSA? Stephanie Craig
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Should Africa Industrialise? Page, J (2011) Africa should industrialize. Without structural change it cannot sustain recent growth. Economies with more diverse and sophisticated industrial sectors tend to grow faster. An industrialisation strategy containing two elements is needed. Refocusing current investment climate reforms Africa must also learn to compete
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“Industry is the means by which rapid improvement in Africa’s living standards is possible” - Kwame Nkrumah (1965) Africa’s post-independence leaders looked to industrialization as the key to rapid economic growth. State-led, import-substituting industries they created were frequently uncompetitive and unsustainable. Industry moving out of Africa over the last two decades.
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Why is this a problem? WHY: Lack of structural limits Africa’s long-term growth prospects. Between 1994 and 2008, average economic growth was close to 5% p.a Mild impact from the global crisis of 2008– 09 Africa’s growth is fragile & needs structural change. Lack of structural change = Africa remains vulnerable to shocks and to a long-run decline in commodity prices.
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What Africa makes matters: structural change, diversity, and sophistication Two problems associated with lack of structural change: Lack of manufacture diversity Lack of manufacture sophistication More diversified production and export structures = higher incomes per capita More sophisticated products and exports = primarily produced by countries at higher income levels & tend to lead to faster growth Thus what Africa makes, matters. Poor countries = specialize in a fairly narrow range of activities.
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Production Sophistication and Per Capita Income between 1975 and 1995
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Diversity and sophistication have declined in Africa 1970s: Africa has been making fewer of the kinds of industrial products that matter for its growth. 1975 – 2005: distinct decline in the sophistication of the manufacturing sector in 16 of the 18 African economies in the UNIDO database None of the African countries in the sample followed the movements of the successful industrialisers.
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The Problem for Africa now… 1980s – 1990s: Narrowing of the production and export structure in manufacturing and a shift toward less sophisticated activities. Consequence of closure of non-competitive, import substitution industries—many of them state Revealed comparative advantage in low sophistication goods increased somewhat.
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