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TitleManufacturing Transformation
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Table of Contents
                            Cover
Manufacturing Transformation: Comparative Studies of Industrial Development in Africa and Emerging Asia
Copyright
Foreword
Preface
Acknowledgements
Contents
List of Figures
List of Tables
List of Abbreviations
Notes on Contributors
1: The Pursuit of Industry: Policies and Outcomes
	1.1 Introduction
	1.2 Industrialization, Structural Transformation, and Growth
	1.3 Industrial Policies and Outcomes in Africa: From a Dominant State to the Investment Climate
		1.3.1 State Ownership and Import Substitution, 1960–85
			1.3.1.1 EARLY INDUSTRIALIZATION
			1.3.1.2 THE INDUSTRIALIZATION DRIVE FALTERS
		1.3.2 The Washington Consensus, 1985–2000
			1.3.2.1 STRUCTURAL ADJUSTMENT
			1.3.2.2 A SHORT-LIVED INDUSTRIAL RECOVERY
		1.3.3 Investment Climate Reform and New Directions, 2000–
			1.3.3.1 INVESTMENT CLIMATE REFORMS
			1.3.3.2 NEW DIRECTIONS
			1.3.3.3 NOT YET A TURNING POINT
	1.4 Policies and Outcomes in Emerging Asia
		1.4.1 Early Industrialization, 1960–85
		1.4.2 Structural Reform and the Export Push, 1985–
	1.5 Policy and Performance: A Comparative Framework
		1.5.1 The Basics
		1.5.2 Manufactured Exports
		1.5.3 Industrial Agglomerations
		1.5.4 Foreign Direct Investment
	1.6 Conclusions
	References
Part I: Industrial Development in Africa
	2: Industrial Policy and Development in Ethiopia
		2.1 Introduction
		2.2 Evolution of Industry: Historical Perspective
			2.2.1 The Imperial Regime, pre-1974
			2.2.2 The Dergue Regime, 1974–91
			2.2.3 The EPRDF Regime, post-1991
		2.3 The Current Structure of the Ethiopian Manufacturing Sector
			2.3.1 Size Distribution
			2.3.2 Sectoral Composition
			2.3.3 Sunrise and Sunset Industries
			2.3.4 Ownership Types
			2.3.5 Trade Orientation
			2.3.6 Geographic Distribution
		2.4 Patterns of Industrial Productivity in the Ethiopian Manufacturing Sector
			2.4.1 Productivity across Firm Size
			2.4.2 Productivity across Sectors
		2.5 The Current Industrial Policy Framework
		2.6 Industrial Policy in Practice—Some Industry Cases
			2.6.1 The Textile and Leather Sectors
			2.6.2 The Flower Industry
		2.7 Remaining and Emerging Challenges
		References
	3: Industrial Policy in Ghana: Its Evolution and Impact
		3.1 The Evolution of Industry
			3.1.1 Historical Developments since 1965
				3.1.1.1 PRE-ECONOMIC RECOVERY PROGRAMME, 1965–83
				3.1.1.2 POST-ECONOMIC RECOVERY PROGRAMME, 1983–2000
				3.1.1.3 THE NEW MILLENNIUM, 2000–5
			3.1.2 Policies for Industrial Development (Historical Evolution)
				3.1.2.1 POST-INDEPENDENCE, PRE-ERP: INWARD OVERPROTECTED ISI STRATEGY, 1965–83
				3.1.2.2 POST-ERP: OUTWARD LIBERALIZED INDUSTRIALIZATION STRATEGY, 1983/84–2000
		3.2 The Current Structure of the Industrial Sector
			3.2.1 Sector Composition
			3.2.2 Size Distribution
			3.2.3 Employment
			3.2.4 Ownership
			3.2.5 Spatial Distribution
			3.2.6 Sunrise and Sunset Industries
				3.2.6.1 SUNRISE SECTORS
				3.2.6.2 SUNSET SECTORS
			3.2.7 Patterns of Industrial Productivity
		3.3 The Industrial Policy Framework
			3.3.1 Macroeconomic Policies
