 Let's start by congratulating John, Richard, and Fin for putting together this volume. This volume definitely is fundamental to the development and modernization of Saharan Africa, especially the issue that they have touched on, which is structure change. As we have known it, structure change will entail the shift of labour resources from informal traditional activities such as biz and farming, petty trading, where marginal productivity of labour is very low and almost stagnant, and in two modern sectors such as manufacturing, where the marginal productivity of labour is both much higher and increases over time, and I think as Richard showed, the current developed countries and East Asian countries followed that path, but this is a path that has eluded Africa, where we see manufacturing as a share of GDP almost stagnant in most of the countries at about 10%, and as the presentation of Ghana has showed, we've had various programs by government over years, various efforts, but to date it has remained around 10% on average. And you find that most of the workforce in Africa and its living from peasant agriculture or in informal household or micro enterprise activities where the labour productivity remains low. Uganda is an example where only 3% of the working population is employed in business enterprises with five or more employees. So we come to the book. The contention in this book is that changes in technology and organization of production and global demand for goods and services have reduced the prospects that Africa will be able to pursue the traditional trajectory of structure change, which is driven by manufacturing industry. Instead, the changes open the possibility of an alternative trajectory of structure change, which will involve credible services, participation in agro, industrial and hote culture value chains. The book argues that the manufacturing industry is not the only sector in which high productivity of labour can be achieved. Strong gains in labour productivity can also be achieved in hote culture, agro processing and modern service industries such as tourism, telecommunications and transport. And you'll find various examples provided in the book in case of Kenya, in case of Uganda, in case of Ghana. And technological advances have made many types of services internationally tradable and provide those opportunities for Africa to leapfrog. The other issue that comes out strongly is the issue of regionalism, that regional integration has made an important contribution to the emergence of many industries without smoke stacks by providing a regional market. And in some cases affording them tariff protection from imports from outside the regional market. And various examples have been provided. I think the case of Uganda with milk production is provided. In the first chapter of the book which serves as an overview, the editors of the book provide data for 33 countries in Africa that indicate the increasing contribution of industries without smoke stacks to export earnings. And you can check out those numbers. The industries without smoke stacks increased their share of total nine oil and mineral exports of these 33 countries by 7 percentage points between 2002 and 2015. And mainly because of increased service exports. This has definitely got very important implications for development policies in Africa. In particular the argument put forward in the book suggests that policies which aim exclusively to promote industrialization by providing assistance and incentives to manufacturing industries meaning tariff protection, tax holidays and subsidized power are unlikely to be the most effective policies to achieve structural change in Africa. So policy makers cannot afford to ignore the potential of services and agribusiness to provide high productivity employment in Africa. Now nevertheless there are important questions which are not addressed in the book which have potentially critical implications for the prospects of structural change led by industries without smoke stacks. And I want to focus on these in the remainder of this presentation. The reasons why Africa has failed to achieve structural change through industrialization in the manner of East Asia are not well understood. Various explanations have been advanced in the academic literature including uncompetitive labor costs, poor business environment, lack of long term finance and I think this again came out in the presentation on Ghana and deficiencies in public infrastructure. This is something that comes out in many studies. But none have been conclusively shown to be the binding constraint to industrialization on the continent. No are these problems unique to Africa. So unless we fully understand the cause of factors which have held back industrialization in Africa how can we be confident that the same factors will not similarly impede structural change which is driven by industries without smoke stacks. Let me just pick out some examples. There is research by Alan Gelband, Christian, Maya, Vijaya and Divyanshi. I have made an attempt but they are research in two factor costs in Africa because both middle and low income countries, low income African countries with the exception of Ethiopia, labor costs in manufacturing are much higher than in developing countries in other regions of the world which makes other regions of the world which have comparable levels of per capita income. That suggests that African economies do not have comparative advantage in labor intensive manufacturing industries possibly because of incomes from natural resources and maybe remittances which raises the value of the re-exchange rate. But if that is the case it is not clear why Africa should have a comparative advantage in the industries without smoke stacks as these industries also must compete on the global market and their competitiveness depends on their capital and labor costs relative to those of their global competitors. Why should industries without smoke stacks be more successful than manufacturing industry in Africa if both of the industries have got similar labor and capital costs? Similarly if business environment detas investment in manufacturing industry why should it not deta private investment in industries without smoke stacks? A second challenge for industries without smoke stacks is the lack of agricultural modernization in Africa. If agro processing is to be the driver of structure change farmers must produce and market the agricultural inputs which the processors need in terms of the quantity, the quality and reliability. I think the previous presentation did point out that there are major problems facing these processors in Ghana who are unable to get a constant supply of fruits to the processors factory. So African agriculture which is dominated by pizant production using rudimentary technology may not be the basis for a very successful agro processing