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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. China’s Growing Engagement with the UNDS as an Emerging Nation: Changing Rationales, Funding Preferences and Future Trends

Author:
Mao Ruipeng
Publication Date:
01-2020
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
As China deepens its engagement in global governance and development, its strategic motivation and rising influence within the UN and on international rules and norms are attracting the world’s attention. This paper focuses on China’s engagement with the UNDS, specifically Chinese funding and allocation decisions. China’s UNDS funding has risen rapidly since 2008 and even accelerated in 2013. Between 2013 and 2017, Chinese funding (excluding local resources) grew at an annual average rate of 33.8 per cent. In 2017, its total contribution reached USD 325.869 million. China’s shares of core funding and assessed contribution in its total UNDS funding are much higher than traditional donor countries. However, the share of non-core funding has also jumped. While China tends to mostly provide funds for UNDS development projects, in recent years it has also been hiking funding for humanitarian assistance. This paper also examines three cases of China’s earmarked funding – to the UNDP and the WFP, which receive the largest share of its UNDS funds, as well as for UNPDF operations, which count as a voluntary contribution. There are several reasons for China’s growing engagement with the UNDS, from evolving perception of foreign aid and appreciating the UN’s multilateral assets to fostering the reputation of “responsible great nation” and pushing forward the Belt and Road Initiative (BRI) through cooperation with the UNDS. In general, China continues to integrate into the global development system, and can be expected to maintain its support for the UN and continue to contribute to the UNDS.
Topic:
Development, International Law, United Nations, Belt and Road Initiative (BRI), and Norms
Political Geography:
China and Global

3. 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

4. Digitalisation and its Impact on SME Finance in Sub-Saharan Africa: Reviewing the Hype and Actual Developments

Author:
Sabrina Disse and Christoph Sommer
Publication Date:
01-2020
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
The vast majority of enterprises worldwide can be categorized as small and medium-sized enterprises (SMEs). They play a crucial role in providing a livelihood and income for diverse segments of the labour force, in creating new jobs, fostering valued added and economic growth. In addition, SMEs are associated with innovation, productivity enhancement as well as economic diversification and inclusiveness. However, almost half of the formal enterprises in low and middle-income countries (LMICs) are financially constrained, meaning that SMEs’ financing needs are unserved or underserved. Digitalisation is often seen as game changer that overcomes the challenges of SME finance by capitalising on the reduced transaction costs, the broader access to more and alternative data and the new customer experience shaped by convenience and simplicity. This paper aims to answer the question what the role of digital financial instruments in SME finance in Sub-Saharan Africa is. It reviews and discusses the opportunities and challenges of digital advances for SME finance in general and of three specific financing instruments, namely mobile money (including digital credits), crowdfunding (including peer-to-peer lending) and public equity. It contrasts the hype around digital finance with actual market developments and trends in Africa. Main findings indicate that even though digital advances have led to impressive growth of certain digital finance instruments, it has not triggered a remake of the financial system. Digitalisation of the financial system is less disruptive than many expected, but does gradually change the financing landscapes. Some markets have added innovative and dynamic niches shaped by digital financial services, but new digital players have in general not replaced the incumbents. Furthermore, the contributions of digital instruments to finance in general and SME finance in particular are still very limited on the African continent compared to either the portfolio of outstanding SME finance by banks or the capital raised by similar innovative instruments elsewhere in the world. Many uncertainties remain, most importantly the response of regulators and responsible authorities. They need to provide a suitable legal framework to strike a balance between the innovation and growth aspiration of the digital finance industry and the integrity and stability of markets and the financial system at large. Also regulators have to safeguard data privacy and cybersecurity and prevent illicit financial flows, bad practices around excessive data collection, intransparency and poor reporting as well as exploitation of vulnerable groups with limited financial literacy. Governments also have to address the increasing gap towards those left behind by digital finance due to issues with ownership of a digital device, mobile network coverage and the internet connection or issues of basic digital and financial literacy.
Topic:
Development, Science and Technology, Digital Economy, Business, Economic growth, and Diversification
Political Geography:
Africa

5. The Implementation of the G7 and G20 Gender Equality Goals in Germany

Author:
Axel Berger, Sören Hilbrich, and Gabriele Köhler
Publication Date:
01-2020
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
In recent years, the Group of Seven (G7) and Group of Twenty (G20) have placed increasing emphasis on gender equality. As part of this focus, the member states of both institutions have set out a series of objectives aimed at advancing gender equality. This report examines the degree to which these goals have been implemented in Germany. First, the gender equality goals that both institutions have set out since 2009 are presented and systematised. The report then investigates the current state of progress in Germany and describes measures that have already been undertaken to implement the goals.
Topic:
Development, Gender Issues, G20, Women, Inequality, and G7
Political Geography:
Europe and Germany

