The Quality of Growth in Sub-Saharan AfricaA Workshop of the JICA-IPD Task Force on Africa

Co-Chaired by Joseph Stiglitz, Akbar Noman and Ravi Kanbur

Columbia University6-7 June 2016

Monday 6 June

Workshop Opening and Objectives

Joseph Stiglitz, Akbar Noman, Ravi Kanbur, and Nobuko Kayashima

Joseph Stiglitz

In the opening session of the workshop, Joseph Stiglitz gave a brief speech highlighting the objectives of the JICA – IPD Task Force. He emphasized why the core topic up for discussion—ensuring “quality growth” for Africa— was an important one. Several key points were discussed. First, he mentioned that Africa has been a growth success before 2008 due to the abundance of natural resources but this impressive growth has since reversed. The goal to move away from dependence on natural resources is extremely important. Second, he re-emphasized an existing problem of income inequality and the fact that between country inequality (world inequality) has declined but within country inequality has been increasing. This phenomenon, he explains is mainly due to China raising more than 600 million people out of extreme poverty. He further gave Namibia as an example of a country that has succeeded in achieving the dual goal of diversifying their economy and lowering levels of inequality, improving on their educational system and health care system. Third, he mentioned that to better analyze these aforementioned issues, broader measures of “success” should be researched – i.e. measures that move away from the simple GDP measure and instead include some other metrics that measure the role of cities and the environment. Fourth, he remarked that it was important that Africa learned from other development success stories such as the East Asian miracles which have been a point of reference for success. He further tied this point to how JICA has played an important role in highlighting the insights of these success stories and how JICA has helped incorporate these insights in Africa. A caveat to the latter is that, African countries should not “carbon-copy” what these successful countries have used to achieve economic development. This is because Africa is different since it faces unique and multi-dimensional developmental issues.

Other points included; new issues facing rural and urban areas, climate change, the importance of the rule of law and impact of natural disasters. The key message highlighted what is important and what is new, in the process of achieving sustainable and quality growth for Africa.

Nobuko Kayashima

1

Since 1993, JICA has been organizing international conferences about African development. JICA and IPD have been working together to produce policy recommendations over the course of several projects. The focus of these projects is to achieve economic development, combat poverty and disparity between urban and rural areas, but also for the overall betterment of the quality of life in Africa.

Ravi Kanbur

It is important to tackle the right combination of relevant issues, whether they are ongoing or have recently emerged. Hopefully, each session of this conference will help reveal the most relevant issues in African development today.

Session I: Sustainable Development Goals and Africa

Ravi Kanbur, Lorenzo Fioramonti, Sakiko Fukuda-Parr

Ravi Kanbur – Sustainable Development Goals and Measurement of Economic and Social Progress

Highlights:

Rethinking growth Focusing on sustainable development goals Building upon the discussions of previous conferences

Currently, there are 17 goals and around 200 targets.

How did we get to such a high number of targets? Ban Ki-Moon claims success, attributes it to MDGs, although it is hard to establish such a causal relationship. Mostly, the examples of MDGs’ successes are anecdotal, as quantitative attributions are almost impossible to determine. These anecdotal examples are what heightened the interest of constituencies to push for their own targets.

Every constituency wanted to get into the process and voice their specific concerns. Therefore, the large number of targets reflects the complexity of the process perfectly well. Constituencies saw value in the process of addressing their specific issues, and MDGs emerged as a broad platform created by consensus.

What, then, can be done at the national level? A relevant point was raised in a previous conference by Ibrahim Patel, who stated that GDP is still a helpful measure in the policymaking process. There are advantages with GDP, as there are no alternative composite measures that address the relevant issues.

Since it is difficult to create an appropriate alternative composite measure, given the resources available, a dashboard approach may be the best possible option. However, the same difficulty arises in determining exactly which elements should be included in a manageable dashboard. Usually, the proposed dashboard elements include: GDP, indicators of inequality and poverty, such as the GINI, or a multidimensional poverty index. But, each of these elements is an aggregate of indicators, which further complicates choosing the right elements for a dashboard.

2

Perhaps, country-specific meetings would be a practical way for policymakers and analysts to define the appropriate elements.

A third question arises, regarding the global aspects of measurement of poverty and inequality. Methods of global poverty measurement are questionable. How can we account for expenditures, or global consumption? The current methods used to produce global measurements have become “ad hoc”, with no systematic method for anchoring a global poverty line.

Inequality, as an MDG goal, has been handled in a nationally oriented manner; however, it should be a global exercise to analyze inequality between countries vs inequality within countries. Within country inequality has risen; while between country inequality has fallen, which makes it difficult to determine whether inequality has actually risen or fallen.

The JICA/IPD task force is an important agent in this process, as it helps clarify the issues with the process and implementation of measures that should be used.

Lorenzo Fioramonti – The SDGs as a development roadmap for Africa: interactions, dynamics and modelling for policy

Highlights:

Unpacking the meaning of SDGs More than a checklist: goals, targets and indicators are interconnected Dynamic nature of development goals is often neglected Replacing the current model of growth

The current model of growth is based on how GDP is measured; however, GDP is one of the main contributors to environmental destruction. It is no surprise, for example, that a perfect correlation between GDP and climate change can be found.

Since 1977, the trend is actually that economies have been shrinking, which points to the fact that there are serious issues with the way growth is measured and conceptualized. After accounting for factors, such as environmental damage and social costs, economic growth is much smaller than what is currently perceived. In Africa, for example, environmental destruction caused by extraction industries has led to the shrinking of economies, even while international financial institutions declared that GDP was growing.

Goals and indicators must have a policy anchor. Accountability to the national or global level must be clear in establishing these indicators, as mismatches between indicators and policy application can be dangerous within the SDGs debate. The data collection process and its constraints are important factors to note, as the process demands an extensive use of resources and creates an opportunity cost for each indicator that is actually chosen. Statisticians have limited resources to work with, the information from new technologies should be harnessed, instead of insisting on the old fashioned way of surveys.

3

The SDGs are a long list of goals and indicators that are often badly formulated, or redundant and placed on the list mostly to appease constituencies. What the SDGs really mean, is that the current model of growth is bankrupt.

While the SDGs open doors for convincing policymakers to implement change; as they stand now, the SDGs do not present a coherent narrative, simply a strategic window of opportunity. In order to implement lasting change, a new apparatus of measurement should be devised. Countries that strive for sustainable growth, instead of simple GDP growth, should be rewarded.

Building on existing tools can also be effective, as these should not be mutually exclusive measurement forms. A dashboard system could be used along with an aggregate indicator. The information available now should be used in a pragmatic fashion, while new technologies should be harnessed to maximize them.

