 Good morning, so I have a nerve issue in the last two weeks, so I may not survive, you know, giving my presentation standing all through. So that's why I am sitting. It's not my habit to do so. And for that reason also I think I'm not going to do a power presentation. But let me start first by thanking both you and your wider and brookings for this great honour to give me a chance to speak to this very important gathering. I'm really pleased to see that I'm among friends again, a lot of friends who are here. And for some of us from the policy community, we always cherish this opportunity to recharge and be able to keep up with the frontier of knowledge. I'll give my keynote remarks really covering two major themes. One is to reflect on the African growth experience and the grounds for African renaissance, which is actually taking place now, and then simply focus on what it will take to sustain this renaissance and enhance Africa's growth competitiveness. So those would be the two main themes that I would like to pursue. And in the course of this, really connect with the theme of the conference on learning to compete. When you revisit African growth literature until mid-2000s, the typical story focused on explaining the failure of growth to take off in a durable way on the continent. Indeed, growth was deemed not only to be very slow, but also very erratic. So there was nothing new to seeing African countries have spurts of high growth, but it was never sustained. And the typical length of period for which the spurt lasted was not more than five years. So this gave rise really to the perspective which I'm going to speak to now. The most vivid approach to laying bare the extent of growth malaise in the region was to contrast it with performance in other regions and use differences not only to measure the extent the region lagged behind others, particularly East Asia, but also to explain what Sahara and Africa did not do right compared to the drivers of success in other regions, and again, particularly East Asia. This approach was dominant not only in explaining overall growth differences, but also sectoral performance and lack of structural transformation in Africa. There is a second trait in that literature that needs emphasis. It is pessimism. The emphasis was on explaining failure rather than on identifying opportunities the region had and how to exploit those. Of course, there was a very long list of what needs fixing. The African growth experience, however, and this is to the surprise of most of us that have been working in this area, has taken a surprisingly sharp turn in the last two decades. Africans pay capital growth, which averaged only 0.8% in the previous three decades, has averaged more than 2% in the last decade, actually around 2.3%. Overall, growth since mid-1990s has averaged 4.6% per year. More than half of the fastest growing countries in the world now are in Africa, in fact 16 of those. Over this same period, the number of sub-Saharan African middle income countries has sharply increased from 9 in about mid-1990s to almost 20 in 2012, with six of these being in the upper middle income group. I can name those, so it's not just a story. It includes South Africa, Namibia, Mauritius, Cichias, Gabon, and Angola. The region even has one country in the high income group. You may not believe this, but it is true. It is Equatorial Guinea. Unlike in the past decades, the recent African growth has proved to be resilient to shocks. Again, another new observation. Unlike in the past decades, the recent global financial crisis and its aftermath, African countries continue to grow way above global average. Annual growth rate in the region averaged 4.2% between 2007 and 2011, when the global economy grew at 2%. In 2012, the growth rate in 80% of the African countries was higher than the global average of 2.7%. Now, I've recounted on this, partly because I think for most of us that have been working in this field, really never saw this coming the way actually it has, even until mid-2000s. You look at all literature until 2007, 2008. Everybody was still talking about failure. Nobody talked about any sustained growth, and suddenly we are all caught with this pleasant surprise that exactly what we had for a long time analyzed and thought would make a difference actually worked. The only thing is we didn't really see it coming as quickly as it has done. Now, this turn of events has significantly helped to change the attitudes in and outside the region towards African potential going forward. In the region, this experience has engendered confidence in many low-income countries to adopt visions to catapult to middle-income status in the next decade. Every vision document that you read for any of the low-income African countries, the first target is middle-income status in the next decade and a half to two decades. And this you can read in any of those. It has also helped to change the ambition from simply focusing on poverty reduction to seeking prosperity. Again, when you read the vision documents, it's no more the issue of just eradicating poverty. It's actually setting on a path towards prosperity. This is new. On its part, the world has changed from viewing Africa as a basket case to one of hope. The continent is now being held potentially as the next frontier for driving the growth of the global economy. Telling you 10 years ago, if anybody said what I just said, I