			3.3.2 Trade Policies
			3.3.3 The Institutional and Regulatory Framework
			3.3.4 Sector Specific Policies
		3.4 Emerging Policy Issues
		Acknowledgements
		References
	4: Kenya’s Industrial Development: Policies, Performance, and Prospects
		4.1 Introduction
		4.2 Evolution of Industrial Policies since Independence
			4.2.1 Import Substitution Hangover, 1963–70
			4.2.2 Policies during External Shocks, 1970s
			4.2.3 Structural Adjustment and Liberalization, 1980s and 1990s
			4.2.4 New Millennium Policies
		4.3 Key Industrialization Episodes and Turning Points
		4.4 Structure of the Industrial Sector
			4.4.1 Sectoral Composition
			4.4.2 Manufacturing Employment
			4.4.3 Size Distribution
			4.4.4 Ownership
		4.5 Sunrise and Sunset Industries
		4.6 Labour and Total Factor Productivity
		4.7 Conclusions
			4.7.1 Factors Undermining Industrial Development in Kenya
		References
	5: Mozambique’s Industrial Policy: Sufficient to Face the Winds of Globalization?
		5.1 The Evolution of Industry
			5.1.1 Colonial Industrial Development, 1945–74
			5.1.2 Post-independence Industrial Development, 1975–86: Central Planning Economy
			5.1.3 Transitional Industrial Development, 1987–96: Towards a Market Oriented Economy
			5.1.4 Current Industrialization Pattern: IPS 1997 and IPS 2007
		5.2 Current Structure of the Industrial Sector
			5.2.1 Industrial Output
			5.2.2 Firm Size in the Industrial Sector
			5.2.3 Contribution from the Industrial Sector to Employment
			5.2.4 Ownership of Industrial Firms
			5.2.5 Sunset and Sunrise Industries
		5.3 Industrial Policy Framework
			5.3.1 Macroeconomic Policies
			5.3.2 Trade Policies
			5.3.3 Institutional and Regulatory Framework
			5.3.4 Current Constraints for Future Industrial Development
				5.3.4.1 SKILLS AND EDUCATION
				5.3.4.2 ACCESS TO ENERGY AND WATER
				5.3.4.3 FINANCIAL RESOURCE ACCESS
				5.3.4.4 ACCESS TO SUITABLE TECHNOLOGY
		5.4 Conclusion
		References
	6: Industrial Policy in Nigeria: Opportunities and Challenges in a Resource-rich Country
		6.1 Introduction
		6.2 Evolution of Industry: Historical Perspective
			6.2.1 Post-independence
			6.2.2 Post-civil War Oil Economy
			6.2.3 Austerity
			6.2.4 Structural Adjustment
			6.2.5 Economic Liberalization
		6.3 The Structure of Industry
			6.3.1 Structural Composition and Firm Characteristics
			6.3.2 Technology and Skills
			6.3.3 Constraints
			6.3.4 Productivity
				6.3.4.1 SPACIAL DISTRIBUTION
			6.3.5 Sunrise and Sunset Industries
		6.4 Industrial Policy Framework
			6.4.1 Policy Management and Coordination
			6.4.2 Macroeconomic Policies
			6.4.3 Industrial Policy
			6.4.4 Trade Policies
			6.4.5 The Institutional and Regulatory Framework
			6.4.6 Sector Specific Policies
		6.5 Conclusion
		References
	7: Industrial Policy in Senegal: Then and Now
		7.1 Introduction
		7.2 The Evolution of Senegal’s Industrial Policy
			7.2.1 From Import Substitution to Economic Liberalization
				7.2.1.1 TARIFF PROTECTION
				7.2.1.2 QUANTITATIVE RESTRICTIONS
				7.2.1.3 THE INVESTMENT CODE
				7.2.1.4 DAKAR INDUSTRIAL FREE TRADE ZONE
				7.2.1.5 INDUSTRIAL ZONES
			7.2.2 Adjustment Policies and Liberalization of the Economy
			7.2.3 Implementation of a Common External Tariff
