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light manufacturing

Africa means never saying goodbye

Justin Yifu Lin's picture

I visited three African countries – Ethiopia, Rwanda, and South Africa– during my first week as Chief Economist at the World Bank in June 2008. Many visits to other African countries followed, but Ethiopia holds for me a special interest. I’ve just visited again, for a fourth time. While I am sure I will go back again after I depart the Bank on June 1 this year, this was my final visit to Africa as Chief Economist.

Over four years, I’ve seen Ethiopia gradually embrace structural transformation and its practical application. Leaders there are acutely aware that, if they are to maintain a robust growth rate (GDP growth has been around 10.5% on average over the past few years), they must move away from agriculture, the dominant sector, toward industrial upgrading and technological innovation, often by imitating economies just a few rungs up the economic ladder.  Ethiopia’s agriculture sector is important and should not be neglected, but that alone won’t get the country onto a path toward middle income and finally to high income status.

Light Manufacturing in Africa: Targeted Policies To Enhance Private Investment And Create Jobs

Hinh T. Dinh's picture

For many African countries, one important way to create productive jobs is to grow the labor-intensive light manufacturing sector, which would accelerate economic progress and lift workers from low-productivity agriculture and informal sectors into higher productivity activities.  

Sub-Saharan Africa’s low wage costs and abundant material base have the potential to allow light manufacturing to jump-start the region’s long-delayed structural transformation and over-reliance on low-productivity agriculture.  Moreover, as globalization advances and China evolves away from a comparative advantage in labor-intensive manufactured products toward more advanced industrial production, African economies such as Ethiopia and Tanzania are uniquely positioned to take advantage of this opportunity.