think they would have thought him to be crazy. But this is what the world now actually says. This optimism will only obtain if the region can build its capacity to sustain the recent growth success. Here now we go into what may need to be done. There are two challenges that need urgent attention in this regard. First, the region will have to preserve the gains it has made in peace and stability. And this includes macroeconomic stability. Growth must assist to end poverty, particularly of its vast rural population, and the rapidly growing segments of the urban unemployed. Growth has also to create more jobs than it has done so far if it is to absorb the youth bulge in the region and turn it into an opportunity rather than a curse of instability. Second, the region has to make judicial use of proceeds from its vast but exhaustible natural resource base to build a more diversified economy in order to sustain growth in the future. The transformation agenda can now be strategically pursued and funded. And I think this is important, and funded, learning from past failures and from others who have succeeded. A major part of this agenda will have to entail raising the capacity of the region to make and implement gainful investment in what Paul Collier has called investing in investing. In this way, the vast natural resource base of the region can help its path to prosperity rather to a curse as the latter is not necessarily inevitable. A variety of studies that have carried out a decomposition of sources of recent African growth have clearly shown that the most dominant source has been productivity growth. Much as both investment in fiscal and human capital has picked up significantly, the direct contribution of these two factors, labor and capital, as measured by this decomposition work, has been relatively smaller and declined compared to their contribution in the past. Let me now go to the second main theme and the main stage of my address, which is how can we sustain this growth revival and enhance Africa's competitiveness. We can reasonably identify five key drivers for sustaining African growth and enhancing the region's competitiveness in the global economy. First is to pursue structural transformation by reducing reliance on commodities or natural resources as the key source of overall growth, pursuing vigorous initiative to add value to its commodities and by pursuing a natural resource base and labor intensive industrialization. This is the first thrust. Second, vigorously pursue a productivity enhancing agenda largely driven by technology based innovation, taking advantage of the region's late startup position to learn from others, leapfrog and adopt such knowledge locally. Third, reduce costs of doing business in the region, not only to help attract foreign direct investment, but also to enhance the competitiveness of African economies as it pursues expansion of its global market share. This includes not only reducing the cost of infrastructure service, including power and transportation, but also enhancing logistical capacity. And on the latter, I would like to lay particular emphasis because even if you do improve infrastructure overall, if you do not improve the logistical capacity of handling produce from the point of production to distribution, you may not actually achieve exactly the competitiveness that you require. So I would like to add logistical investment as part of this reduction of course of doing business. The fourth is to enhance the stock of skills needed to support structural transformation and innovation. In this respect, the continent should exploit the youth bulge as an opportunity for transforming it into a skilled labor force that the rest of the world will count on in the future as the labor force in the industrialized and emerging economies gets older. In fact, in two decades, it is projecting that Africa will host the largest labor force in the world, purely because of its youthfulness of its population and the aging of populations elsewhere. And as we know, nowadays jobs follow labor rather than migration of people to where jobs actually exist. And this provides a very important opportunity for the region. Fifth and lastly is regional integration, not only to take advantage of its own expanded regional markets, but also for industrial coordination to achieve both scale and cost effectiveness. I would now like to elaborate on each one of these five drivers in turn briefly. First one, structural transformation via industrialization. African countries cannot rely on trading in primary commodities as a means of promoting and sustaining high-level growth in the long run. The emphasis must now be on increasing local processing and value addition of the available natural resources wherever possible and economical in order to promote sustainable growth, job creation, and economic transformation. For example, resource-rich countries could promote production of fertilizer from natural gas and phosphate. Production of steel from iron ore. Power generation from uranium, etc. Also, given the abundance of land, agro-processing has a lot of potential in promoting industrial development and employment opportunities on the continent. Therefore, the new partnerships which Africa is forging with both traditional and new economic powers must encourage the development of resource-based domestic firms in order to increase the local value-added content of