Industrial policies for the structural transformation of African economies options and best practices

Abstract

The recent global economic crisis has exacerbated the persistent weakness of African economies thus making it increasing difficult for them to catch up with the rest of the world. Currently, global rules and standards of industrial production are changing with new competitors eroding African market shares thus slowing down its industrialization process. While the causes of this situation are many, there is increasing agreement on the need for a changed approach to the development of the continent. In recent years, the commitment by African governments to fostering industrialization has been increasing and a number of major initiatives to meet this objective have been taken. One of the most important steps was the adoption of the Plan of Action for the Accelerated Industrial Development of Africa (AIDA). The current study is to be placed within the context of the implementation of AIDA. Its objective is twofold. First, it provides a detailed analysis of the current state of industry in Africa, to describe the set of industrial policies currently being pursued by African governments and to discuss how they are affected by the changing global context. Second, it proposes a set of policy recommendations and concrete policy options for African countries. This is based on the analysis of the most promising approaches to industrialization and on the use of newly formulated country taxonomy to identify the optimal industrial policy mix for African countries.