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The Discussion Paper examines the opportunities that the rising industrial wages in China will bring for Africa. China has been the industrial workbench of the global economy for decades. However, its competitive advantages are waning, particularly for labour-intensive assembly activities in the clothing, shows, electronics and toy industries. The Chinese government estimates that up to 81 million low-cost industrial jobs are at risk of relocation to other countries - unless China can keep the companies in the country through automation. Against this background, three complementary studies were carried out. The first examines where the automation technology for clothing and footwear production stands today; the second, how clothing companies in China deal with the cost pressure: to what extent they automate, relocate within China or abroad and how great is the interest in Africa as a production location. The third part is devoted to Africa’s competitiveness in clothing assemly, with empirical findings from Ethiopia and Madagascar. The Discussion Paper shows that the manufacture of clothing can already be robotized today, but that for sewing, robotization will probably remain more expensive than manual labor in the next 15-20 years. China’s companies are investing heavily in the automation of all other production processes and at the same time shifting production to neighbouring Asian countries. In Africa, only Ethiopia is currently competitive in the manufacture of clothing, and here too there are significant institutional difficulties in absorbing large amounts of direct investment., Discussion Paper

Supplemental material, sj-pdf-1-epn-10.1177_0308518X20961105 for Local supplier firms in Madagascar’s apparel export industry: Upgrading paths, transnational social relations and regional production networks by Lindsay Whitfield and Cornelia Staritz in EPA: Economy and Space

This book engages in the debate on growth versus economic transformation and the importance of industrial policy, presenting a comprehensive framework for explaining the politics of industrial policy. Using comparative research to theorize about the politics of industrial policy in countries in the early stages of capitalist transformation that also experience the pressures of elections due to democratization, this book provides four in-depth African country studies that illustrate the challenges to economic transformation and the politics of implementing industrial policies.

This paper examines the underlying assumptions about socioeconomic transformation within the dominant approaches to the political economy of African countries. We argue that the dominant frameworks within African Studies miss important aspects of contemporary processes of socioeconomic change. As an alternative, we argue that political settlements theory provides a better theoretical framework through which to understand contemporary African political economy. We set out the major assumptions and trace the intellectual landscape in which to locate the Political Settlement approach in a way which highlights the distinctions with existing dominant approaches in African studies. The paper then goes on to explain the underlying assumptions about capitalist transformation and the drivers of clientelism embedded within a political settlements approach. We explain how variations in politics and clientelism stem from variations in the distribution of power across countries and how these variations affect the process of capitalist transformation. The paper outlines the implications of the Political Settlements approach for the study of African political economy. It argues that there is not one African political economy, because the distribution of power is quite diverse across African countries; rather, what has accounted for many similarities in African experiences is to be found in the size and capabilities of domestic capitalists and the historical construction of relations between domestic capitalists and the state over time. In concluding, we propose the contours of a new research agenda based on the Political Settlements approach.

This paper examines the underlying assumptions about socioeconomic transformation within the dominant approaches to the political economy of African countries. We argue that the dominant frameworks within African Studies miss important aspects of contemporary processes of socioeconomic change. As an alternative, we argue that political settlements theory provides a better theoretical framework through which to understand contemporary African political economy. We set out the major assumptions and trace the intellectual landscape in which to locate the Political Settlement approach in a way which highlights the distinctions with existing dominant approaches in African studies. The paper then goes on to explain the underlying assumptions about capitalist transformation and the drivers of clientelism embedded within a political settlements approach. We explain how variations in politics and clientelism stem from variations in the distribution of power across countries and how these variations affect the process of capitalist transformation. The paper outlines the implications of the Political Settlements approach for the study of African political economy. It argues that there is not one African political economy, because the distribution of power is quite diverse across African countries; rather, what has accounted for many similarities in African experiences is to be found in the size and capabilities of domestic capitalists and the historical construction of relations between domestic capitalists and the state over time. In concluding, we propose the contours of a new research agenda based on the Political Settlements approach.

This paper explores what can be learned about the development of a productive sector and the factors that affect the process of upgrading and innovation, through a comparative assessment of the experiences of Malaysia and Ghana in the palm oil sector. The purpose is not to carry out a direct comparison of the trajectories of the sectors in the two countries, which would serve only to emphasize the failures in the 'construction' of the palm industry in Ghana. Rather, the role of context must be acknowledged, such that learning starts with understanding key points in the industries' trajectories that either break or accelerate path dependency. Thus, the paper focuses on the differing contextual factors and initial conditions, and how they shaped early divergent paths and industry structures, as well as the presence or absence of factors supporting expansion and diversification within each country's trajectory.

Through a comparison of sector cases in Mozambique and Ghana, the paper analyzes why and how African states engage in developing productive sectors and with what success. It argues that successful state interventions depend on four factors: (1) sustained political support by the government leadership; (2) the existence of an embedded and mediating bureaucracy; (3) changing the 'rules of the game' which govern the distribution of economic benefits and resources; and (4) the organisation of industry actors and institutionalised interaction between industry actors and state actors. The paper starts with a case of successful intervention in Mozambique, using the four factors to explain why the Mozambican government's efforts to rehabilitate the sugar industry were successful over a fifteen year period. The paper then considers experiences in three sectors in Ghana that illustrate variation in the four factors and thus different economic outcomes. Specifically, cocoa, export is a case of sustained political support, palm oil is a case of poorly implemented industrial policy, and horticulture export is a case of political neglect of an industry. In concluding, the paper emphasizes the political context in which these sector cases are embedded and which shapes how ruling elites make policies and implement them, placing the comparisons within a broader conceptual framework.

