Learning to Compete

Participants of Learning 2 Compete (L2C), a project of the Africa Growth Initiative in conjunction with the United Nations University World Institute for Development Economics Research (UNU-WIDER), hosted a meeting in Nairobi, Kenya from May 27-28, 2011.

The project—a comparative, country based research program—seeks to answer a seemingly simple but complex question: Why is there so little industry in Africa? Utilizing both qualitative and quantitative research methods, the project enlists research teams from a selection of nine African and two South East Asian nations to produce a cross-nations analysis of the challenges to industrial development in Africa. The country comparisons will consist of research and support from institutions in Ghana, Nigeria, Kenya, Tanzania, Uganda, Senegal, Ethiopia, Rwanda, Mozambique, Cambodia, and Vietnam.

The L2C participants convened to present the data and work compiled thus far. Products from this research are intended to provide practical policy recommendations for the development of industry in Africa, inform the debate in the academic community, and contribute to the data available for further research on the continent.

Structural change matters crucially for Africa. The region’s recent growth has been largely driven by expansion of existing primary commodity exports and a recovery of domestic economic activity, and growth is becoming increasingly fragile (Arbache and Page, 2008, 2009). Africa has failed to break into global industrial markets. Private investment remains low, direct foreign investment is largely concentrated in mining and minerals, and despite some notable successes—cut flowers in East Africa; back office services in West Africa, garments in Madagascar and Lesotho—exports have remained highly concentrated in traditional activities.

Africa’s share of global manufacturing value added (excluding South Africa) fell from 0.4 percent in 1980 to 0.3 percent in 2005, and its share of world manufactured exports went from 0.3 to 0.2 percent. Asia in contrast has had explosive industrial development and sustained growth. Yet, most successful Asian economies began their industrialization processes with initial conditions quite similar to many African countries today, and the recent Asian industrial success stories, such as Vietnam and Cambodia, have many characteristics in common with their contemporary African counterparts (Johnson, Ostry, and Subramanian, 2007). Asia’s economies have learned to compete in global markets while Africa’s largely have not. Learning to compete in a wider range of industrial activities is fundamental to growth, job creation, and poverty reduction in Africa.

The project commenced in 2011 and will run through the year 2013, during which time country teams will produce a series of academic working papers which will eventually contribute to a large-scale publication of accumulated research findings. Products from this research are intended to provide practical policy recommendations for the development of industry in Africa, inform the debate in the academic community, and contribute to the data available for further research on the continent.