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					 THE PRIMACY OF INDUSTRY

 Industry matters for MDGs (the
 role of industry in filling the gap
 between the required growth rate
 and actual growth rate)
 Industry-led growth makes a
 difference (e.g., recent
 development experience of
 Tanzania)
    TWO SIMPLE QUESTIONS TO
   UNDERSTAND COMPLEX ISSUES
    CONTAINED IN THE REPORT

1) What drives world trade?

2) Why some countries are doing
   better than others?
THE ROLE OF MANUFACTURED EXPORTS
         IN TOTAL EXPORTS
THE ROLE OF MEDIUM- AND
  HIGH-TECH PRODUCTS
     KEY FOCUS OF THE REPORT:
 DIFFERENCE BETWEEN TECHNOLOGY
       AND SOPHISTICATION

 Low-, medium- and high-technology
  products (hardware)

 Organization, quality, design, logistics
  and marketing (software), leading to
  the production of sophisticated
  products across all segments of
  manufacturing
U-SHAPED SPECIALIZATION, INDUSTRIAL DIVERSITY
   AND GROSS DOMESTIC PRODUCT PER CAPITA:
         WHAT YOU MAKE MATTERS FOR
         BREAKING IN AND MOVING UP
DIVERSIFYING PRODUCTION AND MOVING UP THE
PRODUCT SOPHISTICATION LADDER APPEAR TO BE
    IMPORTANT DRIVERS OF DEVELOPMENT
       (PRODUCTION SOPHISTICATION)
DIVERSIFYING PRODUCTION AND MOVING UP THE
PRODUCT SOPHISTICATION LADDER APPEAR TO BE
    IMPORTANT DRIVERS OF DEVELOPMENT
         (EXPORT SOPHISTICATION)
DIVERSIFICATION AND PRODUCT
SOPHISTICATION: KEY FINDINGS

  China and India stand out. In 1975, both
   economies had structures of manufacturing
   production that were significantly more
   sophisticated than those associated with their
   level of per capita income.
  Among African countries, Kenya and Tanzania
   maintained production structures that were
   more sophisticated than their predicted
   income levels.
  If a country remains well below its predicted
   level of export sophistication according to its
   level of per capita income, the country fails to
   perform well at the export front despite high
   level of production sophistication at home.
PICTURES TAKEN FROM AN ETHIOPIAN MANUFACTURING
UNIT PRODUCING SOPHISTICATED LEATHER PRODUCTS:
TASK-BASED PRODUCTION OFFERS DEVELOPING COUNTRIES
THE SAME OPPORTUNITIES TO CLIMB THE MANUFACTURING
SOPHISTICATION LADDER
PRODUCTION OF SOPHISTICATED PRODUCTS ACROSS
  ALL MANUFACTURING SEGMENTS POSSIBLE AND
   PROFITABLE AS EVIDENCED BY THE ETHIOPIAN
EXPERIENCE IN PRODUCING LEATHER PRODUCTS AND
   EXPORTING THEM TO OECD COUNTRIES, WITH
       UNIDO TECHNICAL ASSISTANCE
 SOPHISTICATED LEATHER PRODUCTS MADE IN
ETHIOPIA AT AN INTERNATIONAL EXHIBITION IN
                 NEW YORK
    UNIDO technical assistance enabled
informal manufacturers of leather products
         to break in and move up.
WHERE YOU MAKE MATTERS:

   Agglomeration of firms
 entails economies of scale
    external to firms and
internal to a group of firms.
    THE LOCATION OF MANUFACTURING
              PRODUCTION


 Agglomeration economies raise the
  productivity of firms in industrial
  clusters (an atypical trend in Ethiopia:
  Clustering of firms producing
  differentiated products resulted in
  higher productivity growth)

 Clusters matter in low income
  countries
THE LOCATION OF MANUFACTURING PRODUCTION: CASE STUDIES OF 10
DYNAMIC CLUSTERS SHOW THE RANGE AND EXTENT OF AGGLOMERATION
  ECONOMIES AND DIFFERENT SOURCES OF INDUSTRIAL DYNAMISM
  Country   Industrial    Product    Principal drivers of exports
            Location
  Argentina Buenos Aires Automotives Global integration of domestic subsidiaries of automotive
                                     assemblers and component manufacturers into the value chains
                                     of transnational corporations
  Brazil    South Eastern Pulp and   Operational advantage of proximity to high quality raw
            Brazil        paper      materials

