walking (stumbling?) on two legs? raphael kaplinsky development policy and practice, the open...
TRANSCRIPT
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Walking (Stumbling?) On Two Legs?
Raphael Kaplinsky
Development Policy and Practice,
The Open University
IEA Conference, Pretoria, July 20120
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Summary
• Framing conditions for Industrialisation in SSA
• Forces of disruption:
– Innovation
– The Commodities Boom
• Policy Implications
• The Political Economy of Policy Design and Implementation
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Framing Condition 1:
Changing economic centre of gravity
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?
VU
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“Is this a V recovery or a W?
I think it’s the latter…
(CEO HSBC Bank, Financial Times, 5th Oct 09)
`
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Perhaps its an
L
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OR, MAYBE
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Back to Centre Stage
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Framing Condition 2:
Distributional outcomes of rapid growth in SSA
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Global growth and global poverty
GDP Growth p.a (%)
Living below $1.25 pd (MDG1) (m)
1990-2000
2000-2008
1988-1990
2007-2008
World 2.9 3.1 1,668 1,329
China 9.9 10.4 724 208
India 5.5 7 414 456
SSA 2.2 4.9 224 355
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Framing Condition 3:
Commodity super-cycle and changing terms of trade
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United Nations Conference on Trade and Development (UNCTAD) monthly average price index, 2000=100 (1960 to October 2011)
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The commodities-manufactures terms of trade (1949-2008)
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Disruption in the innovation trajectory
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Inducements to Innovation
• Demand
• Factor prices and character of infrastructure
• Path dependency and firm trajectories
• Regulatory environment
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Forces of disruption to the innovation trajectory
1. The character of low income markets
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Number of Chinese households, by disposable income, 2004 and 2009
Compiled from http://www.portal.euromonitor.com
020,00040,00060,000
80,000100,000120,000140,000
<1,000 1,000 -2,500
2,500 -5,000
5,000 -10,000
10,000 -55,000
>55,000
Annual Household Income (US $ Constant)
Hou
seho
lds
in '0
00
2004 2009
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Number of Indian households, by disposable income, 2004 and 2009
Compiled from http://www.portal.euromonitor.com
010,00020,00030,00040,00050,00060,00070,00080,00090,000
<1,000 1,000 -2,500
2,500 -5,000
5,000 -10,000
10,000 -55,000
>55,000
Annual Household Income (US $ Constant)
Hou
seho
lds
('000
)
2004 2009
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Forces of disruption to the innovation trajectory
1. The character of low income markets
2. The global diffusion of innovative capabilities
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The global diffusion of innovative capabilities
• Learning in global value chains
• Global shares of R&D
–(2%-1970, <10%-1990, 24%-2007)
• Education and training
• Growth of large emerging country firms
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Forces of disruption to the innovation trajectory
1. The character of low income markets
2. The global spread of innovative capabilities
3. Radical new technologies allow for distributed production– Renewable energy, nanotechnology
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Forces of disruption to the innovation trajectory
1. The character of low income markets
2. The global spread of innovative capabilities
3. Radical new technologies allow for distributed production– Renewable energy, nanotechnology
4. New innovators– Dynamic SMEs in rural areas– PPP
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Capital and scale intensive
Labour intensive, small scale
High wages, low cost of capital
Large market
vibrant entrepreneurship
Low wages, high cost of capital,
Small market
Weak entrepreneurship
Inefficient Efficient
A poverty-reducing growth path?
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Capital and scale intensive
Labour intensive, small scale
High wages, low cost of capital
Large market
vibrant entrepreneurship
Low wages, high cost of capital,
Small market
Weak entrepreneurship
Low wages, high cost of capital,
Large market
vibrant entrepreneurship
Inefficient Efficient
A poverty-reducing growth path?
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A perspective on linkages - Hirschman
• Financial linkages
• Consumption linkages
• Production linkages
–Forward
–Backward
–Horizontal
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Production linkages in the commodities sector
Time
OutsideMiningCompanycorecompetences - win-win
Value added
Inside coreCompetences - win-lose
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Policy Impact: Speeding and Deepening Linkages in commodities sector
Time
OutsideMiningCompanycorecompetences - win-win
Value added
Inside coreCompetences - win-lose
Speeding up
Deepening
Shallowing
Slowing down
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Determinants of linkages
• Intrinsic
• Contextual
–Ownership
–Infrastructure
–Capabilities – skills and the National System of Innovation
–Policy
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Turning to Policy
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The substance of effective policy design and implementation
• Strategy
• Policies
• Sanctions backing policy
• Policies which don’t contradict each other
• Policy capabilities
• Policy will
• Policy legitimacy
• Alignment of key stakeholders
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The political economy of policy design and implementation
• Pro-poor “inclusive” innovation
–TNCs – Fortune at the Bottom of the Pyramid?
–Large indigenous firms
–“Greedy” indigenous SMEs
• Making the Most of commodities
–May have high entry barriers
–But lost of opportunities for SMEs
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So…
• Walking?
• Stumbling?
• Falling?
• Jogging?
• Sprinting?