industry. A third challenge is the quality of the labor force. High productivity services industries are skill intensive which is why it is mostly upper middle income and high income economies which have a comparative advantage in industries. Many countries in Africa have made substantial progress in expanding access to education but the average quality of education is poor and education attainments are low. As such it is not obvious that Africa has a labor force which is sufficiently well educated to meet the skills requirements of high productivity services sector. An issue which may be crucial for structure change but has been overlooked in much of the literature on this issue is that the growth of business enterprises. As I have already noted, structure change involves a shift of labor into modern sectors of the economy which are characterized by larger scale of production than the informal traditional sectors of the economy from which labor is drawn. At least some of the firms which begin life as micro or small scale enterprises must expand over time to become medium or large scale enterprises. Unfortunately, this does not occur in a number of African countries where the business sector outside of the small enclave of mainly foreign owned businesses is dominated by micro and small enterprises. Most of these enterprises struggle to survive. Their failure rate is very high and those enterprises which do survive rarely make sufficient profit to finance an expansion of their businesses. There are also other constraints to business expansion especially the lack of trust which impedes the pulling of capital to finance investment in larger businesses. So I come to some policy areas to consider. Some of them are similar to the ones Richard touched on in his presentation. First, I think we all agree modernizing agriculture so that it can supply the inputs required by agro processing industries should be a priority for public policy. Number two, the quality of the education not just the quantity needs to be improved if Africa is to develop a comparative advantage in tradable services industries. Thirdly, given the relative absence of medium-large scale firms in Africa, foreign direct investment must make a large contribution to the growth of modern high productivity industries but it will only be possible to attract foreign investment on a large scale if there are tangible improvements in the business environment to create a transparent and a level playing field for all investors. Fourth, measures are required to strengthen the domestic business sector in particular to improve the business skills of the owners and managers of the businesses. Thank you for listening to me. Thank you Lewis and now we come to questions. I'm so delighted to participate in this panel because the study will be very important for the futures of Africa and to some extent also for the world. I think the most important thing for Africa is jobs whether we can create a sufficient number of jobs for the people in Africa and then boil down the question whether Africa should develop manufacturing that industries smoke or industries without smoke. I saw the debate already settled because in the 1980s and 1990s China and India followed a different approach. China followed industry smoke and it became a global factory and India followed industry without smoke and it became a global hub for services the job created in the service sector in India according to the studies is about 5 million direct jobs 2 million indirect jobs and altogether 7 million jobs and China followed the industry smoke China created 125 million jobs and the population size in China and India is about the same and so your recommendation how much job you can create certainly I have no disagreement that horticultural services and so on those kinds of opportunities should not be missed but fundamentally if those kinds of sectors cannot create sufficient jobs you will have to come to manufacturing again and suddenly we see that industrialization in Africa and industrialization in China but the question is that is there any natural barriers for Africa to develop manufacturing while it was only because wrong ideas we know that if you want to be competitive in manufacturing sectors first you need to go to the sector which you have competitive advantages certainly the labor intensive sector should be the competitive advantage because both China and Africa have abundant supply of low wage labor but if you want to be competitive you also need to facilitate those kind of development by improving infrastructure, business environment and so on and from what I see industrialization in China is Asian and de-industrialization in many parts of the world was because many other parts of the world was guided by wrong ideas in the 1980s, 1990s the Washington consensus said the government should not pick sectors the government should not facilitate and so the business environment in rural sector in Africa, in many other parts of the world were very poor, transaction costs were too high but China, Vietnam their government proactively to create facilitate the infrastructure in the spatial economic zone in natural park to reduce the transaction cost and so they catch up the kind of opportunities that's one thing if you have a right idea, you should be able to do that and I can prove that African country we know Mauritius has been very successful in capturing the manufacturing opportunity and now they get a GDP reach about more than 10,000 US dollars although in the 1960s many people think Mauritius was a basket case so I think if you have right ideas then African country should be able to do that and also we see those appeal economy capture the opportunity industrialized in the labor enhancement manufacturing in general they capture the window opportunity of the global relocation of land manufacturing and that was the reason why in 2011 Fin invited me to give the wider lectures I started to preach China is going to release 85 million jobs in land manufacturing currently China employ 124 million in the manufacturing and among them 85 million is land manufacturing and that is up for raps then you have some debate with the neurologic and you said that the neurologic was pessimistic about the land manufacturing and use some data one is the proportion of manufacturing sectors in the economy no matter high income middle income low income or decline but the key issues absolute number of jobs on the factory floor the absolute number of jobs on the factory floor in high income country now like the US if you 85% of the GDP is in services then manufacturing jobs on the floor will decline but in middle income and low income country even you know the value added in manufacturing sector has been declined but the job on the factory floor did not decline and that is because you have the ocean and you have those kind of production and the