EQuIP Enhancing the Quality of Industrial Policies
Inclusive Industrial Development
A Tool to Help Integrate Quality Employment Generation and Poverty
Alleviation Considerations into Industrial Policy Formulation
Amanda Janoo UNIDO – Industrial Policy Advice Unit
EQuIP Enhancing the Quality of Industrial Policies
“Industrial Policy is back on the agenda. It is now widely accepted that those
countries that managed to catch up with the old industrialized, high-income
countries are the ones whose governments proactively promoted structural change, encouraging the search for new business
models and markets and channeling resources into promising and socially
desirable new activities”
Industrial Policy
Tilman Altenburg
EQuIP Enhancing the Quality of Industrial Policies
Context for Tool Development
1. Simple and intuitive
2. Designed for analysts in low-income countries
3. Non-prescriptive
4. Compliment other tools
5. Concept rich
EQuIP Enhancing the Quality of Industrial Policies
“Inclusive growth…allows people to contribute to and benefit from economic growth. Rapid growth is unquestionably necessary for
substantial poverty reduction, but for this growth to be sustainable in the long run, it should be broad-based across sectors , and inclusive of the
large part of the country’s labor force. This definition of inclusive growth … captures the importance of structural transformation for economic
diversification and competition, including creative destruction jobs and firms”
- Ianchovinchina & Lundstrom
Inclusive Growth
EQuIP Enhancing the Quality of Industrial Policies
Inclusive Industrial Development
What information can help low-income
countries to promote a process of structural
change which generates broad-based quality
employment and alleviates poverty?
EQuIP Enhancing the Quality of Industrial Policies
Tools in Practice
EQuIP Enhancing the Quality of Industrial Policies
EQuIP Enhancing the Quality of Industrial Policies
Sub-Sector Employment Analysis
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000 Food and beverages
Non-metallic mineral products
Textiles
Rubber and plastics products
Leather, leather products and footwear Chemicals and chemical products
Furniture; manufacturing n.e.c. Wearing apparel, fur
Printing and publishing
Fabricated metal products
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Other
Fabricated metal
products
Printing and publishing
Wearing apparel, fur
Furniture; manufacturing n.e.c.
Chemicals and chemical
products
Leather, leather
products and footwear
Rubber and plastics products
Textiles
Non-metallic mineral products
Food and beverages
EQuIP Enhancing the Quality of Industrial Policies
MVA Growth
Employment Elasticity
Positive VA Growth Negative VA Growth
ε < .2 (-) employment growth
(+) productivity growth
Jobless Growth
(+) employment growth
(-) productivity growth
Unproductive Employment Growth
.2 ≤ ε ≤ .5 (+) employment growth
(+) productivity growth
Moderate Productive Employment Growth
(-) employment growth
(-) productivity growth
Dying Sectors
.5 ≤ ε ≤ 1 (+) employment growth
(+) productivity growth
High Productive Employment Growth!!!
(-) employment growth
(-) productivity growth
Dying Sectors
ε > 1 (+) employment growth
(-) productivity growth
Unproductive Employment Growth
(-) employment growth
(+) productivity growth
Jobless Growth
Interpreting Employment Elasticities
EQuIP Enhancing the Quality of Industrial Policies
Sub-Sector Employment Performance
EQuIP Enhancing the Quality of Industrial Policies
Sub-Sector Wage Analysis
0
200
400
600
800
1000
1200
1400
1600
1800
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Wag
es/
Emp
loye
es
(USD
/Pe
rso
n)
Wage Trends in Select Sub-Sectors Relative to GDP/Capita
Food and beverages
Printing and publishing
Non-metallic mineral products
Furniture; manufacturing n.e.c.
Textiles
Machinery and equipment n.e.c.
