Structural change, from Khartoum to D.C.

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Once again, we’re approaching the Annual Meetings of the World Bank Group and the International Monetary Fund. As they do every year at this time, Africa’s Ministers of Finance and Central Bank Governors (“the Africa Caucus”) met in Khartoum on September 4, in part to preface the discussions they will have with the World Bank Group’s President.
 
I was fortunate to be invited to make a presentation to this group, along with Alan Gelb of the Center for Global Development. Our talk was a thematic briefing on competitiveness, fitting under a broader discussion of the WBG’s strategy in Africa led by Makhtar Diop, our Regional Vice President. 
 
The talk responded to a desire by the Caucus to move beyond issues of macro-stability. The issues that concern them now are more sectoral. One such issue is how to achieve agricultural transformation, to achieve a surge in food production and ensure food security even as their populations grow rapidly. Another is the hard choice between manufacturing and services – that is, if countries can choose, and even if they must choose.
 
Above all, countries agree that they need jobs. Structural change is not happening as anticipated, despite recent growth. Migration into cities leads people into the informal sector; exports are still resource-dependent; and industrialization is not happening, although, as Prof. Dani Rodrik of the Institute for Advanced Study has shown, it is usually the engine of productivity convergence. Even if industrialization does occur, technological change means it may no longer create jobs as it once did in East Asia or Western Europe.
 
So there is a fear that the growth we are seeing in Africa is hiding persistent problems. Factor costs remain high (for example, electricity); economies are not diversifying; and the threat of being jobless (for example, through technology in manufacturing) is widespread. Governance and stability have improved substantially, but other fundamentals are still lacking.
 
I was surprised by the level of agreement among the Caucus members on the elements needed to address these problems. Each country has to select its own path. But, to do so, they need strong planning, strong implementation capacity and better skills. Those skills are needed equally in the public sector and the private sector.
 
Of course, this is (much) easier said than done. No one size will fit all. If we are going to help countries achieve these goals, we ourselves will have to be pragmatic – to try, measure, use feedback loops, and adjust.
 
For that reason, I am especially looking forward to the next annual conference by the Competitive Industries and Innovation Program (CIIP), which will occur at the World Bank Group’s Preston Auditorium right after the Annual Meetings, on October 14 and 15. It builds on the excitement generated by last year’s conference, which attracted almost 500 attendees and was keynoted by Prof. Joseph Stiglitz of Columbia University.
 
I will write more about the conference’s theme in a couple of weeks. In short, it asks whether the “new growth strategies” of the last 10 or 15 years – especially “new industrial policy” – are living up to their promise.
 
Dani Rodrik will deliver the keynote address, and the opening panels will ask talk about measuring impact and about the institutional innovations needed to experiment and adjust. They will feature eminent academics such as Philippe Aghion and Arvind Subramanian, as well as current and former senior officials from across the developing and developed world. I am optimistic that, by drawing a tight focus on impact in practice and learning from the results, the discussions may help to start answering the concerns I recently heard in Khartoum.  I hope to see many of you at the CIIP conference in mid-October!

Authors

Ivan Rossignol

Chief Technical Specialist, Competitive Industries Global Practice

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