resources. Unlike other regions, such as Asia, where high growth was driven by structural transformation entailing manufacturing and value-added services, the recent African growth has been largely driven by a commodity export boom as mentioned earlier. Furthermore, growth has occurred side-by-side with deindustrialization. Today, Africa remains the least industrial continent of the world, as most African countries depend heavily on commodity production and exports with little value addition. Although the share of industrial output in total GDP has remained relatively unchanged during the last decade, its composition has significantly moved in favor of mining. Many African countries have experienced notable deindustrialization reflected in the declining share of manufacturing in aggregate output and exports. For example, from 2000 to 2011, the share of manufacturing value-added in GDP declined from 14.9% to 11.8% in sub-Saharan Africa. Also, while other regions have increased their share of manufactured exports, the continent still depends predominantly on the export of raw materials to the industrial world and emerging economies. The share of manufactured goods mentioned as exports in 2011, for example, was 28.5% in sub-Saharan Africa compared to 76.2% in East Asia. Industrial stagnation in Africa has happened notwithstanding the significant improvement in business environment, remarkable performance in macroeconomic stability, sharp decline in the proportion of countries involved in civil conflicts, i.e. the peace dividend and substantial improvement in the governance system. I'm therefore curious first to get a good sense of what is behind the African deindustrialization so that we can draw lessons for the future and second to identify the policies that the region can pursue to rebuild its industrial capacity and indeed increase its share of manufactured output in the global economy. The typical story we always hear about Africa's deindustrialization has been that of a failed state-led industrialization model which focused attention on import substitution industrialization strategy. The argument has been that this model distorted factor prices and rates of return and therefore failed to ignite sustained industrialization in Africa. While indeed this might have played a role, being unable to compete with Asia and instead becoming dependent on cheap imports from Asia has been a major factor behind African industrialization experience, in my opinion. Asian economies became more competitive via both productivity increase and transaction costs reduction. The ability of Asian countries to attract footloose industries from developed countries by way of relocation must have helped the region to further build skills and improve technology. Asia's lower labor costs combined with technological growth through adoption and adoption rather than simply invention put them in a good position as countries to wrestle away labor-intensive manufacturing from developed economies. On the other hand, Africa's poor infrastructure, lack of skills and civil conflicts in some countries more than offset the potential labor costs saving or advantage thus making it relatively uncompetitive. But as we know, industrial progress brings with it rising incomes and wage costs. As the Asian middle income group grows and the per capita income rises first, the relatively lower labor costs in the African countries may now open an opportunity to attract labor-intensive manufacturing from Asia. Some Asian countries are on the verge of graduating from low-skilled manufacturing activities which will potentially open up many labor-intensive jobs to Africa. As Justin Lee has recently put very clearly in his article entitled Flying Geese, Leading Dragons and African Potential, and I quote, the emergence of large bricks as new growth poles that have performed dynamically and climbed the industrial ladder offer an unprecedented opportunity to all developing economies with income levels currently below theirs including those in sub-Saharan Africa. China, having been a follower goose, is on the verge of graduating from low-skilled manufacturing jobs and becoming a leading dragon. I'm still quoting. This will free up 85 million labor-intensive manufacturing jobs by his estimates compared to what helped Asia only Japan's 9.7 million jobs that were freed in the 1960s and Korea's 2.3 million in the 1980s which actually opened up the opportunity for industrialization and manufacturing in the other East Asian countries. So this is a huge, huge opportunity. And of course, he didn't make reference also to India which is also on a similar path and maybe it would be important for work like this also to identify how many potential manufacturing, low-skilled manufacturing jobs actually can be tapped by migration of those industries to Africa. Ethiopia provides a good example of an African country that has successfully taken advantage of the rising labor costs in Asia. As we speak today, one of China's leading shoe exporters, Huajian Group, has opened a factory in Ethiopia since January 2012 to take advantage of lower labor costs and great supply of raw material in Ethiopia which has the largest livestock population in Africa as you know. This firm has a bold ambition of transforming Ethiopia into a global hub for leather industry within a decade and you can read that case study is available. Indeed, the geese are flying westwards from