  Cambodia Pnom Penh      Garments      Transnational corporations taking advantage of preferential
                                        access to developed markets

  Chile       Los Lagos   Salmon        Adoption and adaptation of best practices in salmon culture
                                        and processing
  China       Qiaotou     Buttons       Entrepreneurs connecting and upgrading in global value chains

  India       Chennai     Leather       Institutional and policy direction and support for technological
                                        upgrading and environmental compliance
  Indonesia   Jakarta     Automotives Domestic capability building from specialization in the
                                      production of selected auto parts (modules) in the transnational
                                      production networks and appropriate incentives.

  Lao PDR     Vientiane- Agro and       Proximity to raw materials and preferential market access.
              Champasack Wood
  Malaysia    Penang     Electric-      Transnational corporations taking advantage of attractive
                         electronics    financial incentives and excellent basic infrastructure
  Nigeria     Otigba     Computer-      Pool of educated entrepreneurs
                         components
 THE GROWING ROLE OF
MANUFACTURED EXPORTS
    CHANGING DIMENSIONS OF
     MANUFACTURED EXPORTS

• Developing countries are increasing their
  market share of manufactured exports
• East Asia dominates manufactured export
  growth
• Export diversity and sophistication spur
  growth, especially in middle income
  countries
• Trade in tasks is growing
THE GROWING ROLE OF EXPORTS: DEVELOPING COUNTRIES
  HAVE GAINED MARKET SHARE IN ALL CATEGORIES OF
        MANUFACTURED EXPORTS, 2000-2005

                                                                                                                                         6%
Change in the world market share of medium- and high-




                                                                                                                                                    Developing countries (1,097)
                                                                                                                                         4%



                                                                                                                                         2%
               tech products 2000-2005




                                                         Note: bubble sizes (number in parentheses) indicate the increase in the value
                                                         of total manufactured exports betw een 2000 and 2005 in billion US$                                                Transition economies (110)

                                                                                                                                         0%
                                                        -4%                 -3%                   -2%                   -1%                    0%                 1%                   2%                3%


                                                                                                                                         -2%



                                                                                                                                         -4%
                                                                                  Developed countries (1,703)


                                                                                                                                         -6%



                                                                                                                                         -8%

                                                                                           Change in the world market share of resource based and low-tech products 2000-2005
    SOURCES OF GROWTH IN
MANUFACTURED EXPORTS BY REGION


      Growth in exports =
   Growth in global demand +
      Geographical shift in
           production +
   Change in export propensity
SOURCES OF GROWTH IN MANUFACTURED EXPORTS BY
        REGION,1991-2005 (PERCENTAGE)
THE GROWING ROLE OF MANUFACTURED EXPORTS:
  TASK-BASED TRADE HAS GROWN EVERYWHERE
   IMPLICATIONS FOR INDUSTRIAL
          DEVELOPMENT


• Is there room at the bottom to break
  in?

• How to reduce the pressure in the
  middle to move up?
ROOM AT THE BOTTOM IN SLOW-GROWING LOW-
               INCOME COUNTRIES
Key challenge:
Products of the first and second generations of
   NICs and emerging economies
Sense of optimism: The role of China; trade in
   tasks; supportive policies in developed
   countries; and
leveraging agro-industries
120 innovative ideas were presented
   at the recent "UNIDO International
   Conference on Sharing Innovative
   Agribusiness Solutions“, held
   in Cairo, Egypt.
http://www.agribusiness-solutions.org/
      REDUCING THE PRESSURE IN THE
           MIDDLE TO MOVE UP

Key challenge:
Failure to keep pace with the rapidly changing
  facets of processing, design and marketing
Escaping the pressure:
 Enhancing adaptive and technological capabilities
  and incremental learning
 Supporting the growth of dynamic exports
 Enhancing innovative capabilities to capture
  “niche” markets
IMPLICATIONS FOR POLICY ACTION IN SLOW-
          GROWING COUNTRIES

