THE CASE FOR ECONOMIC TRANSFORMATION Dr. Yaw Ansu Chief Economist, ACET and Prof. Mina Baliamoune (presenter) Director of Research, ACET
Growing Fast, Transforming Slowly • Steady growth over last decade ~ 5% • 7 of top 10 fastest growing economies for next five years AFRICAN CENTER FOR ECONOMIC TRANSFORMATION AFRICAN CENTER FOR ECONOMIC TRANSFORMATION
Are the high GDP growth rates in SSA sustainable? Will they bring shared prosperity? We ’ ve seen this movie before… Growth in the mid-1960s to early 1970s is similar to growth in the 2000s . This earlier growth ended in crash of mid-1970s and 1980s and SAPs. Will it end differently this time? AFRICAN CENTER FOR ECONOMIC TRANSFORMATION AFRICAN CENTER FOR ECONOMIC TRANSFORMATION
Economic Transformation = Growth + DEPTH D iversification E xport competitiveness Growth P roductivity with T echnology H uman well-being AFRICAN CENTER FOR ECONOMIC TRANSFORMATION AFRICAN CENTER FOR ECONOMIC TRANSFORMATION AFRICAN CENTER FOR ECONOMIC TRANSFORMATION
The Economic Transformation Record (1970-2010) • Senegal, • S. Korea, • Burkina Faso, • Singapore, • Ghana, • Malaysia, • Nigeria, • Thailand, • Cameroon, • Indonesia, • Ethiopia, • Vietnam, SSA vs. vs. • Kenya, • Brazil, • Uganda, • Chile • Tanzania, • Rwanda, • Zambia, • Botswana, • Mozambique, • South Africa, • Mauritius *ACET-15 in SSA (2010): Population 70%; GDP 76 %; Manufacturing Value-added 85%; Agricultural Production 65%; Exports 80%
Diversification of Production and Exports Manufacturing is declining in Production Share – MVA (% of GDP) SSA. Without manufacturing, Figure 1.6: Production Share-MVA (% of GDP) opportunities for economic 25 transformation are limited. Why? 20 15 10 1970 1975 1980 1985 1990 1995 2000 2005 2010 Year SSA Average ACET15 Average Comp Average Data Source:World Bank Development Indicators AFRICAN CENTER FOR ECONOMIC TRANSFORMATION AFRICAN CENTER FOR ECONOMIC TRANSFORMATION
Export Diversification: Share of Top 5 Exports Concentration of Exports (% of Top 5 Exports) Figure 1.7: Concentration of Exports-% Top 5 Exports 90 Exports are very • concentrated in SSA 80 and ACET-15; top 5 exports products 70 generally form over 70% of commodity exports. 60 Marginal improvement • 50 over the 40-yer period in SSA and ACET; 40 dramatic progress in 1975 1980 1985 1990 1995 2000 2005 2010 Comparators over the Year 1980s and 1990s. SSA Average ACET15 Average Comp Average Data Source:UN ComTrade. Rev 2 Digit 3 AFRICAN CENTER FOR ECONOMIC TRANSFORMATION AFRICAN CENTER FOR ECONOMIC TRANSFORMATION
Export Diversification: Small Share of Manufacturing Exports Exports in SSA and ACET-15 Manufacturers Exports (% of Total Goods and Services Exports, BOP) are concentrated mostly in Figure 1.9: Manufactures Exports (% of Total Goods and Services Exports, BoP) commodities; manufactures 50 under 20 percent. Very little progress over the past 2 40 decades. 30 20 10 0 1975 1980 1985 1990 1995 2000 2005 2010 Year SSA AVG ACET15 AVG COMP AVG Data Source:World Trade Organization & IMF BoP Statistics Yearbook and data files. AFRICAN CENTER FOR ECONOMIC TRANSFORMATION AFRICAN CENTER FOR ECONOMIC TRANSFORMATION
Export Competitiveness: Growth in Export Market Shares SSA and ACET-15 exports have grown slower than those of Comparators and also slower than world exports (SSA and ACET-15 line below zero). AFRICAN CENTER FOR ECONOMIC TRANSFORMATION AFRICAN CENTER FOR ECONOMIC TRANSFORMATION
Productivity: Manufacturing Labor Productivity in MVA per Manufacturing Worker Manufacturing in SSA and ACET- 60000 15 low and stagnant; high and growing in Comparators. 40000 MVA 20000 0 1970 1975 1980 1985 1990 1995 2000 2005 Year SSA Average ACET15 Average Comp Average Data Source:UNIDO INDSTAT2, Rev 3 Digit 2 AFRICAN CENTER FOR ECONOMIC TRANSFORMATION AFRICAN CENTER FOR ECONOMIC TRANSFORMATION
Productivity: Agriculture Cereal yield (kg per hectare) 5000 4000 Productivity in agriculture (cereal yields - km/hectare) 3000 is also low. There have been improvements, but 2000 the rate is slow. 1000 1970 1975 1980 1985 1990 1995 2000 2005 2010 Year SSA AVG ACET15 AVG COMP AVG Data Source:World Bank Development Indicators AFRICAN CENTER FOR ECONOMIC TRANSFORMATION AFRICAN CENTER FOR ECONOMIC TRANSFORMATION
