Africa should industrialize. Without structural change it cannot sustain recent growth. Economies with more diverse and sophisticated industrial sectors tend to grow faster. But since 1980 Africa has deindustrialized. The paper shows that between 1975 and 2005 the size, diversity and sophistication of industry in Africa have all declined. An industrialization strategy containing two elements is needed. The first is straightforward: refocusing current investment climate reforms on infrastructure, skills, and regional integration. These actions alone will not be sufficient, however. Africa must also learn to compete through strategies to create an export push, develop industrial clusters, and attract task-based production.
This chapter looks at one of the most significant changes in the global economy over the last forty years, the shift of industry from high-income countries to developing countries. Between 1992 and 2012, the share of world manufacturing output produced by developing countries nearly doubled, rising to more than a third of global production. Growth of manufactured exports has greatly exceeded the growth of manufacturing output, and developing countries have gained world market shares in both simple and complex manufactured products. Today, East Asia, led by China, produces more than one-fifth of global manufacturing value added. Africa’s experience with industrialization over the same period has been disappointing. In 2010 the average share of manufacturing in GDP in sub-Saharan Africa was 10 per cent, unchanged from the 1970s.
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