			7.2.4 Deepening Economic Liberalization and Other Measures to Promote the Private Sector
			7.2.5 The Industrial Policy Framework and Emerging Questions
		7.3 The Structure of the Industrial Sector
			7.3.1 Employment
			7.3.2 Foreign Direct Investment
			7.3.3 Profile of Firms
		7.4 Patterns of Industrial Productivity
			7.4.1 Factors Affecting Firm Productivity in Senegal
				7.4.1.1 LACK OF SKILLED LABOUR
				7.4.1.2 POOR INFRASTRUCTURE
		7.5 Industrial Policy
			7.5.1 Trade Policy Reforms and Manufacturing Performance
		7.6 Sunrise and Sunset Industries
		7.7 Conclusion and Emerging Policy Issues
		References
	8: Industrial Development in Tanzania
		8.1 Introduction
		8.2 Historical Developments: Pre-independence Period
		8.3 Industrial Development, 1961–85
			8.3.1 Industrial Development in the Early Post-independence Period, 1961–7
			8.3.2 State-led Industrial Development, 1967–85
		8.4 Industrial Development under Structural Adjustment, 1986–95
		8.5 The Return to Industrial Development as a Development Agenda, 1995–2011
		8.6 Conclusion and Way Forward
		References
	9: Tunisia: Industrial Policy in the Transition to Middle-income Status
		9.1 Introduction
		9.2 Evolution of Industry: Historical Perspectives
			9.2.1 Initial Conditions
			9.2.2 The 1960s: ‘Collectivism’ Experiment
			9.2.3 The 1970s: Private Sector Development and Export Industry Promotion
			9.2.4 Economic Mismanagement, 1977–86
			9.2.5 Economic Recovery and Structural Adjustment Programme, 1986–90
			9.2.6 The 1990s: Global Competition
			9.2.7 Development of Services and Innovative Projects, Early 2000s–2011
			9.2.8 The Arab Spring: Tunisian Revolution of 14 January 2011
				9.2.8.1 YOUTH UNEMPLOYMENT
				9.2.8.2 REGIONAL DISPARITIES
				9.2.8.3 ECONOMIC COSTS OF THE ARAB SPRING
				9.2.8.4 GOVERNMENT MEASURES
				9.2.8.5 ECONOMIC RECOVERY, 2012
		9.3 The Structure of Industry
			9.3.1 Three Pillars of the Tunisian Manufacturing Industry
				9.3.1.1 TEXTILE/CLOTHING AND LEATHER/FOOTWEAR INDUSTRIES
				9.3.1.2 AGRO-FOOD INDUSTRIES
				9.3.1.3 MECHANICAL/ELECTRICAL/ELECTRONIC INDUSTRIES
			9.3.2 Evolution of Manufacturing Industry: More Competitiveness and Openness
				9.3.2.1 EXPORT AND OFFSHORING
		9.4 Industrial Policy
			9.4.1 Foreign Direct Investment
			9.4.2 R&D and Innovation Policies in Tunisia
		9.5 Sunrise and Sunset Industries
			9.5.1 Production, Investment, and Exports: Overview
		9.6 Conclusions
		References
	10: The Evolution of Industry in Uganda
		10.1 Introduction
		10.2 The Evolution of Industry: Historical Perspective
		10.3 The Structure of Industry
			10.3.1 Sectoral Composition: General Trends
		10.4 Sub-sectoral Analysis
			10.4.1 The Manufacturing Sector
				10.4.1.1 SIZE DISTRIBUTION
				10.4.1.2 REGIONAL DISTRIBUTION
				10.4.1.3 EMPLOYMENT
				10.4.1.4 OWNERSHIP
				10.4.1.5 PRODUCTIVITY
			10.4.2 Mining and Quarrying
				10.4.2.1 SIZE DISTRIBUTION
				10.4.2.2 REGIONAL DISTRIBUTION
				10.4.2.3 EMPLOYMENT
				10.4.2.4 OWNERSHIP
			10.4.3 Construction
				10.4.3.1 SIZE DISTRIBUTION
				10.4.3.2 REGIONAL DISTRIBUTION
				10.4.3.3 EMPLOYMENT
				10.4.3.4 OWNERSHIP
			10.4.4 Summary
		10.5 The Industrial Policy Framework
