Industrialisation for structural transformation in Africa: Appropriate roles for the state

Abstract

The majority of African countries recognise the need for structural transformation. They acknowledged this need very early after attaining independence some five decades ago. Unfortunately, such transformation has eluded them while success has been observed in many parts of East Asia. There are obvious questions to be asked about the different outcomes observed. In trying to find explanations for the different outcomes, the literature shows that a major difference has been the role and capabilities of the state. While the state pursued transformation through industrial policy in a systematic way in many East Asian countries, such a systematic approach has not been observed in most parts of Africa. It is obvious that African countries can learn some principles from East Asia in the pursuit of structural transformation. They can set clear goals for transformation and develop clear strategies for achieving the goals. They can also assign specific roles to institutions and individuals in the implementation of strategies. But most importantly, they must show commitment to industrial policy and stick with the agreed policies, making periodic modifications and adjustments when necessary. In choosing goals for industrial policy, African governments cannot lose sight of current capabilities and endowments. They must be guided by how they want to be positioned in a changing global economy. This is what will drive them to develop specific policies that can make them replace fast-growing East Asian economies, such as China, as they move on to other levels in their transformation. In choosing strategies, African countries need to accept that it is not simply a case of 'government versus market'. Nor is it 'horizontal versus vertical industrial policies'. They will find that 'import-substitution versus export promotion' is no longer a dichotomous issue. Being pragmatic and consistent after making the right choices is the way forward. © The author 2012. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved.