 And welcome to this afternoon's session where we are going to cover a session called Made in Africa. And as you'll see as I give kind of a general introduction, really what we're talking about here is a body of work that we, sorry, thanks Dominique, is a body of work that we conducted under a program called Learning to Compete, with the new and new wider. So we're taking this opportunity to kind of present some of our main findings, our main story from that book. So the structure of the session is that I will present an overview of what our thinking was when we came up with this idea, some of the key messages and findings that we got from that. And then I will ask two of the key people who were researching on this program to present specific papers and results from some of the more detailed econometric work. My plan is then to, if we still have time, to come back and say a few words just about the policy implications that we came up with at the end of the book and then we have some comments from some discussants. And so to begin with, just to give a bit of motivation, when we were coming up with this topic and thinking about how important it is to think about industrialization in Africa, we're noting in particular the fact that Africa has deindustrialized significantly since the 1980s. So there was a period of industrialization, a period of growth in industry and then really it just as flatlined then in the more recent years. And to illustrate that even further and to highlight the deficit in manufacturing in Africa, you can see here some, I think very startling numbers that show the manufacturing value added share of GDP for sub-Saharan Africa on average and then comparing that to the developing country average. And on all of these measures on manufacturing added share of GDP per capita, export share and total exports, manufacturing exports per capita, you can see a significant lag in the case of the sub-Saharan African countries compared with other developing countries. So this really kind of is just to highlight that gap, the fact that why is there so little industry in Africa and this is the question that we sought out to answer in this research program. So again, kind of just as a motivation, it's important to try to establish, I guess why industry matters and the kind of three key things that we focused on in our project was to think about the fact that industry matters for growth. And particularly in sub-Saharan Africa, if you look across the different sectors and you look at the productivity differences across those sectors, there are large differences in output per worker. So there's an opportunity to have a substantial growth payoff if you move resources from lower productivity to higher productivity sectors. So it's not that in sub-Saharan Africa, there was not movement or some form of transformation happening, but the movement that you see was from low productivity agriculture to slightly higher productivity service sector jobs. You're not seeing that shift from agriculture into industry. And given the fact that labor productivity in manufacturing is so significantly higher than that in agriculture, then it's a really missed potential and there's a lot of potential there for growth coming from this source. So the first point, industry matters for growth. The second point, of course, is that industry matters for creating good jobs. So while the official unemployment rates in sub-Saharan Africa never appeared that high, the jobs that are there are very poor quality jobs. So 75% of workers in sub-Saharan Africa are in what are called vulnerable jobs and many are engaged in usually barely profitable household enterprises that are formed because there's simply no alternative jobs. And these are lower quality in terms of wages, in terms of job conditions, in terms of benefits, in terms of security. So this kind of lack of jobs, again, means that with industrialization and with industrial development, you will have a better opportunity for better jobs for more employment. And this can obviously accelerate the pace of poverty reduction. Even more so with the exploding population and the need to create jobs for a massive growing young population in particular, understanding whether industrialization can be a reality and is something that can create jobs is ever more important. And the third point, I guess, that kind of motivates is the fact of what you make matters. So the more diversified your production base, the more complexity you have in your production base and in particular in your export structures, the higher incomes will be. So countries that produce and export more sophisticated products tend to grow faster. So there's a strong case for diversification and a strong case for kind of moving up the value chain in terms of the types of goods and services that are being produced. So on the basis of this discussion and this kind of introduction, the two key questions that we attempted to answer in our study was can Africa break in and if so, how can that be done? So this led to this collaborative research program called Learning to Compete that was between UNU wider, the African Development Bank and the Brookings Institution and really involved a large collection of researchers within the UNU wider network but also reaching out to many researchers in the countries that we were working in and to come up with a series of research outputs that have contributed to our thinking on this issue. One, the two main outputs, I guess, substantive outputs are the Made in Africa book published by Brookings Institution that a lot of the kind of what we're presenting today is based on and also another book which was a set of case studies from all of the different studies, different countries that we worked in that really brought together what we know individual African countries in terms of the level of industrialization, the key constraints to industrialization in those countries. In