			10.5.1 Macroeconomic Policies
			10.5.2 Trade Policy Reform and its Implications for Industrialization
			10.5.3 Sector-specific Policies
			10.5.4 Institutional and Regulatory Framework
			10.5.5 Summary
		10.6 Sunrise and Sunset Industries
			10.6.1 Textiles
			10.6.2 Information and Communications Technology
			10.6.3 Construction
			10.6.4 Mining
		10.7 Conclusions
		References
Part II: Industrial Development in Emerging Asia
	11: Cambodia’s Path to Industrial Development: Policies, Lessons, and Opportunities
		11.1 Introduction
		11.2 Evolution of Industry: Historical Perspective
			11.2.1 Sihanouk Regime, 1953–70
			11.2.2 Khmer Republic, 1970–5
			11.2.3 Closed Economy, 1975–89
				11.2.3.1 DEMOCRATIC KAMPUCHEA, 1975–9
				11.2.3.2 PEOPLE’S REPUBLIC OF KAMPUCHEA, 1979–89
			11.2.4 State of Cambodia and the UN Period, 1989–93
			11.2.5 Kingdom of Cambodia, 1993–
		11.3 The Structure of Industry
			11.3.1 Sectoral Composition
			11.3.2 Size of Firms
			11.3.3 Ownership Structure
			11.3.4 Employment
			11.3.5 Age of Firms
			11.3.6 Spatial Distribution
		11.4 Industrial Policy
			11.4.1 Macroeconomic Policy
			11.4.2 Trade Policy
			11.4.3 Labour Market Policies
			11.4.4 The Institutional and Regulatory Framework
			11.4.5 Sector Specific Policies
				11.4.5.1 GARMENT SECTOR
				11.4.5.2 TOURISM
		11.5 Sunset and Sunrise Industries
		11.6 Conclusion
		References
	12: The Evolution of Vietnamese Industry
		12.1 Introduction
		12.2 The Evolution of Industry
			12.2.1 Socialist Industrialization in the North, 1954–75
			12.2.2 Socialist Industrialization in the Central Planning Economy, 1976–85
			12.2.3 The Transition from Centrally Planned to Market Economy, 1986–2005
			12.2.4 Industrialization Following WTO Accession, 2006–
		12.3 The Current Structure of the Industrial Sector
			12.3.1 Sectoral Composition
			12.3.2 Employment and Size of Firms
			12.3.3 Ownership Structure
				12.3.3.1 INDUSTRIAL STRUCTURE BY OWNERSHIP
			12.3.4 Spatial Distribution
		12.4 Industrial Policy Framework
			12.4.1 Macroeconomic Policies
			12.4.2 Trade Policies
			12.4.3 The Institutional and Regulatory Framework
			12.4.4 Sector Specific Policies
		12.5 Sunrise and Sunset Industries
		12.6 Conclusion
			12.6.1 Main Challenges
			12.6.2 Outlook
		References
	13: Can Africa Industrialize?
		13.1 Introduction
		13.2 Breaking in
			13.2.1 Competing with Asia
			13.2.2 New Opportunities
				13.2.2.1 TRADE IN TASKS
				13.2.2.2 INDUSTRIES WITHOUT SMOKESTACKS
		13.3 Changing the Investment Climate Agenda
			13.3.1 The Critical Role of Infrastructure
			13.3.2 Closing the Skills Gap
			13.3.3 Institutional and Regulatory Reform
		13.4 Beyond the Investment Climate
			13.4.1 Mounting an Export Push
				13.4.1.1 POLICY AND INSTITUTIONAL REFORMS
				13.4.1.2 IMPROVING TRADE LOGISTICS
				13.4.1.3 STRENGTHENING REGIONAL INTEGRATION
			13.4.2 Supporting Industrial Agglomerations
				13.4.2.1 SPATIAL INDUSTRIAL POLICIES
				13.4.2.2 STRENGTHENING SPECIAL ECONOMIC ZONES
			13.4.3 Attracting Foreign Direct Investment
				13.4.3.1 INSTITUTIONS FOR FDI PROMOTION
				13.4.3.2 LINKING FOREIGN AND DOMESTIC FIRMS
		13.5 Conclusions
		References
Index
                        