Asia and can land in Africa as the last destination of labor intensive manufacturing. This is our vision. But this can only be possible if other complementary factors are available such as productivity growth combined with comparatively lower labor costs form a basis of enhanced industrial competitiveness in the region to attract labor intensive manufacturing. I repeat, Africa is also expected to become the host to the largest labor force in the world in the next three decades given the youthfulness of its population. Combined with the labor cost advantage, this raises significantly the potential for Africa to be home to the low-skilled manufacturing industry. We are living again in a global economy where jobs migrate to where there is low-cost skilled labor in contrast to old migration patterns where people migrated to where jobs were located. And this is the basis for our optimism and the reason why the geese will probably land and stay in Africa because there's nowhere else to go given the pattern of labor costs. Enhancing productivity growth. Productivity growth associated with the wave of market reforms has waned and the second wind of faster productivity growth will depend on expanding the role of technology and Sebastian Edwards put this very clearly back in 2002. Within technology group, information and communication technology, ICT, is now the main driver for productivity growth as elaborated in a range of studies. Two main channels through which investment in information technology influences aggregate growth. One, a higher stock of information technology will make investment in human capital and in organizational capital more productive. Two, investment in information technology will have a direct effect on growth. Therefore the effect of investment in information technology in GDP growth will also depend on the level of both human capital and organizational capital. This could not be more pertinent than for the case of sub-Saharan Africa's effort to industrialize. Africa's low level of ICT investment and lack of knowledge based to support effective use of ICT can to a large extent explain the failure of most African countries to compete in the global economy. Higher levels of ICT adoption and usage can serve as an important platform for leveraging productivity growth and competitiveness in Africa. ICT contributes to innovation and to the development of new products and processes all of which acts as a vehicle for reducing transaction costs and raising productivity. In order to take full advantage of new technology African countries will have to make major investment in complementary areas. Research and development, education and infrastructure as well as institutional and economic reforms including more flexible labor markets. The potential positive impact of ICT externalities on productivity growth can be similar to those of public infrastructure. For example, the rapid growth of India's software, exports during 1990s can only be explained by India's huge investment in ICT sector including developing the required human resource capacities and skills and which in turn attracted foreign companies from high-tech industries to relocate their production lines to India. Also in peer co-evidence supports positive and significant impact of ICT in promoting productivity growth in OECD countries and there are many examples in that. The potential impact of ICT in improving efficiency of doing business has also been demonstrated recently in the region by the rapid adoption of mobile phone financial services in some African countries such as Kenya and Tanzania. Mobile financial services which to a large extent was facilitated by diffusion of ICT has offered financial institutions in these countries the means to reduce transaction costs and significantly increase efficiency in the payment systems. And according to a study by the Centre for Economic Policy Research a country which has reached a level of mobile phone penetration of 10% of the population adds 0.59% to its GDP growth per capita growth rate. Furthermore strong in peer co-evidence also exists that investment in ICT improves competitiveness and the World Economic Forum has a whole set of work to that effect. The challenge for African economies is to scale up these innovations across different sectors in the economy particularly in the manufacturing sector. If Africa is to become a part of the global value chain it must be able to plug into the current ICT networks. Part of the strategy will involve increasing the level of investment in ICT infrastructure and increasing the absorption capacity of the labor force. Governments can encourage private sector investment in ICT and technology driven innovations by putting in place policies that effectively protect property rights so that firms can incur some fixed startup costs with confidence that they can and not others will capture return to investment. I wanted to underline one thing which is like a big book in the sky technological knowledge and inventions are a global public good. One can only use them if one can reach the book in the sky turn the pages and read from it. As Yuma, this is Kalisto Yuma identified the broader conditions which helped the emerging economies to do this effectively includes in this case significant investment in human capacity to adapt and absorb this technology. Last but one area I wanted to focus on is reducing costs of doing