Dynamic models are required, which should not simply consist of adding different levels and ticking more boxes. By grouping together indicators that are related, the Sustainable Wellbeing Index (SWI) synthesizes the SDGs into a coherent aggregate index. The SWI is a simple indicator that looks at different core dimensions of the SDGs. It also creates levels of saturation and thresholds, up to which wellbeing is unlikely to grow.

Statistics experts across Africa were consulted in the creation of these aggregate indicators, such as human development, quality of environment, etc. They are related to the SDGs, but simply named differently, in a way that is much easier for policymakers to understand.

The SWI accounts for the mutual correlation between sets of indicators, since these different dimensions reinforce or detract from each other. Planning policy cannot be done in a fragmented fashion, the interactions between dimensions has to be accounted for.

Sakiko Fukuda-Parr – Sustainable Development Goals (SDGs) and Africa

Highlights:

Progress in goal setting in contrast to MDGs: more democratic process Goals still require mobilization and championing Dangers of quantifying development goals SDGs as a development policy framing device

The general idea of SDGs is that they have a communications purpose, as a political tool for mobilizing actions. The quantification of these targets and indicators can leave out very important aspects of an issue, which can be off-putting to some. With the MDGs, many of the targets were seen as useless and were not embraced by some civil society groups, especially in developing countries. Many argued those goals were harmful and distracting. MDGs were criticized for being incredibly narrow, leaving out highly important things like growth and industrialization, which is probably the reason why the SDGs are much broader.

4

The breadth of the SDGs results from the demands of governments, who negotiated against the notion of restrictive global goals. The SDGs are a process of contestation between conflicting countries. They help establish that the development debate should go beyond combating poverty. They provide an instrument that can influence policy. They don’t create incentives, but they influence policy by creating narratives that frame policy debates.

Not all of the SDGs will be prioritized. Following the MDGs example, where some items were completely neglected. Certain goals were championed and mobilized many agents, while other goals were not championed and gained little traction. Continued pressure is needed in order to make certain targets relevant.

During the SDG negotiations, the demands of African countries show a strong focus on shifts in global policies, the development of global partnerships in the international economic environment and the role of state.

The quantification of development goals can be very dangerous. All the issues being promoted- industrial policy, role of the state, reform of the international economic and financial systems- are not things that can be well quantified, tracked and monitored. For example, the indicator chosen to measure the technology SDG goal is the number of science agreements and fixed broadband internet subscriptions. It is hard to tell how this indicator will effectively monitor technological cooperation issues, in terms of access to the latest technologies needed by developing countries.

Some of the most important issues are not easily monitored, it is unclear what kind of development narrative will emerge. SDGs may lead to manipulation of development policies and mask other issues in the undercurrent, such as new trade and investment agreements. Overall, these new trade agreements are problematic and disturbing for many reasons. Specifically, these agreements reinforce investor and corporate interest and reduce policy space for all countries.

In conclusion, it is necessary to reflect on what SDGs are good for, and how they can be used. It is important to recognize that SDGs are not innocuous indicators. While the process has become much more democratic, a more powerful set of agreements is actually rewriting the global rules.

Discussion:

Global rules issues are happening concurrently with the setting of SDGs. In order to get a feasible model of global governance, reform is needed. (Noman)

Concerns with global rules. Often, trade agreements reflect the interests of corporations, this includes the US. The transparency involved in agreement construction is questionable. As far as SDGs, they are important because they show a norm in global target setting. Some of the indicators are not ultimate objectives, but are intermediate variables. The variables, and the ways they are measured, reflect current societal parameters. In different countries, the rule of law may mean different things, reflecting embedded values. Just as different measures call attention to different things. Thus, the ambiguity is not necessarily an issue. If a democratic society is established, it can actually generate a debate to determine measures in different countries or subcontinents. The consensus can be reached in that way. (Stiglitz)

5

The discussion is not always grounded in the political process. Institutions feel obliged to fight for themselves and issues that cannot be quantified on their own often don’t get the merit. For example, poverty was separated from hunger so that funding could be mobilized. A pragmatic approach is needed to improve the visibility of the statistics. (Jomo)

Working with the African union at ECA is very important. For member states of Africa, there is a lot of confusion around goals, indicators and elements. Largely due to framing, also because many of these organizations were not part of the discussion. A lot of confusion on the ground, as presidents agree on these agendas, while organizations and agencies are excluded. (Manuh)

SDGs are very ambiguous. They allow for distraction, powerful countries push for their own interests and stakes, while some leaders of African countries simply go along with certain policies. These targets and indicators become abstract, then applied to address basic problems, in countries that cannot even produce statistics on fiscal flows. Fundamentals must be addressed first. (Ansu)

The design of these targets is missing very important factors, like people. Large numbers of people who are living in agricultural environments don’t meet the criteria for many of these indicators as they were designed. (Cramer)

There are many issues, but this process may be imposing way too much on Africa. Putting a lot more on African growth, qualifying it too much. Traditional measures may include productivity, the working poor, vulnerability, which are difficult enough to measure. The analysis should move towards causality. (Mahmood)

Political aspects are important to note due to the conflict between many organizations, such as the World Bank and others. Conflicts and lack of consensus between these institutions may lead to hypocritical narratives, which are counterproductive to development, and some organizations feel it deters from their fights. (Andreoni)

Problem on collecting data. Problem of quality of data. Problem of access to data. These are only some of the data-related issues surrounding the establishment of indicators. Only six of the Sub-Saharan countries have had level 4 surveys, in the last 35 years. Focus should be on countries with statistical possibility, where information returns can be attained. (Bhorat)

Back to basics in stats. Can’t do 200 indicators. (Kanbur)

SDGs are a great opening for policy innovators. Growth is being questioned all over the world. These targets should be used pragmatically, as this is a huge opportunity to create policy innovation. (Fioramonti)

Session II: Sustaining Growth and Transformation after the Commodities Boom (A)—

6

Macroeconomic and Trade Policies

Joseph Stiglitz, Yaw Ansu

Joseph Stiglitz - The Quality of Growth and the Role of the State in Sub-Saharan Africa

To achieve sustainable development goals in Africa there should be a focus on industrial policies and countries in Africa should go beyond resource dependency. Two countries have gone beyond the resource dependency – Ethiopia and Namibia. They have experienced growth based mostly on boom in commodity prices and hydro-carbon discoveries.

Background facts:

There has been limited structural transformation and learning in most of the African countries. For instance, the share of manufacturing is still roughly at the same level as four decades ago. Jobs moving out of China’s economy can however be taken advantage of by Africa.

Placing the discussion in a broader context of economic theory. Rethinking the role of the state.

Government policies need to pursue even wider range of objectives, using a wider range of instruments than envisioned.

‘Government failures’ – it is imperative that African countries learn from past failures and work to reduce the risk of government failures.