addition to that, there was another book about the policy side of things and also a special issue of the journey of African economies on exporting. So it's this kind of body of output and other outputs that we are talking about today. So one of the kind of things, I guess, again, to kind of think about can Africa break in? In other words, can Africa industrialize? Some of this was discussed in this morning session with John Page's session on industries that had smokestacks. I won't dwell too long on it. There's a bit of repetition there. But understanding whether Africa can break in is important for them to us then to think about how can Africa break in and what are the key drivers there? So there are a number of opportunities for Sub-Saharan Africa, in particular the changing circumstances in Asia. There's rising costs in China. Labor costs have doubled between 2005 and 2010. And again, between 2010 and 2016, you also see a lot of increase in domestic demand in Asia that is also driving demand for manufacturing goods. And also the Asian economies are moving up the technology ladder. So they're producing ever more complex goods, ever more sophisticated goods, and therefore they're opening up an opportunity for less sophisticated producers to enter the market. And one of the comments made from the floor this morning by Justin Lin was that there are many, many millions of jobs up for grabs coming from China with that move. And moreover, China is also becoming increasingly globally engaged, particularly in Africa. So there's opportunities for FDI from China to help with this industrialization process. Secondly, of course, trade and tasks represent another important opportunity. Production processes in manufacturing are now very much decomposed into a variety of different tasks. And this is facilitated by lower transport costs, lower communication costs, means that each stage of the production can be produced in any location. So it's very efficient for these tasks to be located in these different countries. And in fact, as much as 80% of all global trade is now in between kind of networks of multinational corporations producing tasks at different stages of the production process. So this has potential as well, because it means that new manufacturing firms don't have to understand or grasp the production processes required for a full product from start to finish. They can just specialize in particular tasks in the value chain. Of course, there are challenges here because this requires low transport costs. It requires efficient trade logistics, good communications, and so on. And that, as we know, is a challenge for parts of sub-Saharan Africa. And then, of course, the topic of this morning's talk, this morning's session was industries without smokestacks. And essentially, this is suggesting that, you know, there is huge opportunities in what we would call non-traditional industries. So tradeable services, agro-industrial value chains all represent opportunities because they too exhibit similar characteristics to manufacturing industries in that they benefit from technological change, they can benefit from productivity improvements, they can benefit from adelomeration, from economies of scale, and they can produce higher productivity jobs. They can produce better jobs. So there are opportunities in there too, and that was discussed at length in this morning's session. But, of course, the key issues or the key necessary conditions are one, keeping labor costs low, and the other, increasing firm-level productivity. And it's the second issue that was the focus of this body of work that we worked on in the Learning to Compete project, which is how do we increase firm-level productivity? What are the drivers that we can think about and the drivers that we can discuss? And the three drivers that we focused on in our work were exports and competition and how that can improve firm-level productivity, secondly, firm capabilities. So this is kind of the knowledge and working practices of firms and the opportunities for capabilities to spill over to other firms through supply chain linkages. It was another important kind of focus of our investigations. And thirdly, agglomerations where we're thinking about industrial clusters and the spillovers that can emerge from these kinds of industrial clusters. And also, one of the other reasons why we really focused on agglomerations is that there was so little evidence for whether, for example, especially economic zones work in Africa, there was very little evidence for what are the drivers of agglomeration and what's the potential for these spillovers? So they're kind of the three main core areas that we set out to investigate in the program. And within the program, we had a three track approach. First of all, we set out to try and document as much information that we have about industrialization in Sub-Saharan Africa. So we used detailed case studies of industrialization, the evolution of policies in relation to industrialization and we did that for 11 different countries, nine African countries and two Asian countries. And that collection of case studies was published in the manufacturing transformation volume. We then did a number of... We did a very large exercise in determining what data are available because for a lot of this work, if you want to do some econometric analysis, you need good quality micro level data. So we did a full data inventory of what we could find from these countries and we set out to do a variety of different econometric analyses to try and see how much evidence we can gather on these three particular issues from each of these country cases. And then finally, one of the things that would be presented and today we did qualitative surveys of FDI firms. So we took a different approach to the pure econometric approach and we really tried to dig in to understand some of the mechanisms going on and under the FDI and the potential for FDI