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«Policy Research Paper Industrial Policies for the Structural Transformation of African Economies: Options and Best Practices No. 2 Policy Research ...»

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The Report has suggested some possible elements of such a typology. Yet, more work would need to be done to identify other possible characteristics to be included in the typology and to determine how they could be related to the optimal industrial policy mix. This indicates the need to construct a database containing information and data related to industry in Africa in order to situate this analysis on a solid empirical base. The database would ideally also contain the detailed description of the industrial policies currently implemented in Africa. The design of effective industrial policies needs a strong empirical foundation.

The proposed taxonomy clearly needs to be linked to micro-level studies and analysis, possibly at the level of government decision making. The topic for further research here is how to build a bridge between the different levels of analysis. Since both micro-and macro level perspectives are relevant to industrialization, the issue is how to consider them together. Another important aspect that needs to be considered in the analysis is how industrial policies are to be related to other policies which affect economic growth, namely macroeconomic policies such as monetary or fiscal policies. Since between these policies there are feedback mechanisms and each one imposes constraints on the other, their simultaneous consideration is fundamental.

This paper has considered several important elements relating to discussions about industrial policy in Africa. One of its main conclusions is that African economies need to refocus on industrial policy in order to induce structural transformation which is the key to economic growth.

Among the elements for a successful industrial policy are the understanding of the political equilibrium of the society, of the actors and their interests and the political institutions. Once the best industrial policy mix for a given country has been identified, the next step is to understand how to make its implementation possible. In other words, normative industrial policy always requires to be complemented by positive industrial policy. Moreover, it has to be acknowledged that industrial police has to take place in a complex environment where other economic variables have to be taken into consideration. Industrial policy success also depends on the level and dynamism of domestic savings and investment, on the strength of the technology accumulation process and on the ability of the government to satisfy the budget constraint. These are all key drivers of a country’s ability to pursue industrialization. But their consideration and interaction with the domain of industrial policy need further research. Finally, it has been argued that once the need for industrial policy is acknowledged and the political, institutional and economic context is correctly considered, the difficult task of finding the best policy mix begins. This paper aims to be a contribution to this valuable effort.

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