Broaden our analysis to go beyond rethinking about the role of the state versus the role of the market. Specifically, the state should not be separated from the market.

Some of the major “events” and the lessons they taught:

The success of East Asia, including China experienced development/growth beyond anything that had been thought possible.

The role of the government was important and contributed to this success. Different countries did different things, policies changed over time but a common factor that all

of these success stories followed were appropriate industrial policies. Furthermore, different institutional arrangement of foreign direct investment played a central role in the rapid growth of these economies.

Hence they serve as a good point of reference and learning economies for several developing countries around the world including African economies.

Neo-liberalism failures that led to slow growth:

Africa’s structural adjustment program led to a lost quarter century growth and led to deindustrialization. Growth; however, recovered partly as a result of China’s involvement in the century, as well as industrial policies that were adopted in a few countries along the lines advocated by our Task Force (JICA).

7

Can this growth be sustained as China slows and the Great Recession’s impact lingers? Seems unlikely with commodity prices and growth falling. This is because the commodity price bubble is over and China will be moving more toward the service sector, hence the growth of China will have no role to play in Africa’s economy, if Africa’s growth depends on manufacturing.

Bad governance has also contributed to the slow growth. Countries in Africa that achieved macro stability and “good governance” did not see flow of

foreign investment except in natural resource.

Other events:

The 2008 crisis showed that markets on their own were neither efficient nor stable – most economies were only saved through massive government intervention such as huge stimulus. Thus, the absence of a strong governmental role in African economies can contribute to slow growth, since markets are not always efficient. The Euro crisis is another example of economic globalization outpacing political globalization.

Growing Inequality:

Inequality is still persistent in most countries around the world, but some countries have managed to reduce inequality. In the quest to reduce inequality, one lesson that has been learnt is that trickle-down economics does not work. Specifically, growth at the top has not benefited everyone. The differences in the progress of reducing inequalities between countries showed that it was not just a matter of economics but also governmental policies. Further underscoring the role of government.

Advances in Economics:

The role of behavioral economics. The standard neoclassical models are based on wrong view of individuals. New instruments that can change behavioral analysis can also break down standard models. New questions about how to assess societal improvements. Micro-credit has been widely shown as an instrument to aid economic development.

Endogenous technology and learning:

Most advances in standards of living are associated with learning and improvements in technology.

Institutions and Markets:

Markets do not exist in vacuum and indeed markets themselves are institutions. They are structured by norms, laws, and regulations. The way they are structured makes a big difference for how the economy behaves (e.g. a particular rule of law), this can lead to more or less inequality.

A whole argument about why we need state interventions stems from managing macroeconomic and financial sector risks, public goods and institutions. Government has a regulatory role, a catalytic role

8

and coordinating role. The minimalist role is a not efficient especially for developing countries, because in most successful developing countries government has played an essential role.

Conclusion:

The quantity and quality of growth are inextricable for Africa to generate economically and environmentally sustainable, widely-shared development. That also implies decent jobs and cities. This also means that government should acquire and utilize capabilities for interventions, especially of industrial policy variety. Lastly, since we have learned a lot about how to manage and minimize risks of government failure the role of government should be managed more prudently.

Yaw Ansu – Macroeconomic and Trade Policy Responses to the Commodity Price Collapse and Economic Transformation in Africa- Back or Forward to the Future?

Learning from the mid 1980 crisis in Africa and the structural adjustment programs that followed. The analyses focused on the changes in major economic variables (GDP growth, gross debt, current account deficit, exchange rate, etc) before and after the commodity burst in 2011. With most countries in the sample analyzed showing very poor current account balance (e.g. Ghana and Nigeria). Macroeconomic policies in response to the burst centered on text book economics—exchange rate devaluation.

Given that Africa is a commodity dependent economy, they have followed conventional economic theory (exchange rate devaluation) to transform the economy and this approach is a necessary but not sufficient to achieve a full transformation going forward. A more holistic approach should be taken to achieve a full transformation – role of government.

Discussion:

The discussion again focused on government role. There was a consensus on the issue that exchange rate devaluation following the commodity burst was important and necessary. A point was also made that after the crisis in Africa in the 80s, the same textbook policies were enacted and this did not help the economies that were affected. This last point underscored the fact that government should take a leading role in such situation. Government action if effective can mitigate some of the inefficiencies in the textbook solutions. Specifically, good governance and policies can complement the textbook actions such as exchange rate devaluations.

Session III: Sustaining Growth and Transformation after the Commodities Boom (B)—

Structural and Industrial Policy

Celestin Monga, Antonio Andreoni, Haroon Bhorat, Akbar Noman

Celestin Monga – Growth without Preconditions

A few examples of true structural transformation were made to highlight how Africa has been lagging in this aspect of economic development. Countries considered in this example were China and South

9

Korea. These examples showed how African countries have seemingly been retrogressing. The main argument that followed was that manufacturing has transformed several economies—China and Taiwan for instance— and it is still relevant today to help African economies to achieve unprecedented growth like China did. This has however not been the case because policymakers have instead focused on the agriculture sector. They argue that over 60 percent of the population in sub-Sahara Africa is employed in agriculture and agriculture related sectors hence focusing more resources in this sector can help combat economic problems like unemployment. The presentation’s main highlight was that, this focus on agriculture is fundamentally flawed and for Africa to see rapid, quality transformation and growth, resources should be focused on manufacturing and not agriculture. Another issue addressed was how African countries have been ranked poorly in corruption and the fact that growth has been “tied too much” to economic success. Several countries that are poorly ranked in terms of corruption have seen very high and quality growth (e.g. China, Taiwan). Meanwhile, countries with good corruption index have seen slow and sometimes have even recorded poor growth with the exception of the Scandinavian countries. In conclusion, the point was made that manufacturing is still relevant to achieving high quality economic growth in Africa despite the recent worldwide shift toward the service sector. Furthermore, it is important to control corruption but to use it as a prerequisite for growth can be misleading in several ways.

Antonio Andreoni – A Generalized Linkage Approach to Local Production Systems Development in the Era of Global Value Chains, with special reference to Africa

Highlights:

Refocus the discussion from global value chains to local production system development Quality of growth in Africa critically depends on the cumulative processes of increasing value

addition and collective learning through linkages, coupled by strategic integration into global value chains

South Africa has increasingly been integrated in the global economy through global value chains (GVCs), in particular through transnational corporations. This has been referred to as a new model of industrialization, a “value chain-led” industrialization, which occurs by moving away from the export-led system or the import substitution model. By taking this approach, the idea is to specialize in a certain task and then try to link into a global value chain. However, the results have not been very encouraging, as production system in the country is not really transforming.

