Is African Industry Competing?

Sanjaya Lall

QEH Working Papers from Queen Elizabeth House, University of Oxford

Abstract: Africa's industrial performance has been poor and its ability to industrialize successfully is under increasing question. This paper argues that industrialization remains vital to African development. It describes the current global industrial setting and analyses the recent performance of African manufacturing relative to that of other developing regions. It finds that Africa is becoming increasingly marginal to the technological dynamics of global economy. It shows few signs of a responding to the competitive stimulus of liberalization or of attracting more mobile foreign productive factors. It analyses the reasons for this performance and argues that the basic problem of African industry lies not in the investment climate (which can certainly be improved) or in gaining market access to rich countries (which is already very good for manufactures, and has improved with initiatives like AGOA) but in the low level of its industrial capabilities. The paper concludes with the need to reconsider current African industrial strategy and to evolve a new strategy focused on building capabilities.

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