inclusive industrial development - die_gdi · “inclusive growth…allows people to contribute to...

EQuIP Enhancing the Quality of Industrial Policies

Inclusive Industrial Development

A Tool to Help Integrate Quality Employment Generation and Poverty

Alleviation Considerations into Industrial Policy Formulation

Amanda Janoo UNIDO – Industrial Policy Advice Unit


“Industrial Policy is back on the agenda. It is now widely accepted that those

countries that managed to catch up with the old industrialized, high-income

countries are the ones whose governments proactively promoted structural change, encouraging the search for new business

models and markets and channeling resources into promising and socially

desirable new activities”

Industrial Policy

Tilman Altenburg


Context for Tool Development

1. Simple and intuitive

2. Designed for analysts in low-income countries

3. Non-prescriptive

4. Compliment other tools

5. Concept rich


“Inclusive growth…allows people to contribute to and benefit from economic growth. Rapid growth is unquestionably necessary for

substantial poverty reduction, but for this growth to be sustainable in the long run, it should be broad-based across sectors , and inclusive of the

large part of the country’s labor force. This definition of inclusive growth … captures the importance of structural transformation for economic

diversification and competition, including creative destruction jobs and firms”

- Ianchovinchina & Lundstrom

Inclusive Growth


Inclusive Industrial Development

What information can help low-income

countries to promote a process of structural

change which generates broad-based quality

employment and alleviates poverty?


Tools in Practice


Sub-Sector Employment Analysis

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000 Food and beverages

Non-metallic mineral products

Textiles

Rubber and plastics products

Leather, leather products and footwear Chemicals and chemical products

Furniture; manufacturing n.e.c. Wearing apparel, fur

Printing and publishing

Fabricated metal products

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Other

Fabricated metal

products


Wearing apparel, fur

Furniture; manufacturing n.e.c.

Chemicals and chemical

products

Leather, leather

products and footwear

Rubber and plastics products

Textiles


Food and beverages


MVA Growth

Employment Elasticity

Positive VA Growth Negative VA Growth

ε < .2 (-) employment growth

(+) productivity growth

Jobless Growth

(+) employment growth

(-) productivity growth

Unproductive Employment Growth

.2 ≤ ε ≤ .5 (+) employment growth


Moderate Productive Employment Growth

(-) employment growth


Dying Sectors

.5 ≤ ε ≤ 1 (+) employment growth


High Productive Employment Growth!!!



Dying Sectors

ε > 1 (+) employment growth


Unproductive Employment Growth



Jobless Growth

Interpreting Employment Elasticities


Sub-Sector Employment Performance


Sub-Sector Wage Analysis

0

200

400

600

800

1000

1200

1400

1600

1800

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Wag

es/

Emp

loye

es

(USD

/Pe

rso

n)

Wage Trends in Select Sub-Sectors Relative to GDP/Capita

Food and beverages



Furniture; manufacturing n.e.c.

Textiles

Machinery and equipment n.e.c.

GDP/Capita


Interpreting Wage and Productivity Trends


Informal Sector Analysis

3%

88%

1%

1% 1%

2%

4%

2001/2 Informal Employment Composition Food & Bev (excluding grain

mill) Grain Mill

Textiles

Wearing Apparel, Dressing and Dying of Fur Luggage, Handbags and Footwear Wood Products

Paper Products

Publishing & Printing

Non-Metallic Mineral Products

Fabricated Metal Products

Parts and Accessories for Motor Vehicles Furniture

3%

57%

1% 3%

1%

2%

9%

0%

0%

24%

2007/8 InformalEmployment Composition Food & Bev (excluding grain

mill) Grain Mill

Textiles

Wearing Apparel, Dressing and Dying of Fur Luggage, Handbags and Footwear Wood Products