Often, this value chain integration does not lead to significant transformation. The value addition from simple GVC integration is not increasing the industrialization capacities of countries. Clothing is really the only sector in which value addition has been consistent. Industrial capacity is not increasing and many times countries are deindustrializing, or participating in these global value chains in very low positions.

In order to understand this, it is needed to move beyond the aggregate feature and look at the articulation of production systems at global and local levels. A much clearer picture emerges when we

10

look at sector-specific value chains and its configurations, then match this information with the knowledge of the local production system.

Local production systems are much more than their vertical relationships within the value chain, there are linkages that cut across sectors or companies of different sizes. Production systems can take different forms and experience different types of value addition.

There is a process of integration in the GVC that produces linkages, but there are linkages that occur mostly due to the learning effect. The learning effect has been very visible in specialized companies, which learn across a number of technological domains and transfer all this information and knowledge across different sectors.

When the economy is changing qualitatively and production systems really transform, we start observing linkages that cut across sectors and value chains. There are more subcontracting relationships that generate value, which at the same time are vectors for technology and learning.

Development of production systems occurs as a result of these linkages, leading companies to scale up. Companies which operated with transnational corporations, manage to reach the international market themselves, or companies that operated primarily in the domestic market become competitors in the regional market.

One of the problems observed is the impediment of the small and medium producers to obtain value. The profit margin acquired by the “bottom of the chain” is really not the same as what the retailer acquires. This means that participation in the value chain does not really mean quality of growth. Thus, scaling up and linking up are necessary to increase productivity and increase profit margins.

Policies should emphasize scaling up, but the transformation really occurs when employees master the technologies they are working with. More emphasis on reaching certain quality standards is a critical point to achieve, as well as a focus on the regional market instead of global market. Intra-continent trade and regional actors can create great opportunities for learning and drive the economy successfully.

Lastly, critical intermediaries have been crucial in the history of development stories in several countries. Public technology intermediaries for example, in Africa, are not connected to the private sector and are failing to help create linkages and value addition.

Haroon Bhorat - The African Manufacturing Malaise: Nature and Determinants

Highlights:

Core of paper is to utilize a new method of analysis, based on both the notion of economic complexity and the use of product space networks

This new method allows us to understand manufacturing and structural transformation in Africa, giving further insights into opportunities for growth

Filling in production gaps to enhance economic complexity

The development path of Asia has manufacturing at its core. The movement consisted of an erosion in the agricultural sector, with high productivity and employment growth in manufacturing.

11

The trajectory of development in Sub-Saharan Africa has been quite different. An erosion in agriculture was also present, but only with a partial transition to manufacturing, still with very little productivity and little employment growth. At times, no productivity growth was experienced, but large gains obtained in wholesale and retail, as labor movement grew in the formal sector after the erosion of agriculture. The growth spurts have been mainly driven by mining, resource extraction and the commodity boom. Some nations in Africa have high GDP per capita, but have low economic complexity. These are usually the “resource-cursed economies”. There are many countries who have manufacturing abilities, but still not the economic complexity, as the product space has not been taken with next-level goods.

Highly diverse, sophisticated economies are often correlated with high GDP per capita. Economic complexity is related to both ubiquity of products and diverse activities in product space. The process of filling in production gaps requires other levels of knowledge and industry, which leads to value additions. Through this process, the economy gains complexity by building capabilities in different sectors and filling in production spaces.

A good example is the move from cocoa extraction to chocolate production. In order to move from cocoa extraction to the production of chocolate, capabilities must be added, such as facilities and engineering expertise. The movement in product space is what allows companies to scale up.

This new method of analysis brings new insight into possible shifts in productivity, manufacturing capabilities and economic complexity, enabling us to find new opportunities for growth in Africa.

Akbar Noman - The Blue Economy and Economic Transformation in Africa

Highlights:

Aim towards sustainable growth practices in tourism, ocean mining agreements The blue economy concerns extend the debate on public goods and global governance rules

Recently, the African Development Bank organized a meeting focusing on the blue economy and its implications in the economic transformation of Africa.

While there is no widely accepted consensus, the blue economy has been defined as the integration of ocean economy development, principles of social inclusion, environmental sustainability and innovative dynamic business models. “Blue growth” has also been cited as an associated term, which relates to the issues of waste disposal and sustainable growth around the utilization of ocean resources.

The concept of the blue economy and its concerns have been recently addressed in high profile conferences and were included in the latest G-7 agenda. The efforts to highlight the blue economy as an important topic in policymaking have been growing rapidly.

Although not entirely evident, the blue economy may be a game-changer and may present an additional opportunity for growth in Africa. The implications of the blue economy in Africa involve several levels of investment and sustainable policies, which create an extension on the debate around public goods and constraints for economic growth.

12

Further defining the blue economy may aid in the articulation of legal standards and global governance rules, in regards to sustainable development. Some of the present concerns involve ocean mining and deep-sea mining investment agreements, which may need to be re-negotiated in favor of sustainability.

Overall, the concerns around the blue economy reflect many of the same concerns in other areas of development. These factors only reinforce the need for strengthening sustainable growth strategies and continuing the discussion on global governance rules.

Discussion:

The discussion centered mainly on the role of government. Few points were made in regards to the fact that manufacturing sector is experiencing slow growth—i.e. the marginal gains in productivity in the manufacturing sector is slowing down. This nonetheless, did not discount the importance of the role of the manufacturing sector in Africa.

Session IV: Environment/Climate and Africa

Ben Orlove, Go Shimada

Ben Orlove – Framing Climate Change Adaptation in Africa: Examining Cases, Examining Metrics

Highlights:

Importance of attaining a different narrative in the climate change debate Different questions involved in climate change adaptation

The element of framing a narrative in climate change is very important, as it affects the efforts in mitigation of damages and adaptation to new paradigms. Currently, the climate change narrative seems to be getting worse, shifting towards the unpredictable and disastrous aspects, making it even harder to frame a comprehensive narrative.

Many questions emerge from the reflection on climate change. Questions of scale in temporal and spatial dimensions, also seem pertinent. Should climate change be studied at a global or national level? Different types of adaptation responses are required in the medium and long term. It may also be worthwhile to investigate the differences in climate change adaptation at the local or regional levels.

Adaptation to climate change: financing adaptation, important point. Responding to changes that have already occurred in urban and rural areas. Addressing the impacts of climate change, effects of increased drought, food security, and health concerns due to outbreaks linked to climate change. Indigenous knowledge is just as important about soils and crops, which may improve adaptation. Adaptation financing activities should not be reduced to projects, which are temporal and adaptation is much longer process.

13

Low-carbon energy scenarios for Africa: hydropower, solar, transportation (other patterns of mobility), which could represent different opportunities of growth for Africa. The relationship between adaptation and development might be an amazing way to frame development initiatives.