work but job on the factory floor did not decline and that is because in 1960s when in 1980s when the manufacturing job to be relocated from Korea, Taiwan, Hong Kong, Singapore and its Asian to China we can look into the number Korea employed 2.1 million jobs in manufacturing in 1980s Taiwan 1.5 million Hong Kong 1 million and Singapore half a million but China when transit from agrarian economy to the manufacturing economy it create 124 and 85 million in the live manufacturing or in the factory floor and also that you know and so here is that the job opportunity will be there and from what I see there are only 2 places which can accommodate such a large relocation of live manufacturing one is India and one is China and India in 1980s 1990s they did not do the first relocation they did not have a captured opportunity but Modi with his experiences in Gujarat practice exactly the same as in East Asia you know exporientation for direct investment infrastructure Justin okay one minute 30 minutes and so they also grow very fast and now Modi become the prime minister and started to promote make in India and now to capture the opportunity of manufacturing but if we in Africa we say now we should not we should go to services are you going to make some mistakes as in 1980-1990 frame the competition between China and India and now Africa and India are competing for the job we are going to have a wrong idea to get the policy direction to the wrong places thanks okay we still have several questions what I propose is we take a group of questions maybe three or four and then come back to the panel so I know people have been very patiently waiting this gentleman right behind Justin was I think first in my line of vision at least I'm Yako Kangasemi industrialization without smokestacks sounds environmentally very friendly but at least when you look at some of the sectors tourism and horticulture horticultural exports they seem to be at least for the casual observer highly dependent on affordable air travel so then maybe they could be called industrialization with jet engines and that's really my question how significant is that and is that sort of anaculis for this type of industrialization and in particular if I'm referring now to the discussion in much of Europe regarding climate change and the climate impact of air travel and the discussion whether we should have some additional taxis on air travel or jet fuel etc if these policies if climate policies become stricter and if that affects the cost of air travel which parts and to what extent of these industries with jet engines will suffer thank you so much I'm Tadesa from Ethiopia Ethiopia Development Research Institute my first question in the history of human development process transformation of agriculture has contributed a lot so given the fact that the African agriculture is so far it has been there there is low productivity low employment opportunity unsustainability of production system given this fact and also when you see the linkage between agriculture and industrial sector they remained very low level so how do you see the sustainable transformation or industrial sector development without sustainable transformation of agricultural sector I have reason for this most of agro processing and manufacturing industries in Africa depend on imported inputs from outside they for instance take most of food processing industries in Ethiopia we import large volume of inputs from outside so they are possible they could be produced locally so given this fact in many instances in Africa the bottom line for transformation it seems to be transformation of agriculture for industrial sector development so that should be seen very deeply in the process of this analysis the second issue is in the private sector in the process of industrial sector development manufacturing in most of cases it's public owned or somehow supported by the participation of private sector in the process is very limited and in the history the process of development mainly explained by private entrepreneurs nurturing for instance take Korean examples Taiwan, Thailand it's not only the public sector who driven in the process of transformation maybe can we see how much private sector is really involved in the industrial sector or manufacturing sector how much the policy package are really there to promote that thanks I was just thinking that this is a very very good presentation and specially the discussions discussion also but my only question is are we really integrating to think wider when we are talking of development are we really integrating the global knowledge in another knowledge domain which is coming up so that is something which already some part has been mentioned but the other part is that Africa's transformation is seen through the most vulnerable sectors to climate change over next 30 and 40, 50 years so how can we think that this transformational change is going to be a sustainable one so that is something which is a big question mark when we are talking about this so and already it has been said that the food mile traveled we want to reduce but we are talking of food mile travel to increase so I'm just thinking that are we really talking in leaf frogging sense or are we just talking about what is happening in the incremental sense I think there is a need for revisiting the whole African development pathway okay I think what I'd like to do is to go back to the panel now give them a chance to respond and then perhaps give them your permission and people can certainly drift out if they tacitly don't want to give their permission we'll go to the second round of questions and tax our lunch hour just a little bit so I propose actually to just start in the same order that we had the speakers start with Richard then to go to Imiko and finally to in Kechi and let Louis put up two hands if he wants to come back and respond on something as well I could hear Louis's answers to all these questions but okay let me give you some initial reflections first in response to Louis I think he's asked a very important question why is it that we might expect the Iowa sectors to do better when manufacturing and has been so delayed I think that's a pretty fundamental question part of the answer to that is we're already seeing it happen the incipient growth of these sectors is quite clear and I think when you stand back from it and you look at it it becomes a little bit logical for example in the tourism sector tourism is not terribly energy dependent at least in the way that manufacturing is and that allows for a whole range of activities to emerge that you wouldn't otherwise get also you're feeling in that case often with natural tourist attraction in East Africa by the way you guys got to go there if you haven't been there already going on safari is spectacular but also many of the parks which are now being developed and which are