From Africa Recovery, Vol.14#3 (October 2000), page 24 (box in article 'Can Africa Claim the 21st Century?')

African economists insist on stronger industrial policy

In most of Africa, the era of structural adjustment has been one of "deindustrialization," and the continent must reverse this trend if it is to become a stronger actor in the global economy, argues a group of African economic researchers. The two dozen economists carried out some 30 separate studies, in the largest African research project on structural adjustment so far. Their individual studies have not yet been published, but many of their findings have been summarized in a book by Mr. Thandika Mkandawire, currently director of the UN Research Institute for Social Development, and Mr. Charles C. Soludo, a member of the Governing Council of the Nigerian Economic Society.*

The researchers generally follow a "mixed economy" approach that acknowledges the potential of markets, but in close conjunction with strong, active, "developmentalist" states that can mobilize resources and investment and ensure greater equity for ordinary Africans. They are highly critical of some of the economic and political strategies of African governments prior to the liberalization policies of the 1980s and 1990s, yet also regard the structural adjustment programmes promoted by the World Bank and International Monetary Fund as "deeply flawed."

Industrial policy in Africa -- or rather, the lack of one -- is an area that particularly concerns these economists. Equating earlier industrialization approaches with "statist" policies of intervention, the World Bank has exhibited a "deep-rooted anti-industrial-policy position," argue Mkandawire and Soludo. Economic liberalization and the removal of state protection in Africa came too fast to allow industry to adapt.

Unable to adapt to stiff global competition, at a time when investment levels in Africa also were declining, many of the continent's fledgling industries were forced to scale back or shut down. African exports of manufactured goods declined drastically. Even in countries such as Ghana that had major increases in industrial output during the late 1980s, eventually "the exposure to world competition led to a steady deceleration of industrial growth." Meanwhile, structural adjustment programmes have encouraged the export of raw mineral and agricultural products, basing Africa's trade even more solidly on primary commodities.

The authors agree with proponents of export-oriented policies that trade can help spur economic growth in Africa, but add that this will happen "especially when a country has increased the share of manufactures in its exports." For this to happen, African countries will need to adopt explicit industrialization policies, somewhat along the lines of the more successful East Asia states. While private initiative will be important in spurring greater industrialization in Africa, say the researchers, "these forces need to be managed with appropriate state-interventionist policies to resolve pervasive market failures." This should include some protection for "infant industries" in Africa, in a way that gradually allows them to mature and enhance their international competitiveness.

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* Thandika Mkandawire and Charles C. Soludo, Our Continent, Our Future: African Perspectives on Structural Adjustment, Trenton, NJ: Africa World Press, 1999, 176 pages, $21.95.

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