Paper Products

Publishing & Printing

Chemicals and Chemical Products Non-Metallic Mineral Products

Fabricated Metal Products

Machinery and Equipment

Furniture


Maximizing Poverty Alleviation • Women’s economic empowerment

contributes to poverty alleviation

• Sectors absorbing women and where the gender wage gap is declining

• Low Tech, Labor-Intensive sectors will absorb the working poor

• Balanced and coherent industrial policy initiatives



Estimating Indirect Effects Food & Beverages

BW Corridor

10% 90%

Food & Beverages 1.06191 1.17430

Agriculture 0.12772 0.76525

Financial Intermediation & Business Activities 0.03074 0.27917

Wholesale Trade 0.01533 0.11164

Petroleum, Chemical & Non-Metallic Mineral 0.01274 0.09959

Transport 0.01425 0.08890

Wood & Paper 0.01341 0.07214

Fishing 0.01170 0.05909

Metal Products 0.00848 0.06294

Electricity, Gas & Water 0.00505 0.04112


Textiles & Wearing Apparel BW Corridor

10% 90%

Textiles & Wearing Apparel 1.04613 1.21940




Transport 0.02029 0.09633

Wood & Paper 0.01465 0.05802

Agriculture 0.00972 0.20056


Electrical & Machinery 0.00669 0.04219

Post & Telecommunications 0.00668 0.03550

Petroleum, Chemical & Non-

Metallic Mineral

BW Corridor

10% 90%




Transport 0.03569 0.09878

Mining & Quarrying 0.02669 0.13559



Wood & Paper 0.02174 0.04782


Construction 0.01430 0.03770 Metal Products

BW Corridor

10% 90%






Transport 0.03072 0.09571


Mining & Quarrying 0.00794 0.05010

Construction 0.01301 0.03595

Post & Telecommunications 0.01137 0.03403


Strategy Setting


• Targets based on past performance

• Estimating inclusiveness effects of economic targets

• Identifying a Role Model

• Setting targets via benchmarking


Conclusion



Thank You

Amanda Janoo [email protected]

mailto:[email protected]


List of Indicators and Tools Macro Indicators • Sectoral Composition (employment)/Growth Rates

– What is the absorptive capacity of the industrial sector for your workforce?

– Structural change from employment perspective • Illustrative method: bar chart, benchmarking across

time w/ line graphs

• Manufacturing Employment/Total Employment and Growth Rate – How large is the manufacturing sector in terms of

employment? – How is this share changing over time?

• Illustrative method: benchmarking across time w/ line graphs

• Employment/MVA – How efficiently is industrial development generating

employment? • Illustrative method: benchmarking across time w/line

graph

• Wage Bill/MVA – How efficiently is industrial development translating into

higher wages for workers? • Illustrative method: benchmarking across time w/line

graph

• Poverty Rate – How extreme is poverty in the country?

• Illustrative Method: benchmarking across time w/ line graph

Sub-Sector Indicators • Employment composition

- How is manufacturing employment distributed within the sectors?

- How this composition is changing over time? • Illustrative method: Bar Graphs of two different

years

• Average Annual Employment Growth Rates - Which of the manufacturing sub-sectors are generating

the most employment? - how is this changing the composition over time?

• Illustrative method: Table of annual average growth rates and line graph to see fluctuations

• Gender Ratio (female/male employment) - Which sectors are absorbing the most women?

• Illustrative method: Table with average growth of gender ratio

• Employment Elasticity - How much employment can we expect to generated

from industrial growth? • Illustrative method: table which classifies sectors on

the basis of productive employment generation, jobless growth, dying sectors, etc…

• Wage rates/national minimum wage - Are sector wages providing for basic needs?

• Illustrative method: line graphs showing changes over time


List of Indicators and Tools Cont. Sub-Sector Indicators • Gender Wage Gaps (Ratio)

– Which sectors are women gaining in economic employment?

• Illustrative method: Table with average growth rate in wage gap over time

• Wage Elasticity of Productivity – How much are the gains of industrial development being

transferred to workers? • Illustrative method: Table which classified sectors on

the basis of high, moderate, low and negative wage elasticity

• Cross-Reference Employment & Wage Elasticity – Are there sectors which are generating high levels of

productive employment and providing increasing wages? • Illustrative method: Sector classification of sectors

which high/moderate employment elasticity and high/moderate wage elasticity of productivity

• Informal Sector Employment – How much industrial employment is being generated in

the informal sector? • Illustrative method: Bar charts of two different years

• Formal vs. Informal Wage Rate – How do wages compare between the formal and informal

sector in the same sector? • Illustrative Method: Create table with ratio’s and

average growth rate

Sub-Sector Indicators • Employment Elasticity of Informal Sectors

– How much employment is being generated from increased MVA in informal industrial sectors

• Illustrative method: Use employment elasticity table to classify sectors

• Technological Classifications – Which sectors are the most/least skill-biased?

• Illustrative method: Use UNIDO technology classifications to categorize sectors the basis of how how tech they are as proxy for labor intensity of sectors/ skill-bias

• Input-Output Ratio – What are the indirect effects of sector

expansion/contraction? • Illustrative method: Use generalized I-O table to

illustrate backward linkages from main manufacturing sectors to other sectors in the economy



Gender Dynamics



Informal Sub-Sector Analysis



Informal Sub-Sector Analysis

0

200

400

600

800

1000

1200

Wag

e B

ill/E

mp

loye

e (

USD

pe

r P

ers

on

)

Informal Sub-Sector Wage Bill

2001 Average

Wage

2007 Average

Wage



Informal Wage & Productivity Trends



Informal Wage Output Table

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