Export Diversification in Africa: Successes and...
-
Upload
truongkhue -
Category
Documents
-
view
214 -
download
0
Transcript of Export Diversification in Africa: Successes and...
Export Diversification in Africa: Successes and Opportunities
Paul Brenton
World Bank
Poverty Reduction and Economic Management
Africa Region
December 09
Export Diversification: critical in any trade strategy for growth
Few countries have developed quickly on the basis of exports of primary products alone
A more diverse structure of exports reduces vulnerability to demand shocks and price swings in overseas markets
Creates greater opportunities in regional as well as global markets
But no magic recipe to promote export diversification
While some developing countries have been very successful in diversifying their exports, others have lagged behind
Export Diversification: Overview
Too much focus on simply adding new manufactured products to export portfolios – “discovery”
often points to use of industrial policies.
While important, a more comprehensive view of diversification is required. Look for opportunities from
improving the quality of existing exports,
breaking into new geographic markets,
increasing services exports,
expand output of goods and services that are inputs into export production
FDI can play important catalytic role: demand for upstream inputs as well as source of exports
Markets matter but low income countries exploit few export market opportunities
Export market penetration in 2004
Number
of
products
exported
Actual
number of
export
relationships
Potential
number of
export
relationships
Export
market
penetration
Madagascar 705 2450 66873 3.66
Malawi 553 1020 53069 1.92
Mozambique 751 1372 71190 1.93
S.Africa 2929 43946 262827 16.72
Zambia 852 1656 80441 2.06
Korea 2930 74171 261619 28.35
Germany 3037 168392 268260 62.77
Switzerland 2915 89062 261904 34.01
Source: Calculated from WITS using data at the 5 digit level of SITC
While diversified, South African products are lower value and go to fewer markets
Source: Calculated from WITS using data at the 5 digit level of SITC
Intra-regional intra-industry trade is lowest in Southern Africa
Grubel-Lloyd intra-regional trade index 2006
0 0.1 0.2 0.3 0.4 0.5 0.6
Southern Africa
Western Africa
Northern Africa
South Asia
Central Asia, Caucasus and Turkey
Central Africa
Eastern Africa
Western Asia
Central America and Caribbean
South America
Eastern Europe
Northeast Asia
Southeast Asia and Pacific
Western Europe
North America
Source: Brulhart (2008)
Lower trade costs encourages specialization and intra-industry trade
Where transportation costs have fallen, firms increased scale and specialization
The key driver, and a major determinant of growth, has been intra-industry trade, mostly of parts and components
This type of trade is more sensitive to transportation costs than trade in primary goods
Regional integration in EAC
Note: excludes mineral fuels. IIT calculated at 6 digit HS. Data from COMTRADE via WITS
…. Hence survival matters as much as entry
“the key element to achieving higher aggregate export
growth are longer relationships and hence higher
relationship survival rates” (Besedes and Prusa (2006))
Hence, successful export diversification requires not
only entry into new export markets but also survival and
growth
What are the factors that undermine the ability of
exporters to survive and then thrive – how to support the
acceleration phase?
Philips lighting in Lesotho
New Philips Lighting factory producing energy saving light bulbs (CFL)
Currently employs 170 (500 at full capacity)
Exports to S. Africa + other SADC markets
Key factors behind investment in Lesotho:
1. reduce Philips’ dependence on China
2. service new demand in Southern Africa
3. English speaking
4. Regional trade preferences.
• Lesotho’s exports to SACU and SADC are duty free whereas Chinese imports pay a tariff of 15%
Services matter for growth
y = 0.7968x + 0.0061
R² = 0.7291
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
0.0% 10.0% 20.0% 30.0%
Real
GD
P G
ro
wth
20
00
-08
Growth in service value added 2000-08
y = 0.3268x + 0.0331
R² = 0.33
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
0.0% 10.0% 20.0% 30.0%
Real
GD
P g
ro
wth
20
00
-08
Growth in manufactures value added 2000-08
Services can contribute a lot to export diversification
Discussion of export diversification too often ignores opportunities in services
Conquering new markets for export services
e.g. Potential 18 million new jobs in developing countries from offshoring (with each job generating a further 3 jobs) - McKinsey
Catalyzing diversification in other sectors (e.g. demonstration effects of tourism to foster export good discovery)
Services are part of the solution to export diversification constraints – information, consulting, etc.
Opportunities for regional trade in professional services in East Africa
0 50 100 150 200 250
RwandaUganda
Tanzania Kenya
Tanzania UgandaRwanda
Kenya
RwandaUgandaKenya
Tanzania
Professional density (professionals per Mio population)
Engineering
Legal
Accountancy
Examples of opportunities for export diversification in World Bank studies
Export of ICT services – Ghana, Nigeria
Cross-border mobile banking in Southern Africa
Trade in financial services in West African Monetary Zone
Scaling-up regional financial integration in the EAC
Africa regional tourism strategy
Regional integration in the Great Lakes region
Country specific projects on mainstreaming trade and diversifying exports – Lesotho, Malawi, Mozambique, Tanzania
A comprehensive policy framework for competitiveness and diversification
Getting incentives right Policy neutrality; lower costs of doing business
Efficient backbone and producer services Competition and contestable market structures, effective regulation
Pro-active support of export expansion Identify shortcomings in the marketplace and tailor interventions to target those
problems (e.g. information deficiencies for accessing new markets)
Effective policies to support adjustment Successful export diversification implies adjustment: resources must move from firms
that have no long-term future to more efficient firms
Support workers, not jobs
Weighting and selection from this portfolio will depend on a country’s level of income, initial policy framework, supply-side assets, and location