6. The Role of Values for Social Cohesion: Theoretical Explication and Empirical Exploration

Author:
Daniel Nowack and Sophia Schoderer
Publication Date:
01-2020
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
Shared values are deemed necessary as a solid foundation for social cohesion by commentators and observers in many countries. However, when examining what kind of values this is based on, answers often come down to platitudes and national clichés. This discussion paper offers some clarification through both a theoretical explication and an empirical exploration concerning the general role of values for social cohesion. Values are notions about desirable, trans-situational end-states and behaviours. They fall into two categories, individual and societal values. We provide a critical discussion of the most prominent conceptualisations and their operationalisation in the social sciences. Values affect social cohesion in three possible pathways: First, when they are shared; second, when they promote behaviour per se conducive to social cohesion and third, through their effect on policy choice and institutional design. We review evidence provided by the research literature for each of these pathways. We further explore the third pathway by deriving from the research literature the conjecture that a cultural value emphasis on egalitarianism makes a universalistic scope of welfare institutions more likely, which in turn increases social and political trust. We first examine this conjecture with a series of regression models, and then run a mediation analysis. The results show that (1.) egalitarian values are moderately strongly and positively linked to universalistic welfare institutions, but that (2.) welfare institutions mediate the association of egalitarian values with social trust only to a small extent and that (3.) more universalistic welfare institutions counteract a negative association between egalitarian values and institutional trust.
Topic:
Culture, Institutions, Values, Welfare, and Social Cohesion
Political Geography:
Germany and Global Focus

7. The Trade Effects of the Economic Partnership Agreements between the European Union and the African, Caribbean and Pacific Group of States: Early Empirical Insights from Panel Data

Author:
Frederik Stender, Axel Berger, Clara Brandi, and Jakob Schwab
Publication Date:
01-2020
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
This study provides early ex-post empirical evidence on the effects of provisionally applied Economic Partnership Agreements (EPAs) on two-way trade flows between the European Union (EU) and the African, Caribbean and Pacific Group of States (ACP). Employing the gravity model of trade, we do not find a general EPA effect on total exports from ACP countries to the EU nor on total exports from the EU to ACP countries. We do, however, find heterogeneous effects when focusing on specific agreements and economic sectors. While the agreement between the EU and the Caribbean Forum (CARIFORUM), which concluded several years ahead of the other EPAs in 2008, if anything, reduced imports from the EU overall, the provisional application of the other EPAs seems to have at least partly led to increased imports from the EU to some partner countries. More specifically, the estimation results suggest an increase in the total imports from the EU only in the Southern Africa Development Community (SADC) EPA partner countries. On the sectoral level, by comparison, we find increases in the EU’s agricultural exports to SADC, Eastern and Southern Africa (ESA) and the Pacific. Lastly, in the area of manufactures trade, we find decreases of exports of the ESA and SADC countries to the EU, but increases in imports from the EU into SADC countries. While this early assessment of the EPA effects merits attention given the importance of monitoring future implications of these agreements, it is still too early for a final verdict on the EPAs’ effects and future research is needed to investigate the mid- and long-term consequences of these agreements.
Topic:
International Relations, Development, International Cooperation, Regional Cooperation, Treaties and Agreements, Manufacturing, and Trade
Political Geography:
Africa, Europe, South Africa, Caribbean, Asia-Pacific, and European Union

8. Strategies to Strengthen Socially Responsible Public Procurement Practices in German Municipalities: A Mapping Exercise

Author:
Maximilian Müngersdorff and Tim Stoffel
Publication Date:
01-2020
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
Socially Responsible Public Procurement (SRPP) is a tool to use the market power of the public sector to trigger private companies to provide socially responsible products and services. In this sense, SRPP contributes to achieving SDG 12 of the Agenda 2030 (“Ensure sustainable consumption and production patterns”). However, while regulations at EU level and within the member states encourage SRPP, German municipalities lack effective implementation of social criteria in their tenders. This gap seriously decreases the triggering effect of the country’s procurement expenditures of which municipalities account for more than 50 per cent. By triangulating interview data with secondary literature, this paper identifies success factors and triggers for the introduction and consolidation of SRPP practices in German municipalities. Our research shows that there is not one gold standard of implementing SRPP in a municipality (as suggested by most existing toolboxes and handbooks on the topic). Rather, our paper presents a compilation of various different entry points from which practitioners may embark on fitting pathways. Beyond this, we have translated the most crucial success factors and triggers into nine recommendations for political action, for example, with regard to clear and ambitious regulations; measures to ensure broad support for SRPP within the municipal administration; and approaches for a more strategic procurement management. Our research also highlights the role played by individuals, that is, the importance of personal commitment for successful implementation of SRPP. This finding, however, is problematic when it comes to transferring and upscaling good practices. To reach a high level of broad and ambitious SRPP action, the balance between individual, regulatory and institutional measures has to change for the benefit of the latter two.
Topic:
Governance, Regulation, Business, and Private Sector
Political Geography:
Europe and Germany

9. Socially Responsible Public Procurement (SRPP) in Multi-Level Regulatory Frameworks: Assessment Report on Policy Space for SRPP Regulation and Implementation in Germany and Kenya