Key issues: High cost of production and doing business;
  and low science and technological base

 Changing expenditure priorities and investment
  efforts on creating infrastructural base should not be
  eroded by unit costs (e.g., less kilometers of roads
  paved at high cost)

 Break public monopoly and encourage private sector
  competition in infrastructure provision

 Convince donors on the inclusion of industrial
  development as an integral part of poverty reduction
  strategy papers

 Implement trade logistics reforms
     THE POLICY SPACE (Continued)
 Exploiting the transformative role of IT (e.g., India)
 Encouraging firms producing differentiated products to agglomerate
 Fostering effective public private partnership




                      A success story of partnership in
                      Nicaragua: An apex body of eight
                      cooperatives representing over
                      700 small milk-producing and
                      processing units was established
                      by UNIDO in 2000; 337
                      kilometres of new energy lines
                      built by the government
                      made a breakthrough in milk
                      production and processing;
                      271 kilometres of road
                      rehabilitation is underway for
                      further enhancing the impact of
                      public private partnership.
THE POLICY SPACE (Continued)




    Strengthening the science
     and technological base as
     well as innovation systems

    Regional economic
     cooperation for creating
     strong infrastructural base
     and facilities
THE POLICY SPACE: RESOURCE RICH COUNTRIES

• Difference between manufacturing profit
  and economic rent
• Policies for knowledge services and
  construction
• Linking it to manufacturing: Investments
  to offset the impact of Dutch disease—
  through infrastructure and skills—offer
  an important path towards an alternative
  export sector for those resource-rich
  countries
   POLICY IMPERATIVES FOR DEVELOPED
              COUNTRIES

• Why the rich countries should care?
  – Closing the income gap
  – Sustaining the “NICE” times
• Trade preferences
  – Creating the “Least Developed Manufacturing
    Countries”
  – A simple, time bound system with liberal rules of
    origin
• Aid for Trade
  – Putting trade at the center of the development
    agenda
  – Mobilizing additional resources and coordinating
    donor efforts
POLICY IMPERATIVES FOR DEVELOPED
COUNTRIES, Aid for Trade (Continued)
              Within a relatively short time
              (2000-2006), UNIDO intervention,
              funded by Norway, managed to
              establish seven internationally
              accredited testing laboratories
              covering chemical testing,
              microbiology testing,
              rubber/plastics testing and food
              analysis, and thereby enabled
              the Sri Lankan exporters to
              comply with international
              standards.
  RANKING COUNTRIES ON THE SCALE
    OF COMPETITIVE INDUSTRIAL
        PERFORMANCE (CIP)

The CIP index combines four
main dimensions of industrial
   competitiveness:
1) Industrial capacity
2) Manufactured export capacity
3) Industrialization intensity
4) Export quality
   CIP (continued)
Six quantitative indicators are used to measure
   those four dimensions:
• Industrial capacity: MVA per capita
• Manufactured export capacity:
  Manufactured export per capita
• Industrialization intensity: share of
  manufacturing in GDP and the share of
  medium- and high-technology
  activities in MVA
• Export quality: share of manufactured
  exports in total exports and the share
  of medium- and high-technology
  products in total exports
CIP (continued)


    The combined indices for the
    four dimensions are simply
    calculated as the arithmetic
    mean of standardized values.
    The top country in the sample
    gets a 1 while the worst
    performing country gets a 0.

   Singapore tops the list.
   WHY DOES SINGAPORE TOP THE LIST
   OF 122 COUNTRIES ON THE SCALE OF
   COMPETITIVE INDUSTRIAL
   PERFORMANCE?
1) Effective national industrial innovation
   system
2) Enhanced domestic capability building
3) High level of functional literacy rate
   (high percentage of literatures with
   enhanced adaptive capabilities to use
   modern technology and device and to
   commercialize new knowledge)
        TWO FINAL POINTS TO
            PONDER


• The Report is not a doctrine.

• The Report is an analytical
  tool to rethink the long-term
  industrial development
  realities
Thank You

				
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posted:8/14/2011
language:English
pages:38