Download Promoting high-level sustainable growth to reduce unemployment in

Promoting high-level
sustainable growth to reduce
unemployment in Africa
Issues Paper
Emmanuel Nnadozie
Director, Economic Development and NEPAD Division, UNECA
Meeting of the Committee of Experts of the 3rd Joint Annual Meetings of the AU
Conference of Ministers of Economy and Finance and ECA Conference of African
Ministers of Finance, Planning and Economic Development
25-28 March 2010, Lilongwe, Malawi
Outline
• Lessons from the global financial and economic
crisis
• The great paradox and the need for a new
approach and a new emphasis on employment
• Country specific growth strategy to address
jobless growth
• Reinforcing the enablers
• Explicit promotion of employment
• Learning from success stories and building
strategic partnerships
• What’s new in all of these?
Current Situation in Africa
• Since the outbreak of the global crises,
African GDP growth has declined significantly
to 4.9% in 2008, 1.6 % in 2009 but a
projected recovery of 4.3% in 2010
• As a result of the crises, unemployment and
poverty has been exacerbated
• ILO (2010) estimates that an extra 20million
people in Africa are living on less than US$1
a day in 2009 compared to 2008
Lessons from the Global
Crisis
1. Africa’s vulnerability to external shocks
2. The impact was severe and extend beyond
growth to wider economy and social conditions
3. The impact could have been worse had
macroeconomic fundamentals not been sound
4. Because impact of the shock depended on the
nature of the economy—hence the need for
diversification
5. The shock-induced collapse of growth in Africa
shows its fragility and questions its sustainability
Policy lessons
• The crises provides a number of short- and long-term
policy lessons to African policymakers such as;
-the need to increase policy space to cope with
externalities,
-increase domestic resource mobilization
-promote regional integration
-economic diversification etc
• The biggest lesson is that the crisis has presented
Africa with a great opportunity to look again at the way
business has been done
• Beyond crises, African countries need to reformulate
their long term growth and employment strategies in
order to reduce poverty.
The paradox of high growth
and poverty rates
• African countries witnessed a high commoditydriven growth before the global financial and
economic crises in 2008
• This growth was jobless and did not translate to
poverty reduction
• The challenge before many African countries is
how to restart, accelerate and sustain growth
and how to ensure that this growth leads to
poverty eradication
The growth-employmentpoverty reduction nexus
• There are many ways of reducing poverty but the most
sustainable way is through decent jobs
• Growth is the key to poverty reduction and
employment is the vehicle through which growth can
translate into poverty reduction
• Hence we emphasize the link among growth,
employment and eradication of poverty
• This needs to be fully understood, fully accepted and
fully embraced
What should African
countries do
• Country specific strategy to address the paradox of jobless
growth and persistence of poverty through:
– Igniting the engines of high level, job-creating and
sustainable growth to promote diversification
– Paying attention to the growth drivers
– Reinforcing the growth enablers
– Promoting growth
– Learning from successful countries and building strategic
partnerships to support growth strategies
Igniting the engines of
growth
• Export of primary products is not a sustainable engine
of growth!
• Ignite the dynamic engines of high-level, job creating
and sustained growth and diversification
• The engines of growth must be driven by high
productivity sectors with important spillover effects on
the rest of the economy
–
–
–
–
–
Agricultural modernisation
Construction
Textiles
Manufacturing
Services
Critical growth drivers
• Adequate supply of factors of production is not a
sufficient condition for sustainable growth; certain
growth drivers must be in place for growth to occur at
high and sustainable levels
• Pay attention to the growth drivers
– Human and physical capital and technology and innovation
•
•
•
•
Industrial policy if necessary
National and regional agricultural value chains
Strengthen and support the private sector
Address the challenges of the informal sector, small
businesses and microenterprises
Strengthening the critical
growth drivers
• Growth depends on the quantity/quality of available
production factors as well as the efficiency with which
these production factors are used
• Productivity growth, technology and structural change
are essential for high-level sustainable long-term growth
Reinforcing the enablers
• Economic analysis shows that countries that have grown at
significantly high and sustainable levels have provided
-an enabling environment marked by peace and security,
-quality institutions and infrastructure
-support for the private sector
• We are talking about the “Developmental State”
– setting a long term developmental vision for economic
transformation and poverty reduction
•
•
•
•
•
Planning is back!
Strong and functional institutions
Infrastructure
Good governance
Good policies
Employment friendly
strategies/policies
• Lessons from emerging countries include
– effective country-specific planning, growth
strategies and regional coordination
– macroeconomic stability and policy flexibility
– striking the balance between government
interventions and market autonomy
– adaptation and application of technology to
production processes
– investment-friendly conditions
– effective governance and capacity building etc.
– Knowing that what it takes to start growth is not
necessarily what it takes to sustain it
Employment promotion
• Employment strategies
– Creating new decent jobs depends on accelerating
economic growth as well as on employment-friendly
macroeconomic and sectoral policies plus what the
ILO does very well
• Employment mainstreaming
– Mainstreaming employment into national
development strategies though systematic promotion
of mutually reinforcing policies and creating synergies
in support of employment goals
• Labour market reforms
– Addressing unfavorable labour market conditions
including insufficient demand and supply of skilled
labour, etc
Lessons from success stories
• ECA study on Lessons from East Asia and Latin America
• Implement good policies for sustainable growth and employment
– Resist the temptation to revert to populist policies that appeal to
people’s sentiment but hurt long-term growth and employment in the
economy
– Import liberalization without export diversification will lead to no good
• Introduce institutional reforms to improve attractiveness to foreign
investment
• Shift from reliance on export of primary and mineral products to the
export of manufactured and processed products
• Institute effective industrial policy
• Strengthen innovative and technological capabilities
• Seize windows of opportunities at the early stages of product lifecycles
• Provide incentives for the labour force to move away from lowproductivity to high productivity informal-sector activities
In addition…
• Don’t reinvent the wheel improve on it
• Establish and strengthen south-south
cooperation to support country growth
strategy
• Develop a strategy to engage China
Role of Key Stakeholders
• Implementation of declarations and commitments on
decent work still remains a major challenge for African
governments
• African countries need to realize that employment should
be the central focus of macroeconomic policy in
particular the budget process.
• Employment friendly strategies must be time bound,
measurable and agreeable by all stakeholders
• Employment targets must be part of government budgets
and they should be effectively implemented and
monitored
What’s new in all these?
• The theme of the meeting is not new.
– Should we be asking: “What is new?” or “should we be
asking: “what is fundamental to Africa’s development?”
• Nonetheless, of note is…
– The emphasis we place on the lessons and opportunity that
the global financial and economic crisis offers, which Africa
must seize
– The way we have articulated the issues:
• growth is good but insufficient for development, which means that
in addition to occurring at high levels, it must be sustained, jobcreating and shared to improve human welfare
– The renewed emphasis on employment and the need to link
it to growth and povertyeradication to achieve the MDGs
and the objectives of AU and its NEPAD programme
What is new?
• The articulation of the key role of the
developmental state and those of other key
stakeholders and in this regard, the emphasis we
place on the issues of…
– structural diversification, human and physical capital
accumulation, employment mainstreaming,
employment targeting, igniting the engines of growth,
regional growth poles, industrial policies, publicprivate partnerships and south-south cooperation
• The presentation of success stories from Africa
and elsewhere and lessons that can be drawn
from these success stories.
Conclusion
The road from growth to poverty eradication is paved not
with a fixation on low inflation but with an unrelenting
attention to employment—I mean decent jobs!
EN
Thank You!
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