Briefing Papers by Lily Sommer, Linda Calabrese, Maximiliano Mendez-Parra and David Luke for ODI.
Africa’s experience of industrialisation has been disappointing. Globally, the share of manufacturing in total output rises with per capita income until countries each upper-middle-income status, then declines as services become more prevalent at higher incomes; however, this has not been the case in Africa. Fresh thinking is needed on how to achieve Africa’s industrialisation objectives, and trade has a key role to play.
This brief, produced in partnership with the United Nations Economic Commission for Africa, explores how the idea of using trade and trade policy to support industrialisation has experienced a recent resurgence, and provides a set of policy recommendations for African economies looking to industrialise smartly through trade.
• Trade, including intra-African trade, and trade policy offer important and underutilised tools for African countries to achieve their industrialization objectives.
• High tariffs on capital goods, inputs and intermediate products discourage domestic production and should be revised.
• African countries can accelerate their productivity gains by promoting participation in global value chains, for example by providing adequate infrastructure and a supportive policy environment.
• Complementary policies to improve skills, infrastructure, trade facilitation and access to affordable credit can boost industrialization.
• Continental, regional and domestic policies should be aligned towards making industrialisation a top priority.
Read the full article here. Photo: Lee Phelps Photography (CC BY-NC-ND 2.0)