1. 1 Successful and unsuccessful industrial policies - Africa case studies YAW ANSU (African Center for Economic TransformationACET)

2. Industrial policy in the African context 2 Its not clear what industrial policy means in the African context so difficult to evaluate successful and unsuccessful cases This presentation will: Provide a clear statement of our understanding of what Industrial Policy is Provide a framework highlighting the key elements of the definition Use the framework to assess: Country institutional and policy environment Contribution of Industrial Policy to success/failure of production expansion/exports of specific products

3. What is industrial policy (IP)? 3 Its controversial 1960s to early 1980s in SSA Socialist-inspired, state-led development strategy o Import substitution and industrialization o Anti private sector Failed--failure of state-led development strategy or of IP? 1980s to 2000s Replaced state-led strategy with Bretton-Woods reforms o Pro-market, anti state involvement Failed to change structure of economies--failure of pro-market strategy or of IP?

4. What is industrial policy (IP)? 4 For this paper: Policies pursued by government to promote the expansion and upgrading of production, or to boost competitiveness of exports or import-substitution of SPECIFIC products and services. o Policies that aim to improve the general economic condition for production and exports of all products and services, while desirable, are not by themselves, in our view, sufficient to constitute the existence on an Industrial Policy regime. o The definition not restricted to industrial products; a set of policies aimed at expanding or upgrading production or exports of targeted agricultural products or service activities also qualifies as IP.

5. IP requires a coherent long-term strategy 5 Targeted economic activities should be nested in a long-term coherent national economic transformation strategy; not isolated initiatives.

6. IP is state-enabled, but private-sector driven 6 Economic production and distribution executed mainly by the private sector, but there could be state enterprises or joint public-private ventures State strives to provide conducive environment stable macro environment competitive trade and exchange rate policies, friendly regulatory environment public goods

7. State-business collaboration 7 Strategic partnership between state and the private sector, with mechanisms for ongoing joint deliberations Private sector informs: content of the long term transformation plan targeting of activities package of policies and incentives to promote targeted activities

8. Management of IPReciprocal Control Mechanisms 8 Clear criteria for: Access to the package of incentives Performance required for continued access Graduation from incentives program Cessation or modification by the state of programs that fail to meet objectives

9. The Africa experience 9 No Sub-Saharan Africa (except Mauritius and possibly South Africa) has ever practiced IP (in the sense outlined here) Nevertheless framework can be used along 2 dimensions : 1.Country approximations: Evaluate current/recent plans, policies and institutions with respect to the above framework to judge the extent to which a country is moving towards an IP regimei.e. country IP regimes 1.Sub-Sector approximations : Evaluate developments in particular economic sub-sectors or products to judge, with respect to the foregoing framework, the extent to which they reflect the pursuit of aspects of IPi.e. specific product/sub-sector examples of IP 2.Initial illustration with 3 Countries and 3 Products

10. Ethiopia - Horticulture 10 Gen. Institutional & Policy EnvtSupport Instruments Transformation Plan ? F. Subsidies--Direct FDI Promotion Targeted Econ Activities F. Subsidies--Indirect Research/Tech Institutes & Services ? Macro--inflation Access to Finance State Procurement Exchange Rate Interest rate Subsidies Info on Export Markets Trade Policy Trade Protection ? Export Market Opening Regulation Duty-Free Inputs ? Land Access State-Private Sector Collaboration ? Infrastr & Port Logistics ? State Enterprises FDI Promotion Industrial Parks/SEZs PPP Ventures Performance Control Target Skills and Training ? Privatization Assessment Under General Inst & Policy Environment, means good; means not good Under Support Instruments, means applied or favorable to activity; means not.

11. Mauritius – Textiles & Garments 11 General Institutional & Policy EnvtSupport Instruments Transformation Plan ? F. Subsidies--Direct ? FDI Promotion Targeted Econ Activities F. Subsidies--Indirect Research/Tech Institutes & Services ? Macro--inflation Access to Finance State Procurement Exchange Rate Interest Rate Subsidies ? Info on Export Markets ? Trade Policy ? Trade Protection Export Market Opening Regulation Land Access State Enterprises State-Private Sector Collaboration Gen. Infrastr & Port Logistics PPP Ventures FDI Promotion Industrial Parks/SEZs Privatization Performance Control ? Target Skills Training ? Assessment Under General Inst & Policy Environment, means good; means not good Under Support Instruments, means applied or favorable to activity; means not.

12. Ghana (2000+) – Cocoa Production & Processing 12 General Institutional & Policy Envt Support Instruments Transformation Plan - F. Subsidies--Direct ? FDI Promotion Targeted Econ Activities - F. Subsidies--Indirect ? Research/Tech Institutes & Services Macro--inflation Access to Finance State Procurement Exchange Rate Interest rate Subsidies Info on Export Markets ? Trade Policy Trade Protection Export Market Opening ? Regulation Land Access State Enterprises State-Private Sector Collaboration Gen. Infrastr & Port Logistics PPP Ventures Performance Control Industrial Parks/SEZs Privatization Target Skills Training - Assessment Under General Inst & Policy Environment, means good; means not good Under Support Instruments, means applied or favorable to activity; means not.