Document Text Contents
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Manufacturing Transformation

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twenty largest economies by the year 2020 (NV20:2020). The SPA encompasses
seven key areas of development (FGN 2008):

� critical infrastructure
� Niger delta region
� food security
� human capital
� land tenure changes and home ownership
� national security
� wealth creation.
The current and future vision for economic development in Nigeria is set

out in NV20:2020. Themacroeconomic policy thrusts of the NV20:2020 are as
follows (NPC 2009: 22–3):

� achieving double-digit growth rates and maintaining strong economic
fundamentals, including inflation, exchange rate, interest rates, and
other monetary aggregates;

� achieving significant progress in economic diversification, such as to
achieve an economic structure that is robust and consistent with the
goals of the NV20:2020;

� stimulating themanufacturing sector and strengthening its linkage to the
agricultural and oil and gas sectors, in order to realize its growth potential
and serve effectively as a strong driver of growth;

� raising the relative competitiveness of the real sector, to increase the
demand for Nigeria’s non-oil products and services;

� deepening the financial sector and sustaining its stability to enable it to
finance the real sector;

� encouragingmassive investment in infrastructure and human capital and
creating an enabling environment for domestic and private investment;

� adopting pragmatic fiscal management and implementing appropriate
monetary, trade, and debt management policies to support domestic
economic activities.

6.4.3 Industrial Policy

The NV20:2020 industrialization strategy aims at achieving greater global
competitiveness in the production of manufactured goods by linking indus-
trial activity with primary sector activity, domestic and foreign trade, and
service activity. A key component is the promotion of a comprehensive policy
of cluster development in the manufacturing and processing industries. This

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includes the development of industrial parks, industrial clusters and enterprise
zones, and incubator facilities.
Industrial parks, aimed at largemanufacturers, are expected to cover areas of

more than 3,050 km2. The parks will be based on the comparative and com-
petitive advantage of each geographical zone. The following business activ-
ities have been identified for each of the zones (Nigeria Vision 20:2020).

� North East: agriculture and solid minerals e.g. gypsum, biomass, ethanol,
biodiesel, tropical fruits, etc.;

� North West: gum arabic, livestock and meat processing, tanneries, bio-
fuel, etc.;

� North Central: fruit processing, cotton, quarries, furniture and minerals,
boards, plastic processing, leather goods, garments, etc.;

� South East: palm oil-refining and palm tree-processing into biomass
particle boards, plastic processing, leather goods, and garments;

� South West: manufacturing (especially garments, methanol, etc.),
distributive trade, general goods, plastic, etc.;

� South Central: petrochemicals, manufacturing (plastic, fertilizer, and
fabrications, etc.), oil services, and distributive trade (TINAPA).

The industrial clusters, which will be established with the participation and
assistance of states and local governments, will cover areas of between 100 and
1,000 ha. They will be exclusively devoted to the organized private sector. The
location of the clusters will take into account access to roads, railways, sea
ports, cargo airports, and proximity to a city, and management will be
through a private cluster company. Industrial incentives similar to those in
industrial parks will also be provided, while each cluster will have a skill
acquisition/training centre.
Enterprise zones are platforms of 5–30 ha, targeted at incorporating the

informal sector into the organized private sector. Located in state capitals and
local government areas, they will enable farmers and SMEs to feed their prod-
ucts into the value chain of large-scale industries. These centres will accommo-
date mechanics, block makers, small-scale furniture manufacturers, timber
merchants, and other vocational workers who constitute over 70 per cent of
Nigeria’s private sector. Skills acquisition/training centres will also be located in
each enterprise zone, while management will be handled by the private sector.
The incubators will be start-up centres for new and inexperienced entrepre-

neurs, graduates of tertiary institutions, investors, and vocational workers
wishing to set up their own businesses. In these centres, prospective start-up
companies will be equipped with entrepreneurial skills and resources aimed at
nurturing them from formation to maturity.

