Commodities and Linkages: Industrialisation in Sub-Saharan Africa

In a complementary Discussion Paper (MMCP DP 12 2011) we set out the reasons why we believe that there is extensive scope for linkage development into and out of SSA’s commodities sectors. In this Discussion Paper, we present the findings of our detailed empirical enquiry into the determinants of the breadth and depth of linkages in eight SSA countries (Angola, Botswana, Gabon, Ghana, Nigeria, South Africa Tanzania, and Zambia) and six sectors (copper, diamonds, gold, oil and gas, mining services and timber). We conclude from this detailed research that the extent of linkages varies as a consequence of four factors which intrinsically affect their progress – the passage of time, the complexity of the sector and the level of capabilities in the domestic economy. However, beyond this we identify three sets of related factors which determined the nature and pace of linkage development. The first is the structure of ownership, both in lead commodity producing firms and in their suppliers and domestic customers. The second is the nature and quality of both hard infrastructure (for example, roads and ports) and soft infrastructure (for example, the efficiency of customs clearance). The third is the availability of skills and the structure and orientation of the National System of Innovation in the domestic economy. The fourth, and overwhelmingly important contextual factor is policy. This reflects policy towards the commodity sector itself, and policy which affects the three contextual drivers, namely ownership, infrastructure and capabilities. As a result of this comparative analysis we provided an explanation of why linkage development was progressive in some economies (such as Botswana) and regressive in others (such as Tanzania). This cluster of factors also explains why the breadth and depth of linkages is relative advanced in some countries (such as South Africa), and at a very nascent stage in other countries (such as Angola)

A Glimpse on Sectoral Convergence of Productivity Levels

This paper examines the presence of sectoral convergence of labor productivity between 14 OECD countries. Using the OECD International Sectoral Data Base (ISDB), the paper looks at the developments within 12 distinct sectors during the period 1970-1995. The change of the coefficients of variance suggests that there is strong sectoral convergence within most service sectors while the evidence of convergence for Manufacturing as well as for Communication is rather weak. These findings are in line with most studies undertaken on this subject so far. It is concluded that economic theories at hand to explain growth and convergence (or divergence respectively) are of different importance for the sectors concerned. While models of the New Growth Theory seemed to be useful to explain growth mechanisms within Manufacturing and Communication, traditional models seemed to apply to most other sectors.

Comparative productivity in British and German manufacturing before World War II: reconciling direct benchmark estimates and time series projections

This article provides a new benchmark estimate of comparative Germany/U.K. labor productivity in manufacturing for circa 1907, and experiments with alternative German manufacturing production indices for time series projection from a circa 1935 benchmark. A consistent picture of broadly similar levels of manufacturing labor productivity in Britain and Germany throughout the period 1871–1938 is established. We also show that a substantial German productivity lead had already emerged in heavy industry by 1907, but was offset by a substantial British productivity lead in light industry. For the pre-1914 period, an additional check is provided using nominal income-based estimates

A Conceptual Overview to Understand Commodities, Linkages and Industrial Development in Africa

Sub-Sahara African commodity exporting economies have benefitted greatly from the commodities boom of the past decade. The conventional wisdom argues that resource extraction is corrosive of industrial development due to a combination of the macroeconomic consequences of resource exploitation and the assumed enclave nature of mineral and energy extraction. The paper challenges this pessimistic ‘resource curse’ argument, arguing that there are unexploited opportunities for promoting industrial development through the development of linkages from the commodities sector. In particular, these opportunities may be greater for backward than for forward linkages, particularly in the minerals and energy sectors. In making this case, this Discussion Paper draws on the experience of high-income countries which have resource-intensive economic structures, the geographical specificity of many resources and the growing interest of large resource-extracting firms in outsourcing the production of inputs which are outside of their core competences, It sets out a general model of linkages between industry and services and the commodities sector which distinguishes between win-win and win-lose outcomes. The paper concludes with a brief review of the reasons why Governments might wish to intervene to support linkages between the commodities and the industrial and service sectors

The churn among firms

Capitalism ; Competition ; Consumers ; Consumption (Economics) ; Corporations ; Cost and standard of living ; Business enterprises ; Productivity

