Production

Regional integration does not ensure production in value chains

Development Matters Building resilience , ,

By Renato Baumann, Co-ordinator, International Co-operation, IPEA, Brazil

Developing economies often face a common challenge: after a period of rapid growth they experience a slowdown in both growth and productivity, falling into what has come to be known as the ‘middle-income trap’. Signing preferential trade agreements and participating in global value chains are two common recommendations presented to countries facing the middle-income trap, and are often seen as intertwining processes. Moreover, regional integration is gaining momentum as an enabler of value chains. However, although regional movement of goods facilitated by regional integration might be necessary, it is not the only condition to ensure production in value chains.

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Accelerating the response to COVID-19: what does Africa need?

Development Matters Africa, Covid-19, Trade , , , , ,

By Annalisa Primi, Head, Structural Policies and Innovation, OECD Development Centre, and Stephen Karingi, Director, Regional Integration and Trade, United Nations Economic Commission for Africa (ECA), and with Lily Sommer, Wafa Aidi, ECA, Vasiliki Mavroeidi, Manuel Toselli, OECD development Centre

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

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Africa is at high risk. The most externally oriented economies, South Africa, Egypt, Morocco and Algeria account for 52% of the confirmed COVID-19 cases (32,979 as of April 28th). The continent lacks adequate healthcare systems. Hospital capacity is weak with 0.3 beds per 1,000 people in Senegal and 2.8 in South Africa, versus 6.5 in France and 8.3 in Germany. The continent is highly dependent on imports of medical supplies: 94% come from countries that have been hard hit by the pandemic, many of which are now limiting exports to ensure domestic provision of critical equipment. The pandemic magnifies the continent’s structural weaknesses, which make self-isolation and lockdown measures costly and hard to implement: 60% of the world’s poorest people live in Africa and the majority of the workforce is informal. The digital gap hampers telework and automation and governments are not able to mobilise investments at the scale needed to secure all citizens. African governments have taken important steps already, also building on lessons learnt in previous pandemic outbreaks. But the challenge is unprecedented: a global solidarity deal is needed. Continue reading →

Localisation of production: COVID-19’s medium-term impact

Development Matters Building resilience, Covid-19, Trade , , ,

By Dr Linda Yueh, Economist at Oxford University, London Business School, and LSE IDEAS, and author of “The Great Economists: How Their Ideas Can Help Us Today”

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

shutterstock_465773663The immediate shock of the COVID-19 pandemic on world trade and investment is apparent in the latest report of the World Trade Organisation (WTO), which expects global trade to fall by an unprecedented 13 to 32 per cent this year.

The WTO points out that all regions will experience double digit declines in trade, which will be worse than during the global financial crisis a decade ago. The global trade body also stresses that there will “steeper falls in products with complex supply chains, such as electronics and automobile products.” This underscores that COVID-19 is both a “supply shock” and a profound demand shock. Finally, the WTO expects a recovery in trade volumes is possible in 2021, but it will depend on the extent of the pandemic and the effectiveness of policy measures to address the shock.

Even as global trade might recover within a year, there are potential medium-term effects from the COVID-19 pandemic, notably, around supply chains and associated cross-border investment. It’s challenging to map out the impact of COVID-19. But the supply chain disruptions are on the back of a tense period of trade restrictions and during a time when additive manufacturing (i.e., 3-D printing) have contributed to an emerging trend towards greater localisation of supply chains.
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Transformation productive en Afrique : l’heure des choix

Development Matters Africa, Français , , ,

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Par Arthur Minsat, Chef d’Unité, Europe, Moyen-Orient & Afrique, Centre de développement de l’OCDE

Ce blog fait partie d’une série marquant
le 19e Forum économique international sur l’Afrique

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Photo by Patrick Sun on Unsplash

Croissance mondiale en baisse, guerre commerciale, automatisation, robotisation … : le commerce international a-t-il encore un rôle positif à jouer dans la transformation des économies de l’Union africaine ?