Tracking of performance against climate change issues is also another factor in consideration. The SDG 13, for example, addresses climate change directly; however, the indicator is not very clear. The AfricaAdapt project is a very useful tool to analyze and examine data on the impact of climate change in Africa, tracking different countries for vulnerability, with graphs and quantitative information, as well as number of adaptation projects.

Go Shimada – No Longer the Black Swan: Impacts of Rising Natural Disasters and Environmental Issues on Agriculture and Economy in Africa

Highlights:

Natural Disasters are no longer black swans, as they have been rapidly increasing in Africa Hard to assess economic impacts of natural disasters Increased need for preventative measures and establishing environment as a priority

Data indicates that Africa is experiencing an increase in natural disasters, which tend to be related to climate change. Regional distribution of natural disasters shows Eastern Africa as most affected. Because of climate change natural disasters increase and the cyclical damage cannot be stopped.

The impacts of natural disasters on the economy are hard to define, since there is very little data available on the topic. Some of the emerging facts show that disasters expanded agricultural land and decreased forest area. Agricultural production remained the same, as disasters expanded agricultural land. A decrease on household consumption was observed, but no impact on GDP.

In the 1950s and 1960s, Japan experienced severe diseases due to environmental pollution, which means pollution could be an issue even in countries with low GDP per capita. Social costs and loss cannot be compensated for, so preventative measures must be implemented in Africa.

Environment issues tend to rank low on the list of governmental priorities for development. Perhaps, these issues should be seen as an opportunity for sustainable growth. Africa could enjoy a “late-comer’s advantage”, by starting off with more efficient energy technology.

Discussion:

Rich countries outsourced pollution by outsourcing low value/high pollution, this is what explains the GDP per capita. Low growth -high pollution and high growth-low pollution, achieved through outsourcing. (Fioramonti)

Local and regional pollution, health effects and global pollution have been part of a long legacy of the UN process to better tackle environmental issues. Significant improvement in remotely tracking emissions, through satellite technology, will assist in the analysis and evaluation of

14

pollution effects in different countries in Africa and help determine the needs for adaptation. (Orlove)

Diversifying should be a priority, especially in climate change mitigation. (Kanbur)

Session V: Africa and New Global Rules for Trade, Finance and Aid

Akio Hosono, Elizabeth Asiedu, K.S. Jomo, Antonio Andreoni and Isabel Estevez

Akio Hosono – Strategies and Effective Approaches for Transformation with Quality of Growth

Highlights:

Quality of Growth in APEC Growth Strategy: Balanced – Trade-offs, synergy, priorities, macroeconomic balance and fiscal balance. Inclusive- addressing poverty trap, jobs and inclusive development. Sustainable- green growth Innovative – resolving the middle income trap Secure – Human security

Several studies have focused on the aforementioned and some preliminary relationship between quality of growth and transformation have been shown (examples includes work by ACET, Asia Development Bank, etc.). Transformation led growth is essential for quality growth hence in Africa, transformation is emphasized:

Changing endowment transformation led growth and when the quality of growth is high it can lead to learning, inclusive society, sustainable society and resilient society can feedback into growth and “quality” growth– commodity boom is more on the peripheral. This can however lead to fiscal revenue.

Strategies of transformation and quality growth:

Learning as emphasized by Joseph Stiglitz and accumulation of knowledge and capabilities as fundamental endowment. This coincides with JICA comprehensive solution in to support the development of student’s basic academic skills (e.g. SMASSE Kenya, Strengthening of Mathematics and Science in Secondary education, started in 1999, Skill based management) – Quality of Basic Education

Inclusive Business of BOP, by BOP and for BOP alongside value chain. Including poor people in the value chain for instance. Including micro enterprises and SMEs in the value chain in the process of transformation, this can be achieved through learning and capacity building ecosystem. This then suggests that finance for SME’s is crucially for growth in SSA. (Example, Fab labs JICA and SolidWorks supported Fab labs in Rwanda)

Importance of SME’s in global value change.

Concluding remarks:

15

An effective strategy for transformation with quality growth (especially, inclusive and innovative growth) is to create strong nexus in the quality of education and learning and inclusive business—SMEs development as well as participation in global value chains, participation in regional integration with corridors development. Other inclusive growth initiative by international cooperation can play a catalytic role in achieving this.

Elizabeth Asiedu - Foreign Direct Investment to Sub-Saharan Africa

Foreign direct investment (FDI) to SSA is concentrated in natural resources, in particular oil. For example, about 40 percent of FDI to SSA go to the top four oil exporting countries: Angola, Equatorial Guinea, Nigeria and Sudan. It is therefore not surprising that the decline in oil prices has led to a significant reduction in FDI in these countries and therefore FDI to SSA. To the extent that FDI promotes growth, one of the challenges facing countries in SSA, and in particular the oil-exporting countries, is to find ways to attract FDI in non-extractive industries. In analyzing this issue, it is important to note that extractive-industry FDI is mainly driven by access to natural resources in host African countries. In contrast, non-extractive-industry FDI is sensitive to the conditions in host economies—such as the size of the local market, quality of physical infrastructure, productivity of the labor force, openness to trade, FDI policy, and the quality of institutions. Furthermore, attracting FDI in manufacturing and services is extremely competitive-most SSA countries cannot “set the rules” and indeed, may have to provide incentives for foreign firms to operate in their countries. I plan to use data from selected countries in SSA to make this point.

K.S. Jomo

Highlights:

African Development experience and prospect Economic liberalization in Africa has focused on domestic determinants of economic

performance with very little focus on external factors. Moreover, anticipated Washington Consensus since 1980 has focused on liberalization of trade, finance, investment and other flows, but not labor.

The policy space:

International organizations like the IMF and World Bank have short-term stabilization programs and medium-term structural adjustment programs that contained policy conditionalities. There hasn’t been any real reduction in conditionalities due to ‘bunching’, renaming.

Retreat of African states:

Economic liberalization led to marketizations, deregulation and privatization and not small open economy reforms. These economies have focused less on good taxation policies hence less taxation and less progressive taxes. The conditions imposed by world/international organizations has also led to reduce fiscal capacity of governments in Africa – less government (especially economic and social) spending and reduced government role. Lastly, aid flow focuses more on MDG-goals and neglects enhancing productive capacities and capabilities. All this has contributed to the retreat of African states.

16

Several economic indicators ranging from GDP measures (e.g. GDP per capita and GDP growth volatility) to education measures (e.g. Primary and Secondary School enrollment) showed that Africa as a region had the lowest rates in these measures.

Isabel Estevez: New Global Rules, Policy Space and Quality of Growth in Africa (co-authored with Ha-Joon Chang and Antonio Andreoni)

The problem of ‘global rules’ is placed in a historical context and analyzed in ways in which these new global rules affect the quality of growth in developing countries.

