Published on Africa Can End Poverty

Does Africa need industrial policy?

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My good friend and predecessor John Page gave a provocative seminar with the title of this post the other day. His main point, echoed in this year’s UNIDO Industrialization Report, was that Africa’s industrial sector was declining, and some type of collective action (he called it “policies for industrialization” rather than the maligned phrase “industrial policy”) is needed so that the continent could resume industrial growth.

As the discussant, I suggested that Africa’s poor industrial performance, like that of South Asia, was itself the result of poor policies of the past. What was the guarantee that this new generation of policies would work any better? John countered by drawing on the East Asian experience, where many policies were tried, but their effects were closely monitored and, when they were not working, mid-course corrections were implemented. But for this to work in Africa, we need monitoring indicators that tell us that these industrial policies are working, or are not working, so that the corrections can be made in a timely fashion. Perhaps that is the main potential use of the Doing Business Indicators, something which John and others have criticized for their weak relationship with the main determinants of industrial performance, but which can serve as a real-time indicator of progress in implementing industrial policies and hence a guide to whether mid-course corrections are needed or not.



Shanta Devarajan

Teaching Professor of the Practice Chair, International Development Concentration, Georgetown University

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