The 2015 Economic Report on Africa by the United Nations Economic Commission for Africa (UNECA) put Tanzania’s unemployment rate at 10.3 percent. It also reported that the number of unemployed women in the country is higher than that of unemployed men.
But there are a number of ways in which we can boost job opportunities for youth in Tanzania.
The global economy is stagnating, and uncertainty about its future is rising. These trends weigh heavily on countries that depend on the production and export of a small range of products, or that sell products in only a few overseas markets. Prices of the minerals and other basic commodities that dominate the exports of many poor countries have also declined sharply. All of this points up the need for diversification strategies that can deliver sustained, job intensive and inclusive growth.
The World Bank Group’s Trade & Competitiveness Global Practice (T&C), a joint practice of the World Bank and International Finance Corporation (IFC), is working with a growing roster of client countries eager to achieve greater economic diversification. This is a worthy goal regardless of economic conditions, but especially so now, as developing countries with sector-dependent economies face mounting pressures.
Chile is an example of a diversified economy, exporting more than 2,800 distinct products to more than 120 different countries. Zambia, a country similarly endowed with copper resources, exports just over 700 products — one-fourth of Chile’s export basket — and these go to just 80 countries. Other low-income countries have similarly limited diversified economies. The Lao People’s Democratic Republic and Malawi, for example, export around 550 and 310 products, respectively. Larger countries that export oil, such as Nigeria (780 products) and Kazakhstan (540 products), have failed to substantially expand the range of products they produce and export.
AJG Simoes, CA Hidalgo. The Economic Complexity Observatory: An Analytical Tool for Understanding the Dynamics of Economic Development. Workshops at the Twenty-Fifth AAAI Conference on Artificial Intelligence. (2011)
While the sluggish global economy is creating economic problems for traditional exports, other economic trends offer new routes and opportunities for poor countries to diversify. The trend toward the spatial splitting up of production across wide geographic areas, and the emergence and growth of regional and global value chains, offer new ways for developing countries to export tasks, services and other activities. Value chains offer developing countries a path out of the trap of having to specialize in whole industries, with all of the cost and risk that such a strategy entails.
There is no doubt that Bangladesh is a modern day success story—a far cry from Henry Kissinger’s label of a “basket case.” Its growth has been steady, even impressive in the context of feeble global growth, and it has now joined the ranks of a lower middle-income country. Its poverty reduction record is even more impressive, with over 20.5 million people escaping poverty between 1991 and 2010.
But the next phase of growth and poverty reduction becomes harder, since the more obvious sources of growth have largely been exploited.
Image "Pro Pit" by Aaron Webb is licensed under CC BY-NC-SA 2.0
“Never let an opportunity pass by, but always think twice before acting,” says a Japanese proverb with particular pertinence for East Asia today.
Plunging oil prices present a significant opportunity for most of the region’s developing countries to strengthen the competitiveness of their economies and take advantage of the ongoing global recovery.
The drop in oil prices — over 50% since mid-2014 — reflects several years of increasing oil supply, particularly in North America, along with decreased geopolitical risks to global production, OPEC’s efforts to maintain production levels and market share, and weaker-than-expected global growth last year. These factors are likely to persist, with oil prices expected to remain low through at least 2016.
Most countries in East Asia, including Japan, benefit from the price decline because they are oil importers. They can expect more rapid economic growth, lower inflation and improved current account balances.
Duty- and quota-free access for exports to global markets is something developing country trade negotiators have demanded for years. Few other “stroke-of-the-pen” measures could boost employment and reduce poverty in low income countries in such large numbers. For instance if the US removed tariffs on Bangladeshi garments – which average around 13%, but for some items are as high as 33% – then exports to the US could rise by $1.5 billion from the FY13 level of $5 billion, in turn generating employment for at least an additional half a million, primarily female, workers. Examples of other countries facing US tariffs include Cambodia (12.8% average tariff rate on its exports to the US), India (4.01%), Indonesia (5.73%), and Vietnam (7.41%). Progress in trade facilitation would likely have even greater pay-offs to growth and employment, but these require structural reforms and investments, while the decision to remove tariffs is a simpler, “stroke-of-the-pen” measure.
A competitive export sector is one of the key engines of a successful transition to high income. Turkish policy makers knew this well, and so they put an increase in export competitiveness at the forefront of their ambitious targets to get the country into the top 10 economies worldwide by 2023. What are the chances of success?
To try and answer this question, the World Bank working closely with Turkey’s Ministry of Economy carried out a Trade Competitiveness Diagnostic (“Turkey Country Economic Memorandum: Trading Up to High Income”), which was just launched in Ankara. The team looked at how Turkey did during the past decade, a period of rapid growth in global trade. It turns out that Turkey did pretty well – its exports during the 2000s grew 15.3 percent annually, twice the average growth in the OECD, 6 percentage points above world trade growth and only 4 percentage points slower than in China. Turkey’s global market share grew by 60 percent (from 0.53 to 0.82 percent) between 2002 and 2009 and is getting close to Turkey’s share of the world population (1.06 percent). At the same time, Turkey increased its export sophistication and improved product quality.
|Bananas for export go through rigorous quality inspection. The plantation employs some 2,000 workers in Maguindanao, Mindanao.|
“It was a war zone, one of the most dangerous places on earth.”
That’s how Mr. Resty Kamag, human resource manager of La Frutera plantation based in Datu Paglas (Population: 20,290) in Maguindanao (the Philippines) described the national road traversing the town from the adjacent province.
Residents and travelers, he said, wouldn’t dare pass through the highway after three in the afternoon for fear of getting robbed, ambushed or caught in the crossfire between rebels and government soldiers.
“That was before the company started operations here in 1997,” said Mr. Kamag. La Frutera operates a 1,200-hectare plantation for export bananas in Datu Paglas and neighboring towns, providing jobs to more than 2,000 people.
Countries of the Middle East and North Africa (MENA) are a cauldron of wrenching social change. For years pundits have attributed the region's tense social fabric to relatively high population growth rates, a lack of economic diversity, autocratic governments, and, in many countries, on an over-reliance on oil.
Howard Pack, eminent business and public policy Professor at the Wharton School, came to the World Bank earlier this week to share his views on the question of why MENA countries never came close to the equivalent of an East Asian miracle and how they might get on a more successful economic path.
Presidents Hu and Obama created buzz earlier this week in Washington when they met on pressing bilateral issues, including US-China business and investment regulation, trade, currency imbalances and security concerns. US-China clean energy cooperation is an important part of that bilateral dialogue (see transcript of my intervention at a January 18 US-China Strategic Forum hosted by Brookings).
Cooperation between the two countries can yield big economic benefits. The world is recovering from the worst economic crisis since the Great Depression. In this context, taking advantage of clean energy opportunities is crucial to fueling a sustained global recovery.