Sustainable Industrialization in Africa

Towards a New Development Agenda

Banji Oyelaran-Oyeyinka, Padmashree Gehl Sampath, Banji Oyelaran-Oyeyinka, Padmashree Gehl Sampath

• Publisher: Palgrave Macmillan
• Year: 2016
• Print ISBN: 9781137561114
• eBook ISBN: 9781137561121
• Topic: Economics
• Subtopic: Business General
• Index: Economics

Sustainable Industrialization in Africa explores the issues that confront development policy in the context of the MDGs and the post-2015 development agenda from an African perspective. The book argues that development is an ultimate outcome of sustainable, equitable industrialization, and that any development agenda for the future has to ensure that industrialization is fostered in a way that makes economies independent and responsive to the needs of all citizens. Future challenges for sustainable industrialization in Africa, based upon the differences in its current industrialization trajectories, are discussed to ensure that industrial growth results in positive economic and social outcomes in the context of the post-2015 development agenda.

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Sustainable Industrialization in Africa: Toward a New Development Agenda

Padmashree Gehl Sampath

This book is about developmental choices. Its main argument is that countries and regions face individual dilemmas and trade-offs in promoting sustainable development, even when the choices to be made begin from a definitional standpoint. Despite the social sciences’ rich scholarship and the benefits of pluralism, a great vice still afflicts it, in that we engage in debates on critical notions that are potentially path altering without actually aligning ourselves on what they may mean for different contexts. Sustainable development is one such notion that holds a different appeal to all who seek to operationalize it. Sustainable development can denote simply the ability to grow at a high rate for the next two decades or more. The term is often also used to denote development that is more equitable, and encompasses the ability to be inclusive and lift people out of poverty in urban and rural areas. Sustainability can also simply refer to growth and development that focus on being environmentally sustainable or intergenerationally conscious. Yet for many others, the term “sustainable development” can be multifaceted, denoting various means of eliciting sustainable outcomes – environmental, developmental and equity based – the so-called holy trinity of development.

In this book, we argue that, however important it may be to agree on the different aspects of sustainable development, in the context of the 2030 Agenda for Sustainable Development, eliminating poverty and attaining equitable outcomes for the majority by promoting industrialization remain the core national prerogative, both in terms of agenda setting and problem solving for countries. It is well known that in the current context, globalization, rapid urbanization, free trade and the ongoing fragmentation of production are the main factors that determine economic outcomes globally, and often the role of a nation state is heavily circumscribed (UN-Habitat, 2013; Breznitz, 2007). Despite this, in our view, the nation state has never been more important than it is now in steering the paths of individual countries in the ways they interact with other actors within the globalized community. Equally, and more importantly, states are critical to determining how economic gains can be captured and translated into social outcomes, in a manner that is sustainable at the national level, vis-à-vis the global community and the environment at large.

Today’s Africa in its variegated hues is a statement of promise: the region has witnessed growing trade relations and a substantial increase in real GDP growth rates in the 2000s, making it the fastest-growing continent worldwide. And yet, poverty and inequality remain the largest hindrance to channeling developmental outcomes. Over 70% of the world’s poorest people live in Africa, including the ten countries that have the highest number of people living in extreme poverty. Similarly, of the 1.3 billion people who lack access to energy, approximately 700 million live in Africa and African states lose roughly 5% of their GDP on ensuring access to water and sanitation as a result of weak national infrastructure. Viewed from these standpoints, lauding international trade or multilateralism for delivering greater access to international markets to African countries seems premature: up until now, there has been not much data to support the claim that increased trade and openness contribute to poverty reduction in general (Bhagwati and Srinivasan, 2002) and in Africa in particular (Le Goff and Singh, 2014).

The growing trade relations between African countries with the rest of the world presents opportunities but these, in fact, need to be punctuated with concern that it is concentrated mainly in extractive or low-technology sectors of the economy, and restricted to some countries more than others. On these topics, however, consensus is hard to come by. Academic and policy scholarship is split on the question of whether trade openness is unfavorable and whether such concentration in some sectors is development friendly. Views oscillate between those who espouse a commodities-based industrialization pathway to development (Lin, 2011; Morris and Fessehaie, 2014) and those who vehemently criticize the overdependence on commodity rents, arguing that it leads to entrenching countries in product spaces that are not conducive to upgrading in general (Hausmann and Rodrik, 2005; Hausmann and Klinger, 2006; Hidalgo et al., 2007).