only in the incipient stages of development really are terrific and gorillas in Uganda are a treat to see anyway enough of the advertisement I think there are natural reasons why these industries have sprung up I think the labor cost issue is really important another point that Luis raised and I think one issue for macro policy looking forward has to be thinking about the overall price level and particularly the real exchange rate looking forward the fact is that the region has enjoyed a large inflow of course of development finance I mean much larger as a share of GDP or capital account flows than other regions that has to begin to shift to rely on foreign direct investment and other more sustainable forms of finance but at the same time there have been episodic periods of substantial overvaluation which because of large fluctuation has tended to throttle many of the manufacturing sectors and I think there's an issue over the long term about maintaining a competitive exchange rate Justin of course knows the experience of China where I think for many many years they've maintained an undervalued exchange rate in fact Danny Roderick used to say the best industrial policy is an undervalued exchange rate Chile for example Andres Solomano is here and can tell us the story there but Chile I think between 1982 and 1995 10 years or 12 years even longer managed to create an export push based on a very competitive exchange rate So the other problem that Africa has of course is minerals we haven't talked about the importance of mineral exports in the region it's very important and drives up the price level across the region even in countries that don't actually are not fully resource dependent so managing this I think deserves much greater talking to the future Quality of labor deficit this is really important you look through the rest of the list that Luis has kindly given us I think basically you are seeing the development problem of Africa enumerated the importance of education the importance of developing larger firms which of course one has to do via exports because most of the countries in Africa are quite small and so far Africa has over a substantial period of time has maintained a substantial anti-export bias bringing that down and at the same time focusing on exports as a development strategy I think is really very important so on jobs, Justin's question this is absolutely the critical question for Africa there is no one magic answer to this and I think what the contribution we are trying to make in this book is to say there is a diversified set of activities that Africa has to develop and maybe if we have any emphasis on this it's the importance of services because services and increasing the productivity of services increases the productivity of your manufacturing sector and what we've seen in the case of Africa is that many of those services are very highly protected there are oligopolies within very small markets banking spread something Luis and I have talked about a lot and we have a little study in the IGC going on in this are very high and as a consequence the cost of finance is very high so I think looking for these areas where Africa can develop across a broad range of activities and particularly services I think are important and the key for manufacturing by the way let's not be sort of pushed into the view that we don't accord an importance to manufacturing moving forward that's not the position of the book the book in fact mentions the importance of light manufacturing as a stepping stone but I think there's other the message of the book is there's other things that have to be considered and can also drive exports the environmental question is a tough one I guess in terms of climate change I tend to sort of look to the developed world to get its act together on this one my own country has been incredibly remiss in this effort look the current industrial countries put up 85% of the CO2 in the atmosphere why should we expect Africa to which has very low GDP very low energy consumptions to shoulder the burden of climate change in the short run growing green is important but I think in terms of the kinds of industries we're looking at this is not going to disadvantage the problem of climate change in the short term the other issues I think maybe I'll let the other panelists take up I don't have much to say after very interesting answers from Richard but I just may have one comment because the recent firm level heterogeneity literature says it's very exporting firms productive and large capital intensive so it's very important to invite foreign direct investment and increase productivity with large firms but at the same time I think it is important to look at small farmers what is going on small farmers if small farmers is benefiting from the recent new opportunities and think about how small holders will benefit and what is the constraint in the future it is important to look at both on the other hand the large firms on the other hand small holders I think the only comments that hasn't been talked about was the comment by one of the audience members about the importance of nurturing the private sector to take a good leading role in terms of some of these activities agro processing and even though when I talked about the evolution of agro processing in Ghana the government tended to play a more leading role over time the private sector has taken over in terms of the activities of the agro processing industry there is however policy the levels of production could be improved one problem that the agro processing firms face is their size as I said they tend to be mostly small over 85% fall within the small and medium scale bracket so it's difficult for them to agitate for the types of policies that are useful for them but recently like I said there's the formation of this group advocacy group for SMEs in Ghana that was set up last year that's supposed to make an impact in terms of discussions with government to ensure that the policies that are relevant for scaling up the activities are actually put in place so that we can see better productivity coming from that sector thank you very much Louisa you think took very very very quick reactions one is the case of Kenya is very interesting and I think it shows that there are some great opportunities from technology that might help the survival rates of the small scale industries and I think we need to dig deeper in that technology revolution and what it offers and how it will support structure transformation so that's one the second one is this activist state I think we have various examples from the 60s examples in the 70s and even recently many of us say yes the role for government but we need to see whether this will lead to sustainable structure adjustment because you see a repeat of some of the mistakes made in the 60s and 70s as government becomes more proactive thank you