1. China and Commodities: Does A Southern Engine of Growth Lead to Disruptive Development? IDC Seminar; 23 rd September 2009 Raphie Kaplinsky Masuma Farooki Julia Tijaja Anne Terheggen Vuyo Mjimba Zeferino Teka

2. The Drive to Industrialisation Close association between incomes and industrialisation The terms of trade favour manufactures

3. UNIDO World Industrial Development Report 2009

4. Commodities-Manufactures Terms of Trade

5. The Drive to Industrialisation Close association between incomes and industrialisation The terms of trade favour manufactures Manufactures are (relative to agriculture) income elastic and price inelastic Synthetic substitutes for natural products Manufacturing embodies rents – agriculture does not Manufacturing can be labour intensive – primary commodities are very capital intensive

6. A Southern Driver of Growth: Challenging Development Orthodoxy? Masuma Farooki

7. A Southern Driver of Growth China: The Large Country Impact –Volume of Demand –International Sourcing China: The Developing Country Impact –Resource Intensive Growth –Years to maturity

8. A Southern Driver of Growth % Share of Costs of Minerals/Extractive Sector in Industrial Production and Per Capita Income (PPP). 2004 Source: Author’s calculations from GTAP and World Development Indicators.

9. A Southern Driver of Growth Changing Traditional Relationships: Income Elasticity of Demand for Commodities –Resource Intensive Growth and Higher Elasticity Commodity Price Volatility –Active Financial Interests and Dampening of Fluctuations The Mining Industry –Supply Inelasticity and Super Cycles

10. A Case Study of the Cassava Industry in Thailand Julia Tijaja

11. Outline The Thai Cassava Value Chains Restructuring of Markets Implications

12. The Thai Cassava VC (simplified) Roots Native starch Modified starch Pellets Chips Feed Food Non food Ethanol

13. Thai Dried Cassava Exports (FRE) Calculated from TTTA Annual Report 2003 to 2008

14. Implications 1.A New Market OptionA New Market Option 2.Change in Nature of DemandChange in Nature of Demand

15. Implication 1: A New Market Option Cushion impact from shrinking EU market BUT Hamper pellet market diversification Disrupt growth of Thai chips users Restrict input into Higher Value Subsectorsigher Value Subsectors

16. Implication 2: Demand Changes Change in Quality Specifications Change in Standard Certification Change in Value Added >>

17. Export unit price (by Sub-sector)(by Sub-sector) Calculated from TTTA Annual Report 2003 to 2008

18. The Tropical Timber Industry in Gabon Anne Terheggen

19. Background Gabon: – High GDP p.c. (USD 9,969) but poor social indicators – Exports: oil (84.4%), timber (8.3%), manganese (3.1%) – Oil-dependent, little economic diversification

20. Background Timber Industry: – Export-orientated industry with focus on logs (okoumé) – Among the top ten producers and exporters globally – Traditionally towards EU, now to China Source: own calculations based on FAO ForesSTAT extracted June 2009

21. Timber Industry: – State-controlled concession system – State‘intervention’ = Forest Code Background Source: World Resources Institute: Interactive Forest Atlas for Gabon (2009)

22. Relegation of EU-Standards Buyer-specific Standards (CSFs) –Stage of processing, species variety, quality, volume, product specifications, and price International Standards –Fewer applications and these less important (phytosanitary certificate) Private Standards –No requirements of environmental production methods and adherence of national legislation

23. Restructuring of Domestic Industry Change of Ownership of Productive Assets – Influx of Chinese & Malaysian (Chinese descent) companies and traders – In addition to and replacing EU and Gabonese owned companies Source: World Resources Institute: Interactive Forest Atlas for Gabon (2009)

24. Restructuring of Domestic Industry Activities – Increase of intensive + extensive margin – Management ‘style’ – Easy cash vs. value-added ‘hurdle’ – Certification vs. lack of skills + capital – Slow change of attitude Clash of (political) Interests at Given Opacity – Gabon vs. EU vs. China

25. Making the Most of Commodities (The MMCP Programme)

26. Making the Most of Commodities (MMCP Programme) The Resource Curse –Dutch Disease –Corruption –Violence Sachs-Warner But US, Canada, Australia experience

27. OU and UCT Programme Sectors –Copper, diamonds, gold, offshore-oil, oil, LNG,support service sector, infrastructure Countries – Algeria, Angola, Botswana, Nigeria, Tanzania, South Africa, Zambia,

28. Core MMCP Hypotheses: Linkages affected by Ownership Employment spillovers National Systems of Innovation Regional links Infrastructure Policy

29. The Nature And Determinants Of Linkages In A Remote Minerals Commodity Sector: A Case Study Of Gold Mining In Tanzania. Vuyo Mjimba

30. Gold Prices Trend 1960-2008 Source: FinFacts 2009

31. The Scene Poverty Royalties and Taxes Ownership Globalization Tanzania South Africa Australia Canada

32. Theories Value Chain Outsourcing The NSI The Resources Curse Thesis

33. Themes Firms Strategies The Local Economy Impact of firm strategy on upstream and down stream linkages. Impact of the local economy on linkages

34. Questions Spillovers Policy Spillovers between gold mining industry, upstream/downstream suppliers and the wider economy Impact of policy regime upstream and downstream linkages

35. Maintenance and Repair Services Market in Offshore Oil and Gas Upstream Industry on the West African Coast: The Chain of Labour and Rents Zeferino Teka

36. Oil & Gas Industry Value Chain

37. What About?

38. KEY ISSUES 1.Power & Governance Structure of the Market Mapping out the value chain Identify LEAD firms Rules of participation Structure of the Market

39. KEY ISSUES 2. Procurement & Outsourcing Criteria & incentive for outsourcing Ownership Inputs sourcing: local & foreign distribution Types of contracts & distribution Determinants of Rent, Division of Labour, & Entry Barriers

40. KEY ISSUES 3. Upgrading & Learning Form of chain governance Absorptive capacity Upgrading strategy Knowledge producers & brokers Status of Dynamic & Technological Capabilities

41. KEY ISSUES 4. NSI Trajectory Macro Policy Meso (horizontal) Policy Micro Policy Context Determinants

42. KEY ISSUES 5. Spillovers Skills & Technology Labour Capital Infrastructure Backward & Forward Linkages

43. Thank You