Recently, the academic scholarship has laid claim to the fact that the region’s history is crucial to understanding some of its challenges of underdevelopment (Jerven, 2009; Austin, 2008). A long list of explanations has been proposed to explain the region’s developmental challenges – a lack of institution building as a result of historical political instability, structural adjustment, a low focus on industrial development in a historical context, and colonization and slavery backed by accounts that span back millennia. Such studies try to connect today’s developmental issues to shortcomings of the past. In the process of creating potential trajectories between the past and current circumstances to draw conclusions, several simplifications are often made to fit certain conceptual categories and to justify particular patterns of data and analysis.

One such simplification that is found in a large part of the economic growth literature is related to the relationship between economic growth and income. This highly critical link is assumed to be relatively straightforward. As Jerven (2009) points, low income today must be the result of a lack of income growth in the past (p. 78). If we were to accept this relationship as factual, one simply has to delve into how best to identify the causes of the lack of income growth in the past in Africa as the starting point to finding solutions. In fact, there is a lot of literature that does begin with such an assumption (see, for instance, Collier and Gunning, 1999). On this basis, scholars have argued that what Africa needs today is a set of pro-growth institutions that can tackle the challenge of income growth that has arisen due to decades of sluggish industrial development, its specific population characteristics, political instability, inflation and unemployment, lack of skilled labor, or even factors such as slavery and racism.

Even if we were to accept the relatively straightforward assumption between low income in the current context and a lack of income historically, attaining higher income growth will depend on (1) structural change, especially a faster transformation from agriculture to industry; (2) higher export shares; (3) lower inflation; and (4) decreases in inequality and dependency ratios (Bulman et al., 2014, p. 2). Not only are these issues interconnected but they suggest that there are differentiated yet important roles to be played by a series of extenuating factors. These factors include not only higher education strategies for a wider skills base, research and development (R&D) infrastructure and techno-logical change. There can also be a large number of barriers to achieving equality are simply associated with marginalization and the lack of opportunities of large sets of people within countries as associated with basic access to health, education, social exclusion or simply the lack of creative space. The key question, therefore, is much more profound: how do we achieve these outcomes simultaneously in a way to channel the current economic growth toward a process of sustainable industrialization in Africa?

The comparative political economy literature on industrialization has yet to address itself to accommodate the possible synergy between the economic and the social interfaces in the growth process that together contribute to the process of sustainable development. The post-2015 agenda deliberations that were conducted under the auspices of the United Nations embarked upon the rich and complex task of finding a go-between for the economic and social domains of development in the context of all countries worldwide. The fundamental idea underlying the 2030 Agenda for Sustainable Development is the creation of prosperity for all. It is embedded in the notion that global prosperity calls for integrated and common solutions in which all countries assume a common responsibility to enable sustainable development. The, recently adopted Sustainable Development Goals (SDGs) are expected to be framed as a common objective of mankind, which if properly implemented has the potential to fundamentally foster an equitable global future for all. The adoption of the SDGs is a first step of the long road that faced the global community. While devising means to further the SDGs agenda, it seems especially important to take on board the lessons learned from the Millennium Development Goals (MDGs) era. Fundamentally, what stands out from the MDGs experience is that, despite the level of success achieved in implementing several of the social goals, the goals in their entirety were insufficient for addressing local challenges in some countries, mainly because they were not closely coordinated with the overall economic development of countries themselves. To a certain extent, although the goals and the progress achieved thereunder were laudable, they were targeting the consequence of social and economic inequalities, rather than addressing their causes. For example, the processes that underlie education or health exclusion are embedded in socio-cultural patterns and the economic division of opportunities. Seeking to achieve access to health or universal primary education without addressing these underlying causes was perhaps a major failing in the older approach. Another critical failure was the inability of the MDG social goals to closely connect with and contribute to the overall industrialization processes of countries. As a result, lives were saved and health was improved, but at the same time, the countries have not been able to guarantee livelihoods along with a chance for everyone to prosper equitably.

The developmental vision advanced by the MDGs also did not also accord due attention to several cross-cutting themes that were important for the achievement of the individual goals and also for contributing to overall sustainable development. These include the acquisition of technological capabilities and innovation, dynamic industrialization and, by extension, productive capacity and equitable development.

In contrast to this, at the heart of the SDGs is an emphasis on productive activities in all countries, as represented by three core goals: Goal 8, Goal 9 and Goal 12. Goal 8 calls for “[p]romot[ing] sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all,” whereas Goal 9 reads, “Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation.” These are complemented by Goal 12, which specifies the need to “ensure sustainable consumption and production patterns.” The focus, therefore, in the SDGs is the emphasis on national-level capability development, through the goals specified therein, in a holistic way. This is evident also in the way many developmental concerns are coded in the 2030 Agenda for Sustainable Development, such as the treatment of multidimensional poverty: the SDGs differentiate the various vulnerabilities to set a zero-goal for poverty over the next 15 years. Goal 10, which calls for reducing inequality within and among countries is a goal that guides how these other goals should be directed. In sum, the SDGs take a more robust view of national-level development in place of the donor-driven approach in the MDGs, which took a relatively narrow notion of development with an explicit emphasis on and preference toward socially, economically and ecologically sustainable objectives.

