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1. Exporting out of China or out of Africa? Automation versus Relocation in the Global Clothing Industry

Author:
Tilman Altenburg, Xiao Chen, Wilfried Lütkenhorst, Cornelia Staritz, and Lindsay Whitfield
Publication Date:
01-2020
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
The Discussion Paper examines the opportunities that the rising industrial wages in China will bring for Africa. China has been the industrial workbench of the global economy for decades. However, its competitive advantages are waning, particularly for labour-intensive assembly activities in the clothing, shoe, electronics and toy industries. The Chinese government estimates that up to 81 million low-cost industrial jobs are at risk of relocation to other countries - unless China can keep the companies in the country through automation. Against this background, three complementary studies were carried out. The first examines where the automation technology for clothing and footwear production stands today; the second, how clothing companies in China deal with the cost pressure: to what extent they automate, relocate within China or abroad and how great is the interest in Africa as a production location. The third part is devoted to Africa’s competitiveness in clothing assemly, with empirical findings from Ethiopia and Madagascar. The Discussion Paper shows that the manufacture of clothing can already be robotized today, but that for sewing, robotization will probably remain more expensive than manual labor in the next 15-20 years. China’s companies are investing heavily in the automation of all other production processes and at the same time shifting production to neighbouring Asian countries. In Africa, only Ethiopia is currently competitive in the manufacture of clothing, and here too there are significant institutional difficulties in absorbing large amounts of direct investment.
Topic:
Industrial Policy, Labor Issues, Foreign Direct Investment, Exports, and Automation
Political Geography:
Africa, Europe, Germany, Ethiopia, and Madagascar

2. African Jobs in the Digital Era: Export Options with a Focus on Online Labour

Author:
Elvis Melia
Publication Date:
01-2020
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
This study asks what impact the Fourth Industrial Revolution will have on job creation and catchup development in Sub-Saharan Africa over the coming decade. Can light manufacturing export sectors still serve African development the way they served East Asian development in the past? If factory floor automation reduces the need for low-cost labour in global value chains, can IT-enabled services exports become an alternative driver of African catch-up development? I present case study evidence from Kenya to show that online freelancing has become an interesting sector, both in terms of its growth trajectory, and in terms of worker upward mobility in the global knowledge economy. As life everywhere moves further into the digital realm, and global internet connectivity between Africa and the rest of the world grows, more and more young Africans who stream onto the labour market may find work in the world of global online freelancing. I discuss the building blocks needed to make online work a sustainable vehicle for African catch-up development in the years ahead.
Topic:
Development, Science and Technology, Labor Issues, Internet, Exports, Manufacturing, and Industry
Political Geography:
Kenya and Africa

3. Exporting for Growth: Identifying Leading Sectors for Egypt and Tunisia Using the Product Space Methodology (التصدیر من أجل النمو: تحدید القطاعات الرائدة في مصر وتونس باستخدام منھجیة فضاء المنتجات)

Author:
Amirah El-Haddad
Publication Date:
01-2018
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
This discussion paper is available below in both Arabic (2019) and English (2018). The structural transformation of countries moves them towards more sophisticated, higher-value products. Network analysis, using the Product Space Methodology (PSM), guides countries towards leading export sectors. The identification process rests on two pillars: (1) available opportunities, that is, products in the product space that the country does not yet export which are more sophisticated than its current exports; and (2) the stock of a country’s accumulated productive knowledge and the technical capabilities that, through spillovers, enable it to produce slightly more sophisticated products. The PSM points to a tradeoff between capabilities and complexity. The methodology identifies very basic future products that match the two countries’ equally basic capabilities. Top products are simple animal products, cream and yogurt, modestly sophisticated plastics, metals and minerals such as salt and sulphur for Egypt; and slightly more sophisticated products such as containers and bobbins (plastics) and broom handles and wooden products for Tunisia, which is the more advanced of the two countries. A more interventionist approach steers the economy towards maximum sophistication, thus identifying highly complex manufactured metals, machinery, equipment, electronics and chemicals. Despite pushing for economic growth and diversification, these sectors push urban job creation and require high-skill workers, with the implication that low-skilled labour may be pushed into unemployment or into low-value informal jobs. A middle ground is a forward-looking strategy that takes sectors’ shares in world trade into account. This approach identifies medicaments in the chemicals sector; seats (e.g. car and aeroplane seats) in the “other highly manufactured” sector; inflated rubber tyres in the chemicals community (plastics and rubber); containers, bobbins and packages of plastics also in the plastics and rubber section; and articles of iron and steel in the metals sector for Egypt. The top product for Tunisia is furniture in the highly manufactured and special purpose goods community, followed by three products in plastics and rubber in the chemicals community, and finally three machinery sectors.
Topic:
Development, Economic growth, Exports, and Economic Development
Political Geography:
Middle East, North Africa, Egypt, and Tunisia