Author:
Tim Stoffel
Publication Date:
01-2020
Content Type:
Special Report
Institution:
German Development Institute (DIE)
Abstract:
Public Procurement is a highly regulated process ruled by a complex legal framework. It comprises not only national but also, increasingly, sub- and supranational regulations, giving rise to a multi-level regulatory governance of public procurement. The integration of sustainability aspects into public procurement, as called for in goal 12.7 of the Sustainable Development Goals (SDGs) of the Agenda 2030, needs to take this multi-level character into account. This reports focuses on social considerations, which are a central part of sustainable procurement – whether with a domestic focus or along international value chains. Social considerations have been somewhat neglected in Europe, whereas they feature prominently in procurement regulations in many countries of the Global South, especially in Sub-Saharan Africa (SSA). The advanced process of regional integration in the European Union (EU) and the progress made towards integration in some regional economic communities in Sub-Saharan Africa call for deeper analyses of the influence of the higher levels of the regulatory framework on the lower levels. The question is whether public entities, from the national down to the local level, are required or at least have the option to integrate socially responsible public procurement (SRPP) into their procurement processes and tenders, or at least have the option to do so. This report is conducted as part of the project “Municipalities Promoting and Shaping Sustainable Value Creation (MUPASS) - Public Procurement for Fair and Sustainable Production”, implemented by DIE in cooperation with Service Agency Municipalities in One World (SKEW) with funds from the Federal Ministry of Economic Cooperation and Development (BMZ) and compares public procurement in Germany and Kenya. In both countries, the multi-level regulatory frameworks allow for SRPP regulations and practices ar the national and sub-national levels of government. There is, however, an implementation gap for SRPP in Germany and Kenya that appears to be independent from the specifics of the respective regulatory framework. To tackle this, supportive measures, such as capacity building, are key. Furthermore, Regional economic communities, such as the EU and the Common Market for Eastern and Southern Africa (COMESA), can play a role in promoting SRPP, even without introducing mandatory provisions. At the other end of the multi-level regulatory spectrum, municipalities in the EU had and have an important role in SRPP implementation, that might be replicable by sub-national public entities in Kenya and other contexts.
Topic:
Development, Governance, Regulation, and Sustainable Development Goals
Political Geography:
Kenya, Africa, Europe, and Germany

10. Revenue Collection and Social Policies: Their Underestimated Contribution to Social Cohesion

Author:
Francesco Burchi, Christoph Strupat, and Armin von Schiller
Publication Date:
01-2020
Content Type:
Policy Brief
Institution:
German Development Institute (DIE)
Abstract:
Social cohesion is an important precondition for peaceful and economically successful societies. The question of how societies hold together and which policies enhance social cohesion has become a relevant topic on both national and international agendas. This Briefing Paper stresses the contribution of revenue collection and social policies, and in particular the interlinkages between the two. It is evident that revenue mobilisation and social policies are intrinsically intertwined. It is impossible to think carefully about either independently of the other. In particular, revenue is needed to finance more ambitious social policies and allow countries to reach goals, such as those included in the 2030 Agenda for Sustainable Development. Similarly, better social policies can increase the acceptance of higher taxes and fees. Furthermore, and often underestimated, a better understanding of the interlinkages between revenue generation and social policies can provide a significant contribution to strengthening social cohesion – in particular, concerning state–citizen relationships. In order to shed light on these interlinkages, it is useful to have a closer look at the concept of the “fiscal contract”, which is based on the core idea that governments exchange public services for revenue. Fiscal contracts can be characterised along two dimensions: (i) level of endorsement, that is, the number of actors and groups that at least accept, and ideally proactively support, the fiscal contract, and (ii) level of involvement, that is, the share of the population that is involved as taxpayer, as beneficiary of social policies or both. In many developing countries, either because of incapacity or biased state action towards elite groups, the level of involvement is rather low. Given the common perception that policies are unjust and inefficient, in many developing countries the level of endorsement is also low. It is precisely in these contexts that interventions on either side of the public budget are crucial and can have a significant societal effect beyond the fiscal realm. We argue that development programmes need to be especially aware of the potential impacts (negative and positive) that work on revenue collection and social policies can have on the fiscal contract and beyond, and we call on donors and policy-makers alike to recognise these areas as relevant for social cohesion. We specifically identify three key mechanisms connecting social policies and revenue collection through which policy-makers could strengthen the fiscal contract and, thereby, enhance social cohesion: 1. Increasing the effectiveness and/or coverage of public social policies. These interventions could improve the perceptions that people – and not only the direct beneficiaries – have of the state, raising their willingness to pay taxes and, with that, improving revenues. 2. Broadening the tax base. This is likely to generate new revenue that can finance new policies, but more importantly it will increase the level of involvement, which will have other effects, such as increasing government responsiveness and accountability in the use of public resources. 3. Enhancing transparency. This can stimulate public debate and affect people’s perceptions of the fiscal system. In order to obtain this result, government campaigns aimed at diffusing information about the main features of policies realised are particularly useful, as are interventions to improve the monitoring and evaluation system.
Topic:
Development, Finance, Economic growth, Tax Systems, Transparency, and Social Cohesion
Political Geography:
Germany and Global Focus