Technology: Production Share of Medium and High-Tech Manufacturing Technology (% of Med & High Tech Manufactures) manufactures (i.e. using Lall % of Med. & High Tech. Manufactures Decomposition) is low and 60 . stagnant in SSA and ACET-15, while relatively high and rising in 50 Comparators 40 30 20 10 1970 1975 1980 1985 1990 1995 2000 2005 Year SSA Average ACET15 Average Comp Average Data Source:UNIDO INDSTAT2, Rev 3 Digit 2 AFRICAN CENTER FOR ECONOMIC TRANSFORMATION AFRICAN CENTER FOR ECONOMIC TRANSFORMATION
Technology: Exports Top 10 exports in Comparators have evolved gradually from Primary Commodities and Low Tech to Medium and High Tech; in Africa, we are still waiting for the change.* * PP = Primary Products; RB = Resource-based; LT =Low Tech; MT =Medium Tech; and HT = High Tech AFRICAN CENTER FOR ECONOMIC TRANSFORMATION AFRICAN CENTER FOR ECONOMIC TRANSFORMATION
Human Wellbeing — GDP per capita Despite the recent welcomed • change in Africa, real GDP per capita is only around 50 percent higher in 2010 than what it was in 1970 - 40 years ago. In the ACET-15, it is about two • and half times higher. In the Comparators, however, it is 5 times higher. AFRICAN CENTER FOR ECONOMIC TRANSFORMATION AFRICAN CENTER FOR ECONOMIC TRANSFORMATION
Human Wellbeing — Formal (Non-vulnerable) Employment: Over 80 percent of employment is non-formal or vulnerable Some� features� of� employment� and� unemployment� in� selected� Sub-Saharan� countries� Country� Informal� employment� (%� of� total� Vulnerable� employment� (%� of� employment)� total� employment)� Benin� 2010� 92.9� 89.9*� (2003)� Ethiopia� 2005� n/a� 83.9� Ghana� 2010� 86.1� 71.5� Kenya� 2009� n/a� 63.4*(1999)� Mozambique� 2005� 92.8� 84.8� Rwanda� 2006� 93.9� 76.6� Uganda� 2009� 85.5� 82.7*� (2005)� � Source :� Compiled� from� Baah-Boateng,� Ansu,� and� Amoako-Tuffour� (2013).� � AFRICAN CENTER FOR ECONOMIC TRANSFORMATION AFRICAN CENTER FOR ECONOMIC TRANSFORMATION
Meanwhile the youth population of SSA is rising very fast Population of Youth 450 Africa ’ s youth population to 400 outstrip China ’ s and India ’ s. 350 300 Demographic dividend or SSA Millions 250 Africa Demographic Bomb? 200 India 150 China 100 50 0 2010 2015 2020 2025 2030 2035 2040 2045 2050 AFRICAN CENTER FOR ECONOMIC TRANSFORMATION AFRICAN CENTER FOR ECONOMIC TRANSFORMATION
The African Center for Economic Transformation (ACET) – Championing Economic Transformation • Economic policy institute based in Accra, serving Africa • Founded in 2007 to support sustained growth through transformation • Staff of 30 from 10 African countries, global network of leading thinkers and practitioners • Diverse board of highly accomplished leaders in business, government and global development AFRICAN CENTER FOR ECONOMIC TRANSFORMATION AFRICAN CENTER FOR ECONOMIC TRANSFORMATION AFRICAN CENTER FOR ECONOMIC TRANSFORMATION
The ACET approach • Ask new questions about old and emerging problems • Search for evidence around the world Analysis • Adapt solutions to Africa • Engage African governments • Engage the private sector Advocacy • Broker public-private dialogues • Share lessons among governments • Push for action Advice • Support governments to implement policy (Think & Do) AFRICAN CENTER FOR ECONOMIC TRANSFORMATION AFRICAN CENTER FOR ECONOMIC TRANSFORMATION AFRICAN CENTER FOR ECONOMIC TRANSFORMATION
The African Transformation Report (ATR) Common Structure • Review of transformation performance (Growth + DEPTH) • The African Transformation Index • Discussion of some key drivers of transformation and relevant practical examples for policy • Discussion of some Pathways to Africa ’ s transformation based on Africa ’ s comparative advantage and global market trends Informed by country case studies (Botswana, Burkina Faso, Cameroon, Ethiopia, Ghana, Kenya, Mauritius, Mozambique, Nigeria, Rwanda, Senegal, South Africa, Uganda, Tanzania, and Zambia) AFRICAN CENTER FOR ECONOMIC TRANSFORMATION AFRICAN CENTER FOR ECONOMIC TRANSFORMATION AFRICAN CENTER FOR ECONOMIC TRANSFORMATION
First ATR--Contents Chap 1 . Review of Chap 2 . The State, Chap 3. Export Chap 4. Education Chap 5. Labor- Performance, the the Private Sector Promotion and Skills intensive ATI and Economic Development Manufacturing Transformation Chap 7. Extractives Chap 6 . Agro- Chap 9. Regional Integration-- Chap 8. Tourism Creating Wider Markets for processing Transformation AFRICAN CENTER FOR ECONOMIC TRANSFORMATION AFRICAN CENTER FOR ECONOMIC TRANSFORMATION AFRICAN CENTER FOR ECONOMIC TRANSFORMATION
African Transformation Report Launch — Feb. 2014 www.acetforafrica.org AFRICAN CENTER FOR ECONOMIC TRANSFORMATION AFRICAN CENTER FOR ECONOMIC TRANSFORMATION
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