business. Efforts to reduce costs of doing business on the continent will help to attract foreign direct investment and promote dynamic private sector. The increasing rate of mobility in the factors of production particularly capital and knowledge means that any African country that wishes to industrialize must create an investment friendly environment to make its location attractive. Attractiveness is not limited to cheap labor and tax holidays. It is also about good governance, quality infrastructure and services and strong and functional institutions. This is the usual literature. A core part of any industrialization strategy therefore will need to target reducing transaction costs and improving investment climate to make African countries better destinations for global capital. I think if there is one or two areas that one would identify in terms of reducing the cost of doing business in Africa is power and transportation. There is no doubt about these two. Now Africa especially Sub-Saharan Africa ranks consistently on the bottom of the developing regions in access to infrastructure services. The lack of adequate infrastructure is estimated to reduce productivity across the continent by up to 40%. Transport costs in Sub-Saharan Africa are estimated to be between 50% and 100% higher than the global averages. It is also estimated that total installed capacity for power generation in 43 countries of Sub-Saharan Africa excluding South Africa is only about the capacity in Poland or the state of New York. That's the state of the situation. And therefore if there is an investment drive which one should really focus on is investment in power, investment in power and investment in power. I think on the transportation side this has received I think enough emphasis broadly but we have seen now particularly with growth picking up including manufacturing and industry also starting to pick up the biggest tumbling block certainly is power. Now one message, we cannot improve infrastructure across all our countries at the same time. Tanzania for example is a huge country. There's no way you can improve all the business conditions across the whole of the country at the same time. And therefore the concept of special economic zones which again was extremely helpful in Asia is a concept that we have got to pursue in order really to realize the opportunity to talk about which is attracting manufacturing jobs. Then it is human capital after this and infrastructure alone will not do this. Fortunately as I said again with the youthfulness of our population the region has the ability to absorb knowledge and innovation much more quickly. You know young population always is amenable to absorbing innovation and the region youthfulness exactly again is an opportunity to do this but we have got to invest in not only imparting knowledge but right from primary education through secondary to tertiary education levels in terms of use of technology not just to make education simpler but to get to know it and to get really connected to the rest of the world as a learning instrument. So an important part of industrialization has got to be raising skills. Vocational training has been always the most direct investment that countries have made but we have come to a block where you have graduates from vocational training who can't find jobs and you have firms that are looking for skills that can't find the skills. This is definitely something that needs again a connection to make sure that vocational training is demand driven and that there is a connection between training and skills generation and the type of jobs there on the one side. In this particular case however the region has a major challenge. There is already a stock of trained, skilled, young people who cannot match the job requirements. So it's not just training the new ones we have got to think about how to retrain and also make a connection between that stock and industry. Sometimes it's purely information failure in order to get the two sides connected and we need to invest in that. Let me conclude first by acknowledging that African economies are definitely very diverse and what I've said cannot be simply applied to all countries at the same time. Each country will need to develop specific policies in line with its comparative advantages and country characteristics. For example, countries with coastal locations facing international markets could focus on a wide range of labour intensive manufacturing to serve the region and the world. These countries can also pursue a regional export platform model by adding value to goods in transit both to and from landlocked neighboring countries. This would include, for example, attracting investment in plants that would assemble important component parts prior to onward shipment to other landlocked countries. On the other hand, resource-rich countries can promote industrialisation and structural transformation by supporting both downstream value addition and upstream in terms of domesticating the supply chain into these industrial processes. So, again, these two examples are simply to give a sense in which there is that difference. Let me end by saying Africa is ready to pursue its renaissance. We as researchers have a major role to shape this venture via forward-looking research and providing the knowledge base to realise the visions various governments have promulgated. Let's play our part and I thank you.