Book review – Made in Africa: Industrial Policy in Ethiopia

Justin Yifu Lin, the former chief economist at the World Bank, describes this book as “brilliant”. He writes: “It provides first-hand insights with academic rigour. Anyone concerned about development in Africa would be wise to read the book.”

Certainly, Oqubay writes authoritatively. A former mayor of Addis Ababa, he has been central to the Ethiopian government’s policymaking for 25 years, serving as a minister and special advisor to Ethiopia’s prime ministers. A veteran of the popular liberation struggle that ended the Derg dictatorship, he clearly has a passion for development economics.

Oqubay structures this book within a broad narrative that argues that industrial policy can work – and, moreover, it can work in Africa. He looks in detail at three economic sectors: the cement industry (an import substitution industry); floriculture; and leather footwear and apparal (an export-oriented light industry).

It might be argued that all three sectors represent something of a ‘comparative advantage’ for Ethiopia. Cement manufacturing is heavily energy dependent (something that Ethiopia is busily developing with its drive for hydro-electric generation); floriculture is viable as the national airline is one of the biggest fleets in Africa and has an extensive international network – an important asset for perishable cut flower exports; and leather is readily available with Ethiopia having the largest livestock herd in Africa.

The book is organised in eight chapters, three of which are sector specific case studies looking at the above three industries. One of the interesting observations made of the cement industry is that, “in sharp contrast to the overall domination by multinationals of the African cement industry, domestically owned firms continue to dominate the industry in Ethiopia”.

The floriculture industry is discussed under the witty chapter heading of “Beyond Bloom and Bust”. The industry took-off in Ethiopia in 2003, and has since become the world’s fourth-largest. The lessons that this industry presents is that government policies must be modified following an industry’s successful introduction.

Perhaps surprisingly, Oqubay writes that the leather industry “has been characterised by erratic and sluggish growth” even though its successes have been lauded elsewhere. However, the author accepts that “recent developments have begun to yield more investment, better quality, and more exports of higher end products” which perhaps explains this anomoly.

Following these three sector-specific case studies, the author pens a chapter that discusses the findings they threw up, teasing out the reasons for the “uneven outcomes”. He writes that “what matters overall is the interaction among industrial structure, linkage dynamics, and politics/political economy.” He concludes: “This has significant implications for policymakers.”

Wrapping up this significant academic treatise’s arguments in the final chapter, Oqubay argues that the study is a necessary corrective to “the over-aggregated and typically superficial hyperbole on an African economic renaissance”.

But on a more positive note, the author does say that that despite enormous challenges, Africa can catch up. The book, gratifyingly, contests the standard pessimism that Africa is a hopeless continent.

Indeed, Oqubay quotes the distinguished German economist who wrote in the 19^th century that ‘no nation has been so misconstrued and misjudged as respects its future destiny and national economy as the USA, by theorists and practical men’.

As he points out, the US is the leading economic power of our time. “History offers many examples of economic miracles occurring in unexpected places.” The bottom line is, Oqubay states: “With long-term national development vision, highly committed political leadership, and strong institutions, countries can shift from a relatively agrarian to an industrial society.”

Made in Africa: Industrial Policy in Ethiopia

By Arkebe Oqubay

£55 Oxford University Press

ISBN: 978-0-19-873989