Premature deindustrialisation in Africa

Between 2005 and 2020, the share of agricultural workers dropped by 52%. Many of these workers were absorbed into service industries, mainly characterised by informality and low productivity (increasing the share of workers in industries to 37% in 2020).

Dani Rodrick (2015) has defined the phenomenon “premature deindustrialisation”; i.e. a continuous fall of manufacturing shares of employment and value addition. Evidence of premature deindustrialisation trends have been observed in Africa and Latin America, although significant variation across countries and sectors do exist. 

due 300x126 Premature deindustrialisation in Africa

At much lower levels of income, Africa may be facing fewer opportunities to industrialise through manufacturing compared to earlier industrialisers. This is attributed to the evolution of automation technologies and the expansion of capital-intensive manufacturing firms.

Limited industry in the continent can also be explained by firm uncompetitiveness, inadequate infrastructure, and the dominance of small firms.

 

5 Premature deindustrialisation in Africa

 

Manufacturing share of exports, on the other hand, has expanded over time from 35.5% in 2008 to 48.9% in 2018, with exports having become increasingly integrated into global value chains (GVCs) (IAP UNIDO, 2020). However, relative to other regional share of manufacturing exports (e.g. Europe at 89% and the Americas at 77.7%), Africa’s manufacturing contributes significantly less. The linkage rates of manufacturing in recent years have become more heavily skewed towards resource-rich countries. Africa’s participation in international trade is also largely defined by exporting raw materials and low-value manufacturing; for example, basic metals account for 54.1% of total manufacturing exports.

 

Presented by Romano Pisciotti

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