spillovers. And so that was kind of the approach that we took. So I want to kind of summarize some of the main findings before going into some of the detail on one or two of the studies. So as I said, one of the bodies of work that we looked at was about exports and productivity. And we managed to find enough detailed micro firm level data to study the issue of learning by exporting and whether firms learn by exporting from six different countries. So from Cambodia, Ethiopia, Mozambique, Senegal, Tunisia, and Vietnam and they formed one of the special issues in Journal of African Economies that I spoke about. So of course, econometric issues here are quite... They're quite complex in terms of identification and dealing with the selection into exporting issue. And then once you have selection, are you actually observing learning or is it just selection of the best and most productive firms into exporting? So these are all kind of issues that we took very seriously in our analysis and we developed a framework for analyzing the data in a consistent way across the different countries. And overall, our findings in the one hand confirmed our expectations that there is a lot of selection into exporting. So the more productive firms do select into exporting and the larger firms are more likely to export. The foreign firms are more likely to be the ones that export, not surprisingly. We did find evidence of learning and that's not like there's been cases where learning has not been observed. But in our case, once you control for selection, exporting further increases productivity. And we found that in particular, those learning effects spill over or are strong or for the domestically owned firms, the exporting of more sophisticated products, which again is not so surprising, when you're exporting to higher income markets or more distant markets in fact, you find that the learning effects are larger and the learning effects are largest in those initial years of exporting with some of the benefits dissipating over time. But we also found some surprises that had not really been documented in other studies. One of the interesting things was that many African exporters are what we say are born global. Both the FDI firms that just established in order to export from a particular country, but also local domestic firms, we found a lot of evidence that they were born global also. So few firms learn to export over time. So the few firms, if you're not born global, it's unusual for you to select into exporting. And so it's hard to learn to export. But once you start, then it's quite persistent over time with not so much exit from export observed in the data. And the productivity premium is higher with a low national or sectoral export participation rates. So if you are in an economy where there's not much exporting happening and you enter into exporting, you get a much higher premium. So that was kind of on the export side, which I've gone into in a bit more detail than the others because we've no kind of paper talk. I wanted to kind of summarize all of the details from those papers rather than going into detail on one. And on firm capabilities, which John will talk a bit more about in a while, specifically on the qualitative work that we did with the FDI firms. And here we did a number of studies from Cambodia, Ghana, Ken, Ethiopia, Mozambique, Uganda and Vietnam, where we were looking at this at a firm capabilities in particular. And one of the things that emerged was very evident that Africa lacks capable mid-sized firms. So in the 50 to 70 worker range. And management and finding managers to handle the size of firm and appears to be a particular constraint in terms of growing capabilities. But we did find, and kind of in reference to the previous slide, that firms learn capabilities from exporting itself. But we also found evidence that firm-to-firm knowledge transfers are a very important source of capabilities. So FDI is a major source of higher capabilities and we found evidence of spillovers, particularly vertical linkages along the supply chain mattering for firm capabilities and mattering for learning. And as I said, John will speak a bit more about that in a while. Secondly on agglomeration, agglomeration and capabilities kind of also fall within the kind of the same umbrella. And here the data demands are much more difficult, of course, because you need to have location data for the firms in order to understand agglomeration. So there were fewer examples from our cases where we could actually do some quantitative work on this. But where we could, we could see evidence that industrial clusters do confer significant productivity gains. So the jobs that are created in clusters, they have additional impacts on the productivity of other firms. So firms in close proximity learn from each other, firms in the clusters benefit from a broader pool of skilled labor, we found evidence of this. And clusters also help link local firms as foreign firms and also with export markets. So there's kind of a spillover between clusters and special economic zones and exporting as well. And they're kind of mutually beneficial to each other. And we found that the cluster effects are just stronger in the lower income countries. And the large firms indeed benefit more than the small firms. And again, this comes down to kind of a capabilities and understanding capabilities argument there. So that's kind of the summary of the detailed findings that we got from the more econometrics and quantitative studies. And of course, from these kind of three slides, really what we can conclude from this body of work was that these three topics are not mutually exclusive. And when you're thinking about them from a policy perspective, and I'll come back to this when I conclude later, they really go hand in hand. And they are quite complimentary to each other. And that's something that should be borne in mind. Thank you. Thank you.