Since the Fourth Republic was inaugurated in 1993, politics in Ghana has been increasingly characterized by competitive clientelism. Ruling coalitions are characterized by a high degree of vulnerability in power due to a strong opposition party, by strong lower-level factions within the ruling coalition due to their importance in winning elections, and by a high degree of fragmentation among the ruling elite. These characteristics, combined with a weak domestic capitalist class and high inflows of foreign aid, have led the ruling elites across political parties to pursue and implement policies that have a short time horizon, that do not significantly shift the allocation of resources towards building productive sectors, and which are often plagued by problems of enforcement. The results have led to growth without economic transformation. In particular, the country has witnessed recurrent macroeconomic instability, a haphazard process of privatization of state-owned enterprises, and no serious attempt to build up productive sectors outside of cocoa and gold.

We know a lot about what kinds of policies are needed to support the development of productive sectors, but much less about why governments pursue these policies and why some governments achieve better outcomes than others. The paper reviews the many but disparate arguments on the comparative political economy of development and presents a conceptual approach that builds on the most convincing insights to date. This provides a framework for analyzing why and how ruling political elites support productive sector development and with what outcomes, and for comparing outcomes across productive sectors within and among countries, regions and continents. The approach builds on three propositions: political survival is the key motivation for ruling elites, and the need to maintain ruling coalitions and winning elections shapes the kinds of policies that political elites choose and how they are implemented, in particular whether ruling elites share a mutual interest with relevant productive entrepreneurs and whether ruling elites are able to create 'pockets of efficiency' in the bureaucracy in charge of implementing the policies.

The nascent Ghanaian horticulture export sector, which emerged in the mid-1980s, has been ignored by ruling elites, especially after the return to multiparty democracy in 1993. Ruling elites across the two party governments between 1993 and 2008 did not actively pursue initiatives to support the industry. Without sustained political support, the types of public-private coordination of actions and investments needed to help the sector expand and upgrade were not forthcoming in an effective and timely manner. This private sector-driven non-traditional export sector constitutes a neglected opportunity for export diversification and building a new agro-industry, and also highlights some of the factors explaining why the country's economy was still dependent on the traditional exports of cocoa and gold by the close of the 2000s. The political challenges to changing the productive structure in Ghana can be found in the characteristics of ruling coalitions - vulnerability of the ruling elite in power, the high fragmentation within ruling coalitions, and their existing sources of and strategies for financing the state and the ruling coalition, combined with the country's existing economic structure as well as the size and capabilities of domestic capitalists. The characteristics of ruling coalitions in Ghana shaped the incentives facing ruling elites such that the ruling elites were not sufficiently compelled to support new productive sectors, such as horticulture export, which did not (yet) provide substantial revenues.

Ghana has exhibited rather strong economic growth since the 1980s, but little transformation of the productive structure of its economy. The paper argues that ruling elites' policy choices are shaped by their political survival strategies. In turn, these strategies are shaped by (1) the characteristics of the ruling coalitions, which include a high degree of vulnerability in power, strong lower-level factions of the ruling coalition, and a substantial amount of fragmentation among the higher factions of the ruling coalition; (2) the weak capabilities and political influence of the nascent productive capitalists; and (3) easy access to financing for the state and the ruling coalition from foreign aid, mining and cocoa bean exports. As a result, ruling elites' policy actions did not prioritize the development of new productive sectors (or upgrading of old ones), but were geared towards delivering benefits to the higher and lower levels of the ruling coalition, as well as delivering a small amount of visible goods and services to as much of the population as possible in an effort to 'swing' voters their way at election time. Neither of these political survival strategies resulted in significant productive sector investments.

The time is ripe for an evidence-based discussion of what is 'private sector development' in Africa and how it occurs. This discussion requires analyses on how actual existing industries are created, expanded and remain competitive, and the role of industrial policy. This paper contributes to the discussion by examining the emergence and trajectory of a new agro-industry in Ghana: the pineapple export industry. It explores how this new agro-industry emerged as well as how it responded to changes in international competition. It explains the limited expansion of the industry and its declining international competitiveness by looking at how Ghanaian exporters developed technological capabilities initially and the incentives and disincentives to building those capabilities. The industry has its origins in Ghanaian professionals, civil servants and import businessmen who sought new economic opportunities in the 1980s and 1990s. The paper argues that at the heart of the industry's crisis was an inability to further develop technological capabilities. Both firm level and national level factors determine technological capability development. Thus, the crisis had systemic features that have broader implications for understanding the obstacles to developing new agro-industries in Ghana as well as other African countries. It also argues that small farmers can have a place in high-value agricultural export industries, but they must be linked into supply chains in ways that increase their capabilities. Where relevant, it compares Ghana's experience with that of the Ivory Coast and Costa Rica, its main competitors.