Global rules are understood as political-institutional mechanisms affecting processes of value creation and appropriation at the global level. In particular, by facilitating the tendency toward concentration and shrinking the policy space, especially for developing countries entering the new globalization post 1980.

Summary:

Unequal treaties by developed countries on weaker countries and essentially deprived these countries of the right to set their own tariffs (tariff autonomy), which has made it almost impossible for them to use infant industry protection. Moreover, there has been the concept of “most favored nations” (MFN), which has enabled all countries that signed (unequal) a treaty with a weaker country to get a more favorable treatment, if one of them manages to extract it.

Discussion:

Should the focus be LDCs vs Developed countries or should the rhetoric instead focus on the global issues? Capital vs Labor? Workers’ rights are not leading to improvement in wage distribution. Global capital vs Global labor, the global politics that drive these global capital flows is also tied in by in-country politics. (Kanbur)

Argument against the LDC vs Developed countries, if one looks at the past decade the countries that have done well in terms of growth have been the global 1% and the upper middle income groups in China and India while the groups that have not done so well have been the lower middle income in the U.S and every other group.

Session VI: Employment (Rural and Fragile States)

Christopher Cramer, Christopher Blattman

Christopher Cramer - The quality of growth with unlimited supplies of labor

Highlights:

17

Wage employment is far more prevalent than commonly acknowledged. Agricultural wage workers are extremely poor. There is no evidence that ‘interventions’ like Fairtrade certification, improve conditions for wage

workers.

If we are interested in structural change that emphasizes quality then there should be focus on agriculture. This is in contrast with the manufacturing argument. Ethiopia for instance does not depend on natural resources and instead depends on agriculture. Hence, the fact that in urban and small-town Ethiopia it takes a long time for wages to adjust to price hikes, is problematic. Furthermore, in coffee growing areas in 2010-11, there was no evidence that rural wage workers can bargain to maintain real wages when food prices spike. Some highlight findings include,

Some policy responses to mitigate some of these findings include: (i) Direct labor market interventions (this policy is particularly to monitor but not useless) (ii) Indirect measures to tighten labor market (iii) support for agricultural investment (iv) Capturing the gains of the industrialization of freshness.

Christopher Blattman - Generating employment in poor and fragile states: Evidence from labor market and entrepreneurship programs

Industry (manufacturing) will be a huge source of job growth; however, in the short and medium run this is not a mass employment strategy for the youth bulge. Active labor market and entrepreneurship interventions have an important role to play in this. It is however difficult to find programs that raise the poor level and productivity of current work, or access new occupation. Particularly, it is hard to find examples of skills training (business or vocational) that pass the cost-benefit test. Similarly, it is hard to find examples of poverty alleviation at existing interest rates and transaction costs.

Some countries have however taken steps to train poor youth. For instance, Colombia has 3 months vocational training plus 3 months on the job training for poor youth—this has reached 80,000 unemployed young people between 2002-2005. These training programs do not always have positive impacts on men but can have positive impacts on women. Examples include Dominican Republic, Turkey and Malawi.

How does informal employment compare to these manufacturing jobs? Do most poor people want to be entrepreneurs? Five industrial firms (manufacturing) pay less than informal sector, carry serious health risks so essentially at the prevailing wages and working conditions, informal work is preferred. Moreover, people use the industrial jobs as a safety net – used during informal unemployment spells and most people quit within weeks.

Some implications: A shift to more capital-centric interventions

At the early stage of industrialization, industrial jobs may not be as desirable and equalizing as the alternatives.

Among the poor youth, the returns to capital in self-employment appear to be high. Long term, access to capital means increasing the affordability and access of investment finance

for small enterprise. Skills training intervention, where most of the money goes, are hard to get right.

18

Tuesday 7 June

Session VII: Poverty, Inequality and Employment

Andy McKay, William Baah-Boateng, Moazam Mahmood, Masumi Okamoto, Simon Roberts

Moazam Mahmood - The Quality of Growth and Jobs in Sub-Saharan Africa

GDP growth has been led by services, followed by manufacturing in lower range.

GPD growth in SSA, led by exports. This pattern of growth contrasts with Asia pacific, which has been leading by investment rather than exports. Increasing and very high import dependency. GDP growth mimics commodity prices. This pattern of commodity-led growth leads to Dutch disease effect.

Productivity growth is weaker and gap increasing from 39% to 32%. Kaldor effect. Labor force growth about 3% and employment growth about 3%, employment growth determined by labor force growth determined by demographics.

Unemployment: skeptical about unemployment for SSA. With crisis, huge drop in GDP growth, but don’t see a response in unemployment yet. Unemployment figures not a good measure of distress in labor force because of condition of working poor, who lack social protection, so cannot afford not to work. Compelled to accept any kind of work no matter how onerous, not even informality, conditions and hours worked worsen. Unemployment figures for youth roughly double, but ratio of youth to adult unemployment remains unchanged. Broad metric is not sensitive to this.

A second indicator of job quality is vulnerability, which has decreased very little from 73% to 70%. Measure of people moving from some categories of jobs to other categories of jobs.

Vulnerability criteria consist of 2 categories: unpaid contributing family workers. Reciprocal of vulnerable employment is wage employment. At a statistical level, wage employment seems to be better than unpaid family work or self-employment. Contributing family work is so bad because of gender gap. Women’s share of unpaid contributing family work, 1/3rd of their total jobs and double that of men. Women have less of a share in wage work as well. Decomposing poverty into:

Demographic drag: poor have huge demographic gap. Poor have large number of dependents, so need to be given more support

High unpaid family work, low waged work: Poor contributed very strongly to unpaid family labor. Non-poor have better access to wage employment. Poverty alleviated far more by access to wage work. Poor tend to be largely in agriculture and have lower access to higher productivity sectors like industry and services. Poor have lower access especially to manufacturing and trade. Income gap per year to end poverty is approximately $38bn for $1.90 for SSA. Income gap as share of expenditure is huge for SSA. Consumption, export-led, investment-led growth and balance needed between these drivers of growth.

Andy McKay - The UNU-WIDER Growth and Poverty Project (GAPP)

19

Context: Africa in the Economist- change in attitudes from 2000 to 2011.

Afrobarometer survey: “Poverty remains unchanged at grassroots level”

Country case studies from 24 most populous countries in SSA. A lot has been achieved, but a lot remains to be achieved. African growth turnaround post-1994 and pre-1994, in which child mortality nearly halved. Child malnutrition reduced, though still the highest. Access to clean water, but still lowest.