Si l’on regarde du côté des marchés africains, la réponse est oui : la demande interne a contribué à 69% de la croissance du continent depuis 2000, la maintenant à une moyenne de 4.6% par an, soit la plus rapide au monde après l’Asie (7,4%). Or, cette demande dynamique, portée par une croissance démographique forte, l’urbanisation et l’émergence de « classes moyennes » s’oriente de plus en plus vers des produits transformés comme l’alimentation, les boissons, la viande ou les machines génératrices d’électricité : l’un des principaux obstacles à l’émergence d’un secteur manufacturier africain riche en emplois—la faiblesse de la demande domestique—est ainsi en passe d’être levé !  Or non seulement cette « mégatendance » s’installe pour plusieurs décennies, mais elle prend de l’ampleur au moment où la perspective d’une Zone de Libre-échange Continentale Africaine (ZLECA) rend possible un bond du commerce intra-africain. Continue reading →

Towards sustainable cocoa: financial solutions for smallholders in Côte d’Ivoire

Development Matters Africa, Policy , , , ,

By Adeline Dontenville, Land-use and Finance Expert, EU REDD Facility, European Forest Institute

cocoa-1529742When you buy a chocolate bar, it’s quite likely that the cocoa in it came from Côte d’Ivoire, the world’s top producer. If so, it is almost certain that the cocoa plants were grown where dense rainforest once stood.

Expansion of cocoa production into new areas is amongst the main drivers of deforestation in Côte d’Ivoire. At current rates, the country will lose all its forest cover by 2034. Decoupling cocoa production from deforestation is therefore crucial if Côte d’Ivoire is to achieve its goals of producing zero-deforestation cocoa and restoring forest cover to 20% of its territory by 2030.

One solution for the Ivoirian government is agroforestry, a type of land management in which farmers grow not only crops but also a variety of trees for multiple purposes, like firewood, fruit and timber. It’s a way to produce cocoa while restoring forest cover, improving soil fertility and diversifying the income of producers.

But how can Côte d’Ivoire’s smallholders invest in agroforestry when they live below the poverty line and have limited access to finance? And how can large chocolate manufacturers that buy cocoa from smallholders help?
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Jeunes : oser, innover, entreprendre !

Development Matters Africa, Français, Policy, SME, Youth , , , , , ,

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Par Awa Caba, Co-fondatrice, Sooretul 1

Pour en savoir plus sur ce sujet :
Le Forum mondial de l’OCDE sur le développement 2018
Cliquer ici pour vous inscrire

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Vendeurs de fruits à Thiès, Sénégal. Photo: shutterstock.com

Au Sénégal, les Petites et Moyennes Entreprises (PME) ou structures de production et transformation des produits agricoles se trouvent essentiellement dans la banlieue de la capitale (Guédiawaye à 15 km de Dakar) et dans les zones rurales autour de Kaolack, Ziguinchor, Kédougou, Thiès et Saint-Louis. Elles disposent de peu de moyens techniques et financiers pour se développer et commercialiser leurs produits. Leurs produits manquent notoirement de visibilité et de présence sur le marché local, dans les boutiques et les grandes surfaces.

La stratégie de pénétration du marché par ces structures s’effectue, en général, à travers la participation aux foires internationales. Ce sont malheureusement les seules occasions de vente à très grande échelle. Ce déficit des produits locaux sur le marché a plusieurs causes: peu de moyens mis en œuvre pour développer le secteur, des PME insuffisamment sensibilisées aux enjeux du packaging, et un manque de d’incitation au niveau politique pour favoriser la consommation de produits locaux.

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What can governments do to harness the potential of new technologies?

Development Matters Building resilience, Policy , , , , , ,

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By Eduardo Bitran, CEO and Deputy Chairman of the Chilean Economic Development Agency (CORFO).

To learn more about countries’ strategies for economic transformation, learn about the 9th Plenary Meeting of the OECD Initiative for Global Value Chains, Production Transformation and Development hosted by the Economic and Social Commission for Asia and the Pacific (ESCAP) in Bangkok, Thailand on November 2017.

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Facilities to refine the copper from the mine in Chuquicamata, Chile

Chile is considered a success case, and Chileans today are much better off than a decade ago. However, inequality is persistent and the knowledge base of the country is still limited. What the country also faces is a productivity challenge. Chile’s total factor productivity growth has decreased from 2.3% per year in the 1990s, to a yearly rate of 0.3% from 2000 to 2009, and then to -0.2% after 2010. These trends lasted through several government terms. So, what needs to be done to sustain the country on its path towards development?
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