Session 3: Regional manufacturing and industrial policy 2
The Sub-Saharan Africa (SSA) region has enormous potential to exploit its large reservoir of natural and agricultural resources through diversifying its resources from a predominantly agrarian to an industrial base. There is now consensus among African leaders and stakeholders that this is a path to the promotion of sustainable development and employment creating growth. Growth of the industrial sector brings with it more high-income jobs, upstream linkages to domestic firms and triple effects throughout the economy for both formal and informal workers. However, the challenges to attain industrialisation may be more daunting than in the past. Although there has always been a strong theoretical case for industrial policy, based on market failures, the practical difficulties including the identification of firms and sectors to target, survival of inefficient firms, rent-seeking and misallocation of resources are considerable. The emergence of global value chains has affected the nature of international competition. The prominence of multi-national companies in the global economy influences access to knowledge and technology. The availability of tariffs is becoming narrower, limiting room for maneuvering in industrial policy. In recent times many SSA countries have adopted new industrial polices or industrial development framework, including Botswana, South Africa, Uganda, Kenya and Ethiopia. There is a danger, however, that the lessons from past policy failures are forgotten. In this paper we attempt to give careful consideration to these past experiences.