GAPP approach:

Bring together macroeconomic data, comparable household budget surveys, DHS data and host of other information on prices etc. Try to get beyond WDI data, with specific country contexts. Trying to summarize different countries, 4 categories of countries:

1. Relatively rapid growth and corresponding poverty reduction: Ethiopia, Ghana, Malawi, Rwanda Uganda

2. Relatively rapid economic growth and limited poverty reduction: Burkina Faso, Mozambique, Nigeria, Tanzania, Zambia,

3. Low growth countries.

Take 2 examples: Ethiopia and Tanzania. Both have significantly lower GDP per capita than SSA average

Ethiopia- Agricultural Success Plus:

Strong growth performance overall with periodic shock. Strong investment by Ethiopia in agricultural sector. Agricultural development led industrialization policy. Impressive progress in agriculture, modern inputs and big infrastructural improvements. Widespread safety net.

Poverty story poverty fell 46.8% in 2000 to 46% UN 2005 and 23.3% in 2011. Both urban and rural poverty fell sharply. Depth of poverty fell. Increased agricultural production. Improvements in non-monetary indicators: infant mortality, malnutrition etc.

Tanzania- reconciling macro and micro:

Investment important factor behind growth. Government spending, but slower growth in consumption. Population growth, slow growth in agriculture, food price increases.

Poverty reduction is much slower. National head count 39% in 1992/3, 34% in 2007, 28% in 2011/12/ Very low responsiveness to growth using macro measures but not using micro data. Household real consumption increased relatively little. Non-monetary indicators show a better record.

Findings: SSA markedly better than 20 years ago, but progress not even.

Outstanding challenges- global demographic projections, fast population growth, structural transformation slow, jobs and employment creation lagging. Agriculture not performing particularly well.

Some research issues moving forward:

1- Difference in performance of non-monetary indicators compared to monetary ones. In most

20

countries, improvements in non-monetary indicators than monetary measures of poverty. Monetary measures extremely sensitive to what you happen to measure. Employment is key here.

2- Inequality. Many successful cases are areas where inequality increased e.g. Ghana. SSA region of world with second highest income inequality. Nigeria remains an enigma- partly a problem of data, needs to be understood better.

William Baah Boateng – Job Creation Response to Growth: Some Insights from Ghana

Introduction: Ghana as an African lion based on growth. Ghana has been one of the good performing countries with strong growth averaging over 7% over 2007-2015. Rebase of national accounts in 2007 pushed the country to join the ranks of the middle income countries. Growth reached 14% on back of commercial production and export of oil in 2011. Quality of growth questioned especially in light of unemployment.

Growth and changing sectoral share of GDP. Ghana is a positive growth story. Agriculture dropped to 22% of GDP. Services contributes about 51% OF GDP. Shift from agriculture to services. Largest contribution to industrial output is construction. Employment to population ratio figures have decreased from 80% in 1984 to 75% in 2013.

In terms of quality of employment, vulnerable employment is slowing going down. Productive employment or wage employment and self-employment with employees has slowly gone up between 1984 to 2013 from about 21% of 29%. Unemployment is quite low at 5.2%, but this is because of definition of unemployment. By level of education, youth unemployment rate is higher for educated people. The educated (tertiary) don’t want to go in the informal sector after years of education. Informal sector is used more by uneducated people.

Poverty: Ghana has done well in terms of reducing poverty, but inequality is rising. Heterogeneity in poverty figures by region. Employment growth lags behind economic growth. This is because of source of growth. Social protection measures instituted in Ghana in 1990s. Employment elasticity of output somewhat inelastic in Ghana. Lower job creation response because growth driven by extractive industry. Few jobs created are mostly in the informal sector with degree of vulnerable employment

Masumi Okamoto - Mental Health for Quality of Growth in Africa

Definition of mental health: State of wellbeing in which every individual realizes his or her own potential, can cope with normal stresses of life, can work productively and fruitfully and is able to make contribution to his or her community (WHO, 2014).

Commission on the measurement of economic and social progress in the 2013 OECD, with a shift from measuring economic production to measuring people’s wellbeing. Measures of wellbeing should be put in a context of sustainability. (Stiglitz et al 2013)

WB_IMF spring meeting 2016: Investments in mental health important - cost benefit analysis shows investments beneficial.

21

Facts of mental health:

Life time prevalence of mental health problem estimated to be about 25%. Those with mental problems tend to unhealthy behaviors like poor diet and physical inactivity, contributing factors to cancer, obesity and diabetes. Mental health problems can be cause of diseases and disability.

Mental health status and suicides are highly related.

People with mental health problems also likely to have lower educational attainment, lose their job and face difficulty in finding a job.

Conflicts and natural disasters impacts in SSA. Conflict experience triggers symptoms of PTSD, anxiety and depression and hampers trusting people and learning skills. Violation of human rights of people with mental health problems in SSA is a problem as well.

Financial and human resources care for mental health is very limited in SSA. Average expense of mental health is $1.53 in low middle income countries.

Investment of $1 for mental care can produce $4 in the future as return.

Simon Roberts - (Re)shaping markets for inclusive economic activity: Competition policy as an instrument to combat rising inequality?

Supporting performance based competition. Competition accelerates and growth. Stimulating investment in capabilities, learning, rewarding effort and creativity.

Competition issues: competition policy and competition law. Rules of the game, links to patents, intellectual property.

Consider markets relating to agriculture and agro-processing. Why is competition not working in agriculture? African countries almost all importers of fertilizer. US gulf price. International benchmark price. Fertilizer use is very low in many of these SSA countries- e.g. Zambia, Malawi etc. So low, looking at fertilizer subsidies for farmers, e.g. in Malawi.

Fertilizer price composition supply Mbeya, Tanzania, maverick company comes in and drove down prices in Tanzania. Concentrated markets, lead to formation of cartels. Prosecution of cartels in Southern Africa. Control over port and logistics facilities. Big push to develop fertilizer markets. Fertilizer subsidy program had price higher than competitive price would be, very generous subsidy program in Malawi.

Agricultural commodity trading. Local trading interests and very big trading interests penetrating rapidly into these countries. Commodity markets established to undermine local trading markups, perhaps should increase price transparency to farmers?

Infrastructure, storage and transport costs within regions are critical to margins, access and control. Dealing with price volatility and implications of global warming implies need to manage markets.

Agro-processing:

Investment in learning and capabilities. Substantial economies of scale and scope. For example, the

22

poultry: animal feed production, transport, breeding stock. Investments in production and processing. Seeing import penetration into African countries in many countries instead of developing local industries.

Barriers to entry to local participants? Investments required for capabilities. Coordination of key inputs. Appropriate industrial and trade policies needed.

Retail: Supermarkets and rapid urbanization, expanding chains. ShopRite, Wal-Mart, Nakumatt, retailers in South Africa. Retailers integrating the region. Concentration and arrangements associated with space and distribution.

