African Industrialisation: Is global value chain development the answer?

Newman, Susan and Takala-Greenish, Lotta (2014). African Industrialisation: Is global value chain development the answer? In: International Conference on Manufacturing Led Growth for Employment & Equality, 20-21 May 2014, Johannesburg.



Industrialisation and industrial policy have been recently returned to policy debate in sub-Saharan Africa following a hiatus for some three decades since the implementation of Structural Adjustment Programmes in the wake of the debt crisis. However, the nature of the current debate, and the perceived role and form of industrialisation and industrial policy differs greatly from thinking that informed industrial policy in the post-liberation period of the 1960s and 70s that were rooted in classical political economy, the (structuralist) development economics of the 1950s and 60s.

At the level of the international financial institutions and development agencies, Justin Lin’s New Structural Economics (NSE) has come to the fore as orthodox (neoclassical) theoretical justification for industrial policy in the 21st century. At the same time, Global Value Chain Development (GVCD) as the process of entry into and upgrading along transnational supply chains, has emerged in recent debates on African industrialisation. This paper investigates the conjuncture of these two approaches both in terms of their theoretical underpinnings as well as the policy conclusions that develop out of these lines of thinking. We compare both the explicit and implicit understanding of industrial development in economic growth within GVCD and NSE approaches with those from classical political economy and heterodox economics in order to assess the extent to which these approaches inform industrial strategies that can result in employment creating, self-reinforcing and rapid inclusive economic growth through the growth of manufacturing. We then draw upon the notion of the Minerals Energy Complex (MEC) as a historical political economy approach to industrial development in South Africa to assess the scope and limitations of resource based industrialisation in delivering broad-based and equitable growth in African economies today.

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