Trade Integration And Global Value Chains In Sub Saharan Africa

This analysis of the extent of trade integration of sub-Saharan African (SSA) countries in the global economy as well as within the region over the 1995–2013 period focuses on four key concepts: (1) trade openness, captured by import and export flows; (2) the centrality in the global and regional trade network, a measure that takes into account not only the size of trade but also the number of trade partners and the respective weight of these trade partners in global trade; (3) gravity model estimates that account for country- and region-specific determinants of bilateral trade flows; and (4) global value chain (GVC) integration. Using both existing data and a newly available dataset based on multiregion input and output tables, this analysis led to several findings: (1) trade openness has increased strongly; (2) integration in the global economy has made the region more vulnerable to external shocks; (3) levels of trade flows emanating from sub-Saharan Africa are still only half the magnitude of those experienced elsewhere in the world; (4) the region still has ways to go to better integrate in GVCs; and (5) it is more critical than ever to make progress in filling the infrastructure gap by lowering tariff and nontariff barriers, improving the business climate and access to credit, and continuing to enhance education outcomes.

Development largely depends on how given places participate in global economic processes.The contributions to this book address various features of the integration of sub-Saharan Africa into the world economy via value chains, so as to explain corresponding challenges and opportunities. The book deals with five issues that have not been covered adequately in scientific debates: first, policies are essential to promote value chains and increase their impact on development; second, value chains are diverse, and the variance between them has major economic and political implications; third, regional value chains appear to constitute a viable alternative to global ones (or, at least, are complementary to them), promising better developmental outcomes for the Global South; fourth, political and socio-economic factors are important considerations for a complete assessment of value chains; fifth, cities and city regions are also crucial objects of study in seeking to achieve a comprehensive assessment of value chains.

Industrialization drives the sustained growth in jobs and productivity that marks the developmental take-off of most developed economies. Yet, academics and policy makers have questioned the role of manufacturing in development for late industrializers, especially ith more job creation. Industrialization drives the sustained growth in jobs and productivity that marks the developmental take-off of most developed economies. Yet, academics and policy makers have questioned the role of manufacturing in development for late industrializers, especially in view of rapid advancements in technologies and restructuring of international trade.Concurrently, industrialization and structural transformation are integral to the African Union’s Agenda 2063 and the development strategies of several countries in Sub-Saharan Africa (SSA). Given this renewed interest in industrialization across the region, a central question is not whether SSA countries should pursue industrialization as a potential path to sustainable growth but how to promote the prospects of industrialization. Industrialization in Sub-Saharan Africa: Seizing Opportunities in Global Value Chains addresses this question by reassessing the prospects for industrialization in SSA countries through integration into global value chains. It also examines the role of policy in enhancing these prospects. The main findings indicate that • SSA has not experienced premature deindustrialization; the region has witnessed substantial growth in manufacturing jobs despite a lack of improvement in the contribution of manufacturing value-added to GDP. • The region’s integration into manufacturing global value chains is reasonably high but it is dominated by exports of primary products and engagement in low-skill tasks. • Global value chain integration has led to job growth, and backward integration is associated with more job creation. The report emphasizes the role of policy in maintaining a competitive market environment, promoting productivity growth, and investing in skills development and enabling sectors such as infrastructure and finance. Policy makers can strengthen the global value chain linkages by (1) increasing the value-added content of current exports, (2) upgrading into high-skill tasks, and (3) creating comparative advantages in knowledge-intensive industries.

This book presents the results of a groundbreaking study on ‘spillovers’ of knowledge and technology from global value-chain oriented foreign direct investment (FDI) in Sub-Saharan Africa, and discusses implications for policymakers hoping to harness the power of FDI for economic development.

Examining the changing role of Africa in the global economy.

This paper examines opportunities for Sub-Saharan African countries to effectively participate in globalization, particularly given the increasing interest of China and India in Sub-Saharan Africa. How can Sub-Saharan Africa fully engage and gain benefits from global network trade? Over the past 15 years Asia has become Africa's fastest growing export market. Asian countries are much more open to trade than Europe or America. There seems to be no evidence to suggest that this trend will not continue in the near future. The authors acknowledge the numerous caveats in Asia's growing interest in the African continent, not least the "resource curse" of exports that are heavily concentrated on oil, minerals, and raw materials, as well as the fierce competition from Asia's cheap manufactured exports. However, they believe that there is strong evidence to suggest a clear potential for South-South cooperation in trade and investment. Drawing on evidence from their extensive research into international value chains, the authors identify five critical factors for effective participation in global network trade: price, speed-to-market, labor productivity, flexibility, and product quality. Underlying competitive performance of these critical factors are a country's policies and institutions. Effective policies, efficient institutions, and the necessary infrastructure will ensure the best outcome for trading countries. To improve the depth and sustainability of these five critical factors, it is important that developing countries create a supportive policy and institutional framework from the outset.