GDP/Capita
EQuIP Enhancing the Quality of Industrial Policies
Interpreting Wage and Productivity Trends
EQuIP Enhancing the Quality of Industrial Policies
Informal Sector Analysis
3%
88%
1%
1% 1%
2%
4%
2001/2 Informal Employment Composition Food & Bev (excluding grain
mill) Grain Mill
Textiles
Wearing Apparel, Dressing and Dying of Fur Luggage, Handbags and Footwear Wood Products
Paper Products
Publishing & Printing
Non-Metallic Mineral Products
Fabricated Metal Products
Parts and Accessories for Motor Vehicles Furniture
3%
57%
1% 3%
1%
2%
9%
0%
0%
24%
2007/8 InformalEmployment Composition Food & Bev (excluding grain
mill) Grain Mill
Textiles
Wearing Apparel, Dressing and Dying of Fur Luggage, Handbags and Footwear Wood Products
Paper Products
Publishing & Printing
Chemicals and Chemical Products Non-Metallic Mineral Products
Fabricated Metal Products
Machinery and Equipment
Furniture
EQuIP Enhancing the Quality of Industrial Policies
Maximizing Poverty Alleviation • Women’s economic empowerment
contributes to poverty alleviation
• Sectors absorbing women and where the gender wage gap is declining
• Low Tech, Labor-Intensive sectors will absorb the working poor
• Balanced and coherent industrial policy initiatives
EQuIP Enhancing the Quality of Industrial Policies
EQuIP Enhancing the Quality of Industrial Policies
Estimating Indirect Effects Food & Beverages
BW Corridor
10% 90%
Food & Beverages 1.06191 1.17430
Agriculture 0.12772 0.76525
Financial Intermediation & Business Activities 0.03074 0.27917
Wholesale Trade 0.01533 0.11164
Petroleum, Chemical & Non-Metallic Mineral 0.01274 0.09959
Transport 0.01425 0.08890
Wood & Paper 0.01341 0.07214
Fishing 0.01170 0.05909
Metal Products 0.00848 0.06294
Electricity, Gas & Water 0.00505 0.04112
EQuIP Enhancing the Quality of Industrial Policies
Textiles & Wearing Apparel BW Corridor
10% 90%
Textiles & Wearing Apparel 1.04613 1.21940
Financial Intermediation & Business Activities 0.07883 0.33076
Petroleum, Chemical & Non-Metallic Mineral 0.04675 0.26216
Wholesale Trade 0.03169 0.13518
Transport 0.02029 0.09633
Wood & Paper 0.01465 0.05802
Agriculture 0.00972 0.20056
Electricity, Gas & Water 0.01054 0.05466
Electrical & Machinery 0.00669 0.04219
Post & Telecommunications 0.00668 0.03550
Petroleum, Chemical & Non-
Metallic Mineral
BW Corridor
10% 90%
Petroleum, Chemical & Non-Metallic Mineral 1.16991 1.36523
Financial Intermediation & Business Activities 0.14872 0.33424
Wholesale Trade 0.04568 0.10339
Transport 0.03569 0.09878
Mining & Quarrying 0.02669 0.13559
Electricity, Gas & Water 0.02798 0.07468
Electrical & Machinery 0.02150 0.04824
Wood & Paper 0.02174 0.04782
Metal Products 0.01830 0.04284
Construction 0.01430 0.03770 Metal Products
BW Corridor
10% 90%
Metal Products 1.18960 1.44846
Financial Intermediation & Business Activities 0.10518 0.29203
Wholesale Trade 0.04329 0.10820
Electrical & Machinery 0.03644 0.08239
Petroleum, Chemical & Non-Metallic Mineral 0.03711 0.08330
Transport 0.03072 0.09571
Electricity, Gas & Water 0.02288 0.07613
Mining & Quarrying 0.00794 0.05010
Construction 0.01301 0.03595
Post & Telecommunications 0.01137 0.03403
EQuIP Enhancing the Quality of Industrial Policies
Strategy Setting
EQuIP Enhancing the Quality of Industrial Policies
• Targets based on past performance
• Estimating inclusiveness effects of economic targets
• Identifying a Role Model
• Setting targets via benchmarking
EQuIP Enhancing the Quality of Industrial Policies
Conclusion
EQuIP Enhancing the Quality of Industrial Policies
EQuIP Enhancing the Quality of Industrial Policies
List of Indicators and Tools Macro Indicators • Sectoral Composition (employment)/Growth Rates
– What is the absorptive capacity of the industrial sector for your workforce?