This book, while acknowledging the importance of an overall effort of that nature, argues that developmental solutions are ultimately rooted in contextualization and that choices matter. Most of all, these choices relate to how sustainable development is defined and implemented. Given that development is an ultimate outcome of the process of industrialization, the critical choices for nations as we see it are related to two key issues: how to perceive equitable, sustainable industrialization, and how countries can begin to devise means to foster it. Despite the ambitious tone of the 2030 Agenda for Sustainable Development, it would be naive to believe that different countries and actors can be bound to a common framework on economic and social prosperity, given the vast hinterlands of poverty and inequality that plague some regions of the world much more than others. The SDGs themselves recognize the need for local solutions. In fact, as Breznitz (2007) notes, a most essential shortcoming up until now has been the inability of social science theories to explain how different countries, each with a discrete set of policies on industrialization and development, can be expected to meet a similar set of targets over time, on whether to attain industrial growth, catch-up growth, technological progress or to achieve a common set of socio-economic goals. This last point is perhaps not just the omission of the comparative industrial economists but also of development economists in general.

From this standpoint, it remains an imperative for any development agenda, if it is to have any success, to create the bases as producers of goods and services for wealth creation that can be channeled to finance social goals and to recognize that different regional and national contexts may require differentiated treatments.

If countries are to succeed in eradicating poverty, generating opportunities for their people, fostering business and taking responsibility in devising a sustainable future for all, nuancing options, opportunities and challenges at a regional context is highly relevant.

1.1 Comparative industrialization: insights and pitfalls

Contemporary notions of industrialization can be traced back to the experience of Great Britain, Western Europe and North America during the 19th and early 20th centuries (Nzau, 2010). The literature that reviews the experiences of these countries seems to agree that, although the early-industrializing countries started out at different stages of growth, they followed more or less a similar format of change that led to their transformation. Marked by the shift from a subsistence/agrarian economy to more industrialized/mechanized modes of production, hallmarks of industrialization include technological advance, widespread investments into industrial infrastructure and a dynamic movement of labor from agriculture into manufacturing (Lewis, 1978; Todaro, 1989; Rapley, 1994). Agreement exists that a dynamic process of industrialization is fundamental to the overall economic development of countries, given that it promotes growth-enhancing structural change, which is the gradual movement of labor and other resources from agriculture to manufacturing, as accompanied by productivity increases. Manufacturing is construed as critical in most such expositions because of the empirical correlation between the degree of industrialization and the per capita income in countries (Szirmai, 2012). Given that productivity is higher in the case of manufacturing than agriculture, transfer of resources into manufacturing should normally provide a basis for higher rates of productivity-induced growth structures.

While the role of the state is not clearly elaborated in early industrialized countries, Gerschenkron (1962) was one of the first scholars who revisited the notion that state plays a critical role in helping latecomer countries to catch-up. His thesis has been fundamental in shaping our understanding of what forms of support structures latecomer countries might put in place to facilitate the process of industrial change, and by extension, achieve economic development. Analytical constructs of latecomer development that have been extensively advanced to understand the process of industrial and economic catch-up of countries are mostly based on the notion that a large number of technological developments that are needed for the latecomers to embark on industrialization are already available (Gerschenkron, 1962). Based on this, a spectrum of activities characterizes the essential “catch-up” route: assimilation of existing knowledge to imitative innovation, to incremental innovation, to state-of-the-art R&D, to frontier innovation (Amsden, 1994; Kim, 2003; Amsden and Chu, 2003). This sort of industrial catch-up focuses on the development of industrial sectors as such, with local firms at the center of technological activity.

Despite the richness of such studies, there are several old and new pitfalls in the literature on comparative industrialization. The first of these is the relationship between economic growth (as measured by rising GDP growth rates) and industria...

Table of contents

• Cover
• Title
• 1  Sustainable Industrialization in Africa: Toward a New Development Agenda
• 2  Revisiting the MDGs in an African Perspective: Lessons for the Sustainable Development Goals
• 3  Challenges to and Opportunities for Structural Transformation: Africas Service Sector
• 4  Linkage Dynamics and Natural Resources: Diversification and Catch-Up
• 5  External Opportunities, Innovation and Industrial Growth: The Case of GVCs in Africa
• 6  Growth and Structural Change in Africa: Development Strategies for the Learning Economy
• 7  Using Industrialization to Raise Urban Living Standards
• 8  Sustainable Development and Inequality of Opportunity in Africa
• Index