Implications and agenda: Address barriers to entry, in order to generate competition and support participation. Alternatives? Japan and South Korea? Analyze bargaining power in industries, along with industrial policies.

Session VIII: Urbanization

Takyiwaa Manuh, Luc Christiaensen, Tony Venables, Gabriella Carolini

Tony Venables -

Land values in African cities and investment in land in African cities. Cities are congested, disconnected, fragmented. African cities are high nominal wage but not high real wage.

Takyiwaa Manuh - Urbanization, Growth and Transformation in Africa

Africa’s impressive yet exclusive growth. Imperative of structural transformation. At ECA, when we analyze the imperative of structural transformation, we think about the declining shares of agriculture, rural to urban migration, low birth and death rates, modern industrial and service economy, linked to urbanization. Urbanization one of the most important shifts the African continent will undergo in this century. The way in which African countries manage the process of urbanization will determine whether the continent achieves sustainable growth and development.

In less than 20 years, more than 50% of Africa’s populations will be living in urban areas. 40,000 new urban inhabitants will be added every day between now and 2040.

Urbanization and industrialization in Africa. Consumption cities dominated by non-tradeable services in the informal sector. Urbanization has not moved in tandem with GDP per capita growth between 1980-2014 in Africa.

Urbanization and structural transformation are an asset. Gauging, SA, small area in SA, 40.6% manufacturing outputs and 30% of SA’s GFP. Lagos state, Nigeria, 62% of national non-oil GDP. Nairobi, Kenya, contributes to 20% of GDP

Cities are important centers of economic growth in African countries. Need to see cities as an asset and

23

places of investment, innovation and diversification linked to rural areas and global and regional markets.

Policy anchors: national development planning and urbanization. Industrial policies must be integrated into thinking about urbanization. Urban policies need to factor in industrialization.

Luc Christiansen - Secondary Towns and Poverty Reduction: Refocusing the Urbanization Agenda

World is urbanizing. Africa’s urbanization is rabid. Twice as fast as Europe. Africa’s urbanization is highly concentrated in a few cities. 2/5 of Africa’s urban population lives in big cities (over 1 million). Over 40% lives in small towns (<250,000). And becoming increasingly concentrated. Big cities growing at 6.5%

Hypothesis:

A shift in public investment towards secondary towns will improve poverty reduction performance.

Hypothesis raises many questions:

1. What is the dichotomy between secondary towns vs big cities?

2. What is the evidence for contribution of secondary towns vs cities to poverty reduction?

3. What are the economic mechanisms for such a differential contribution and how does policy interact with them?

Poverty gradients and poverty reduction:

Evidence on poverty reduction? Rural-urban gradient, gradient well known at least as far as Kuznets (1955). Incomes lower in rural areas vs urban areas. Much less information on within urban gradient by size of agglomeration. Static way: move people to cities to solve poverty (wrong way).

Another way, is more dynamic way of thinking of this. What can we say about the 3-way split? Small town, city. Growth of secondary towns seems to have large direct and indirect effect on rural poverty than does big city growth. Cross-country evidence, seems to be additional effect on poverty reduction of moving to secondary towns.

Inequality associated with agglomeration in megacities according to data. Metropolitan agglomeration associated with faster growth as well. Evidence from case study - town migrants contribute more to poverty reduction than migrants to cities because they are many more.

Mechanisms and policy:

Economic mechanisms - what are the mechanisms? How does policy interact with them? A shift in public investment towards secondary towns from big cities will improve poverty reduction performance. Question not easy to answer and not satisfactorily tackled in the empirical or theoretical literature.

Location decision of the firm- labor demand, equilibrium models of agglomeration. Typically not focused on distributional questions but they do have conclusions about potential inefficiency of cities compared to towns. Role of government in this picture- can government influence this, or is this pure economics?

24

Gabriellla Carolini - Understanding the Nature of the Urban Bottleneck

What we know is needed for quality urbanization in Sub-Saharan Africa (SSA):

1. Urban planning capacities, investment in infrastructure development, public financial reform. So why doesn’t this actually happen? Slum dwellers in urban populations by regions- millions in SSA. Defining slums. Lacks one or more of durable housing, adequate accessible affordable war, sanitation, sufficient living space (not more than 3 people sharing same room), security of tenure that prevents forced evictions

SSA cities have worst regional deprivations. Some countries have seen increases in proportion of urban pop living in slums since 2000. Focus on Mozambique for talk. Plans for cities are for housing complexes, not slum dwellers. How infrastructure gets built- convenience planning, reactive not proactive in Mozambique. Budgeting and finance is a problem.

2. Lack of project level coordination- sanitation projects, no coordination or projects in sanitation sector

3. Conveniently archaic data management system on land- cadastral updates are still lagging.

Reforming municipal public finance needed. Also lack of reform in municipal finance, means cities like Maputo missing out on value capture. Eg. Sao Paulo, Brazil: auctions rights to building and millions of dollars. Not happening in African cities, need more own source financing.

Moving forward, coordination is needed within development industry at project level in cities, as well as improved land administration and management.

Workshop Closing and Next Steps

Joseph Stiglitz, Akbar Noman, Ravi Kanbur, Go Shimada

Joseph Stiglitz - Concluding Remarks

What’s new about thinking about growth? Beginning to understand that some of the ideas that shaped development thinking in the past are not fully adequate. There is no longer a defense of the Washington consensus, very few people who would defend it. Recognize that our understanding of development has changed. Reality of global economy has changed. Africa is one area where there is rapid economic growth along with demographic problems, the question is about how to improve job growth. Reality of urbanization. Environmental externalities are also important to think about differently in the African context. Africa clearly embedded in global economy and the global rules are always changing, but not always to advantage of Africa. How does Africa fight for rules it wants and adapts to disadvantageous rules, at the same time?

New set of instruments and old instruments revived: industrial policy, competition back on the scene. Urban-rural migration should be considered in design of cities. Important to be careful with interpreting micro studies using reduced form approaches to empirical work. Elasticities are result of policies and

25

whole object is to design policy to change these elasticities. Exciting set of interesting papers, what are our objectives, in regards to sustainable development. Africa, as different from other continents in very discernible ways due to a different context from other regions of the world. Important to adapt lessons from East Asian context to a new world.

Akbar Noman – Closing Remarks

What further work should be brought into the program/taskforce?

Go Shimada – Closing Remarks

Thanks to all participants!

Ravi Kanbur – Closing Remarks

What’s important and what’s new. Global rules and how they affect Africa. Urbanization, climate change and older issues on employment, etc. Exogenous trend of labor displacing technology and what are the effects of this, how to frame the debate an important old question put into a new form.

26