“Countries can decide their development path. Countries become good at things because they want to excel at making those particular things,” renowned Development Economist Mr Ha-Joon Chang told delegates on 3 April 2016 at the second Annual Adebayo Adedeji Lecture during African Development Week.

Chang, popular author and University of Cambridge development economist, argued that industrialisation is imperative for Africa’s development and wealthy na­tions. Institutions who advise otherwise are distorting their own histories of development, he maintained.

Citing South Korea as an example of industrialisa­tion success, Mr Chang declared that history is replete with examples of countries forging a different path from the one they were advised to follow by interna­tional institutions.

“Most developed economies have succeeded in growing their economies because of infant industries,” argued Mr. Chang. This allowed for the development of skills and protection of the domestic market until such time as industries had matured.

“Infant industry protection creates the ‘space’ for an improvement in productive capabilities, but does not automatically lead to productivity increases.” Chang explained that countries make the common error of not investing in productivity growth areas such as machines, research and skills.

Commodity dependence leaves countries vulnerable to shocks and decline in terms of trade and focusing on service industries won’t solve problems of poverty and inequality, argued Chang.

Manufacturing, however, helps to raise productivity, spreads learning and techno­logical progress, and leads to innovations that can be transferred to other sectors.

“You have to learn from other coun­tries,” Chang said, advising countries to develop strategies to locally produce goods and develop local skills to export. “Economic development requires export success.”

Despite prevailing economic orthodoxy, Chang said industrialisation must remain at the centre of African development. Manufacturing and agriculture can work to support each other, he said, and despite World Trade Organisation regulations and the penetration of monopoly producers across international and local global value chains, countries can still find space to reach high levels of development through industrialisation.

The annual lecture was launched in 2014 and named after Adebayo Adedeji, recognizing the former Economic Commis­sion of Africa (ECA) Executive Secretary and United Nations Under-Secretary Gen­eral for his commitment to development, Africa and humanity.

Adedeji’s son introduced Chang during Sunday’s lecture and the professor spoke on themes explored in his books, criticis­ing the neo-liberal development policies African states have been pressured to adopt by the Bretton Woods Institutions, the Washington Consensus and foreign donors. Using the economic development of South Korea and the US as examples,

In his opening remarks, ECA Executive Secretary Carlos Lopes described Adedeji as a beacon for African development and a builder of institutions, saying that much of ECA’s inspiration for work on industrialisa­tion comes from Mr Chang.

“He provides an excellent mix of history and economics by bringing to us the expe­rience other countries have gone through in their development experience.”

Chang has authored two books, Kicking Away the Ladder and Things They Don’t Tell You About Capitalism, and Economics, and on Sunday launched a third, Trans­formative Industrial Policy for Africa, launched alongside the ECA’s 2016 Eco­nomic Report on Africa.

The inaugural lecture last year was delivered by Donald Kaberuka, former president of the African Development Bank, who left office in 2015.

This article is published in the African Development Week Roundup - Day 4 by IC Publications.

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Transformative Industrial Policy for Africa

Africa is at a crossroad. After a long history of exploitation (slave trade and colonialism), violent conflicts (liberation struggles, civil wars, and military coups), and economic turmoil (the varied experiences of initial post-colonial economic development, devastation due to the Structural Adjustment Programmes of the 1980s and the 1990s), it has finally seen a decade of improved economic growth and greater political stability.

Once written off as a continent uniquely suffering from structural impediments to economic growth and development – poor climate, disadvantageous geography, varying degrees of ethnic diversity, poor institutions, cultural prejudice etc – there is now widespread optimism about the future of the continent. The talk of ‘African growth tragedy’ is being replaced by a talk of ‘Africa rising’, with metaphors like ‘African lions’ – in obvious homage to that of ‘Asian tigers’ – flying around.

However, it is not yet clear whether Africa can turn the recent economic recovery into sustained economic development. First of all, the acceleration in economic growth over the last decade in several countries in the continent is owed to one-off factors, like the finding of important oil or mineral reserves (e.g., Equatorial Guinea) or the end of a prolonged civil war (e.g., Chad). More importantly, most of the acceleration in economic growth has been based on high prices of primary commodities, and at that with relatively little upgrading within the commodity sectors themselves (e.g., making cocoa butter and powder instead of exporting cocoa beans). As such, the recent fall in commodity prices, likely to last for a while, is dimming the prospect of growth in the short- to medium-term. More importantly, the failure of most African countries to use the recent commodity-based growth to start a more sustainable growth based on the development of the manufacturing sector (including but not exclusively the processing of primary commodities) is making the continent’s long-term prospect worrisome – no country, except a few states exceptionally rich in oil (e.g., Qatar, Kuwait, Brunei) or very small financial havens (e.g., Monaco, Liechtenstein), has achieved high and sustainable standards of living without developing a significant manufacturing sector.

In light of this, it is important that African countries begin to think seriously about – and implement – ways to upgrade their commodity sectors and, more importantly, promote the development of higher-productivity sectors, especially manufacturing but also some highend services. This report is intended as a contribution to that thinking process.