Analysing Alternative Policy Response to High Oil Prices, Using an Energy Integrated CGE Microsimulation Approach for South Africa

An energy-focused integrated CGE microsimulation approach is used to assess the implications of differential government policy responses in South Africa, to increases in international oil prices. The first scenario assumes that increases in world oil and petroleum products are passed through to end users with no changes in government tax/subsidy instruments. The second scenario assumes that the world price increases are nullified by a full price subsidy by government in one scenario, while, in the third scenario, revenues generated from a 50 percent tax on the windfall profit of the synthetic petroleum industry, help to minimize the loss in government revenue. Overall output falls by between 2.2 and 2.5 percent, while the government deficit varies from a worsening of 12 to 22 percent under the three scenarios. Synthetic petroleum, coal, and electricity benefit under the floating price scenario, while none expands its output when a 50 percent tax is levied on the profit of the synthetic petroleum industry. Unemployment increases among medium and low-skilled workers, while skilled workers witness a substantial fall in their remuneration, particularly in rural areas. In both rural and urban areas, women are adversely affected relative to men. The poverty headcount ratio and inequality increase slightly more in the price-setting scenarios relative to the floating-price scenario. Thus, allowing the prices to be passed through to end users probably has a less adverse impact at a macroeconomic level, although there may be adverse distributional consequences.

Taking the measure of manufacturing

In "Taking the Measure of Manufacturing" Tim Schiller and Mike Trebing outline several of the most important surveys and indexes that track manufacturing, describe their similarities and differences, and discuss their usefulness in providing timely and accurate data on the sector.Manufactures

Local development and technological innovation in Algeria: experiences and perspectives

The starting point of the present paper is the idea that to define a regional development policy which should effectively respond to the new challenges of the future, in particular to the globalisation of the economy and the acceleration of technological changes, it is necessary to think about new methods that grant a privilege to the local solution, using to the maximum the local skills, the national technological strength, the creative and innovative capabilities existents. But, referring to the Mediterranean basin, there are major disparities between regions and countries in the field of innovation and R&D, as also in the level of diffusion of modern information and communication technologies. In particular some Third Mediterranean countries as also some regions of South Europe, if on the one hand have clear difficulties in developing modern forms of industrialisation capable to insure an access to the international markets, on the other need to increase the competitiveness of their firms, to improve their strengths and to compensate the disadvantages due to their periphericity by developing their international contacts with neighbouring countries in the Mediterranean Basin. This study identifies and analyses the policies adopted by Algeria in the development of technological and managerial capabilities to highlight the facilities and the constraints for implementing and managing advanced technology and innovation in the economic lagging regions and to explore ways of innovative co-operation in this field.

The Dematerialization Potential of the Australian Economy

In this paper we test the long term dematerialization potential for Australia in terms of materials, energy, and water use as well as CO2 emissions, by introducing concrete targets for major sectors. Major improvements in the construction and housing, transport and mobility, and food and nutrition sectors in the Australian economy, if coupled with significant reductions in the resource export sectors, would substantially improve the current material, energy and emission intensive pattern of Australia’s production and consumption system. Using the Australian Stocks and Flows framework we model all system interactions to understand the contributions of large scale changes in technology, infrastructure and lifestyle to decoupling the economy from the environment. The modelling shows a considerable reduction in natural resource use, while energy and water use decrease to a much lesser extent because a reduction in natural resource consumption creates a trade-off in energy use. It also shows that trade and economic growth may continue, but at a reduced rate compared with a business-as-usual scenario. The findings of our modelling are discussed in light of the large body of literature on dematerialization, eco-efficiency and rebound effects that may occur when efficiency is increased. We argue that Australia cannot rely on incremental efficiency gains but has to undergo a sustainability transition to achieve a low carbon future to keep in line with the international effort to avoid climate change and resource use conflicts. We touch upon the institutional changes that would be required to guide a sustainability transition in the Australian economy, such as, for instance, an emission trading scheme.dematerialization, physical accounting, stocks and flows, resource productivity, material flows, Australia