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United States of America
African Growth and Opportunities Act

(AGOA) 75, 76, 85, 261
and Cambodia 215, 226, 227
Clinton administration 227
Federal Reserve 9
and Kenya 75, 76, 85
Patent and Trademark Office (USPTO)

187–8
quotas 227
Treasury 9
and Vietnam 14, 239, 242

value-added tax (VAT), and export push 267
Vietnam 235–56, 273
agricultural sector 236, 239–42, 248
apparel/garments sector 235, 240, 251,

253, 260
bauxite sector 249
cement sector 240
chemical sector 255
coal sector 236, 240, 243, 246
communication sector 241
competition/competitiveness 14, 235, 242,

249, 250, 254–6
construction sector 239, 242
consumer goods 239
context 3
current structure of industrial sector 243–6
Department of Economic Zones 14, 248
Doi Moi 14, 217, 235, 240, 244, 247, 271
domestic savings 241
electrical and electronics sector 249
electricity supply 240, 246
employment 239, 242, 243–4, 245
Enterprise Development Agency 14, 248
entrepreneurship 236, 239, 242
evolution of industry 236–42
exchange rates 247
export processing zones (EPZs) 14,

241, 242
exports 17–18, 235, 240, 242, 247–8, 250–1,

255–6, 266
fabricated metals sector 235, 251, 252–3
FDI 19, 235, 240, 242, 244–5, 247, 249, 251,

255–6, 271
fertilizer sector 247
financial/banking sector 241, 248, 249
fisheries sector 240, 241, 242
Five-year Plans 239, 240, 241, 242
food and beverage sector 235, 240, 241,

251, 252
food relief to Cambodia 217
Foreign Investment Agency (FIA) 14, 248
Foreign Investment Law 241
forestry sector 240, 241, 242
furniture sector 253

gas sector 243
handicraft sector 240
human capital 248, 254
ICT sector 249, 250
imports 242, 247, 255
import substitution 235, 255
industrial agglomeration 18, 246, 269
industrialization 13, 14, 257–8
industrial policy framework 247–51
industrial zones (IZs) 14, 241, 242, 246
inflation 239, 247
infrastructure 236, 239, 241, 254
institutions 248–9
investment climate 247, 249, 255
Law on Encouragement of Domestic

Investment 241
Law on Enterprises 241, 242, 255
liberalization of trade/economy

250, 253
licensing 249
lignite mining 246
literacy 236
macroeconomic policy 14, 247
mechanical industry sector 249
media sector 245, 253
metal sector 251, 253
mineral sector 251
mining sector 242, 243, 246, 253
Ministry of Industry and Trade 248, 249
Ministry of Planning and Investment

14, 248
motor vehicles sector 251
oil sector 239, 240, 243, 246
Orientation of Industrial Development 241
ownership types 244–6
paper and printing sector 240, 253
pharmaceuticals sector 235, 252–3
poverty 241
power 239
price controls 240n
privatization 246
productivity 235, 239, 245–6, 250,

253–6, 260
Public Investment Programme 241
quarrying sector 246, 253
quotas 247
real estate sector 247
regulations 247, 248–9
research and development 249, 250
rice sector 236, 240, 247
rubber sector 236, 249
sectoral composition 243
service sector 240, 241, 242
sewerage sector 246
size of firms 243–4, 245
Socio-Economic Development Strategy

(SEDS) 248, 254, 255, 256

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special economic zones 18
standards 249
State Bank of Vietnam 249
state ownership 14, 235, 239, 242, 244–7,

249, 255, 256
steel sector 240, 249, 250
structural characteristics 4
structural reform and the export push 14,

15, 20
sugar sector 241
sunrise and sunset industries 251–4
tasks, trade in 260
technology 241, 250, 255
textile sector 240, 250–1, 255
tobacco sector 245
tourism 241
trade policy 14, 247–8
transport 239, 253
value added in manufacturing 8
Vietnam Development Bank 248
wage levels 226
war with the US 14, 239
water supply 246

World Bank 242, 248, 253, 255
zinc sector 240

wage levels
Africa versus Asia 258–9
OECD countries 258
and productivity 86
tasks, trade in 261

Washington Consensus 9–11
welfare 86, 181
West African Economic and Monetary Union

(WAEMU) 141
West African Monetary Union (WAMU)

140–1
World Bank (WB)
Doing Business report 265
investment climate 11, 262
manufacturing datasets 87
Private Sector Development Program 107
Trade Logistics Index 267
Washington Consensus 9

Zambia 108, 150

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