– Structural change from employment perspective • Illustrative method: bar chart, benchmarking across
time w/ line graphs
• Manufacturing Employment/Total Employment and Growth Rate – How large is the manufacturing sector in terms of
employment? – How is this share changing over time?
• Illustrative method: benchmarking across time w/ line graphs
• Employment/MVA – How efficiently is industrial development generating
employment? • Illustrative method: benchmarking across time w/line
graph
• Wage Bill/MVA – How efficiently is industrial development translating into
higher wages for workers? • Illustrative method: benchmarking across time w/line
graph
• Poverty Rate – How extreme is poverty in the country?
• Illustrative Method: benchmarking across time w/ line graph
Sub-Sector Indicators • Employment composition
- How is manufacturing employment distributed within the sectors?
- How this composition is changing over time? • Illustrative method: Bar Graphs of two different
years
• Average Annual Employment Growth Rates - Which of the manufacturing sub-sectors are generating
the most employment? - how is this changing the composition over time?
• Illustrative method: Table of annual average growth rates and line graph to see fluctuations
• Gender Ratio (female/male employment) - Which sectors are absorbing the most women?
• Illustrative method: Table with average growth of gender ratio
• Employment Elasticity - How much employment can we expect to generated
from industrial growth? • Illustrative method: table which classifies sectors on
the basis of productive employment generation, jobless growth, dying sectors, etc…
• Wage rates/national minimum wage - Are sector wages providing for basic needs?
• Illustrative method: line graphs showing changes over time
EQuIP Enhancing the Quality of Industrial Policies
List of Indicators and Tools Cont. Sub-Sector Indicators • Gender Wage Gaps (Ratio)
– Which sectors are women gaining in economic employment?
• Illustrative method: Table with average growth rate in wage gap over time
• Wage Elasticity of Productivity – How much are the gains of industrial development being
transferred to workers? • Illustrative method: Table which classified sectors on
the basis of high, moderate, low and negative wage elasticity
• Cross-Reference Employment & Wage Elasticity – Are there sectors which are generating high levels of
productive employment and providing increasing wages? • Illustrative method: Sector classification of sectors
which high/moderate employment elasticity and high/moderate wage elasticity of productivity
• Informal Sector Employment – How much industrial employment is being generated in
the informal sector? • Illustrative method: Bar charts of two different years
• Formal vs. Informal Wage Rate – How do wages compare between the formal and informal
sector in the same sector? • Illustrative Method: Create table with ratio’s and
average growth rate
Sub-Sector Indicators • Employment Elasticity of Informal Sectors
– How much employment is being generated from increased MVA in informal industrial sectors
• Illustrative method: Use employment elasticity table to classify sectors
• Technological Classifications – Which sectors are the most/least skill-biased?
• Illustrative method: Use UNIDO technology classifications to categorize sectors the basis of how how tech they are as proxy for labor intensity of sectors/ skill-bias
• Input-Output Ratio – What are the indirect effects of sector
expansion/contraction? • Illustrative method: Use generalized I-O table to
illustrate backward linkages from main manufacturing sectors to other sectors in the economy
EQuIP Enhancing the Quality of Industrial Policies
EQuIP Enhancing the Quality of Industrial Policies
Gender Dynamics
EQuIP Enhancing the Quality of Industrial Policies
EQuIP Enhancing the Quality of Industrial Policies
Informal Sub-Sector Analysis
EQuIP Enhancing the Quality of Industrial Policies
EQuIP Enhancing the Quality of Industrial Policies
Informal Sub-Sector Analysis
0
200
400
600
800
1000
1200
Wag
e B
ill/E
mp
loye
e (
USD
pe
r P
ers
on
)
Informal Sub-Sector Wage Bill
2001 Average
Wage
2007 Average
Wage
EQuIP Enhancing the Quality of Industrial Policies
EQuIP Enhancing the Quality of Industrial Policies
Informal Wage & Productivity Trends
EQuIP Enhancing the Quality of Industrial Policies
EQuIP Enhancing the Quality of Industrial Policies
Informal Wage Output Table
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