Industrial Policy and Development in Africa

Economic development involves increasing agricultural productivity, building technological capabilities among domestic firms, export diversification, and industrialization. In the 21st century of fragmented production processes dispersed globally, it also entails positioning domestic firms in global production networks in order to create wealth and employment as well as increasing production for a growing domestic market. Despite two decades of high levels of growth between the mid-1990s and mid-2010s, very few African countries have created manufacturing industries that are internationally competitive and have diversified their exports away from dependence on a few primary commodities, and most African countries still import the majority of their manufactured goods. Economic transformation does not emerge from the interplay of free market forces but rather requires proactive, targeted government policies. Such industrial policies include providing infrastructure, access to credit, and training labor but also incentivizing and assisting locally owned firms to build their technological capabilities in order to become internationally competitive. Well-conceived industrial policies are only successful if they are implemented, and that is much more difficult.