Rising wages and the reorientation of investments have led to a decline in China's market share. An opportunity for the economic development of the African continent.
This Sunday, November 20 will mark the world day for the industrialization of africa celebrated annually by the entire international community since its launch by the United Nations in 1989. The subject retains all its relevance today as the continent, and in particular sub-Saharan Africa, has so far remained the periphery of the global industry.
However, recent structural developments in the latter now offer a historic opportunity to give impetus to this African industrialization, as we show in the study "What Prospects for Late Industrialization for Sub-Saharan Africa", recently published by the French Development Agency (AFD) – provided, however, that you are able to grasp it.
The study focuses on theindustry light, which produces consumer goods and requires a limited use of capital. As such, this light industry has always been an activity in search of workforce abundant and low wages, which has caused a regular shift on a global scale of its production to new, more attractive territories and to create jobs, often numerous.
As a rule, these mobile industrial activities constituted the first stage of the process of industrialization of the host countries, in particular in East Asia. In this perspective, the last milestone was the constitution of the Chinese “workshop of the world”, whose market shares have reached impressive levels.
“Post-China” has begun
After Japan and the Asian “dragons”, China has indeed reached a peak in the world market in labour-intensive industries. Wages rose, investment shifted to higher value-added activities, and China's market share began to decline in light manufacturing.
“Post-China” has thus begun in these labour-intensive activities and has already opened up markets to poorer countries in Asia. The clothing sector appears to be particularly concerned, as well as other labour-intensive industries such as footwear, leather, furniture, etc.
At the same time, from a demographic point of view, the XNUMXste century will be that of Africa. While Asia has concentrated two-thirds of the increase in the world's active population for 60 years, in the coming decades, the new workers will be mainly African. In 2050, the active population of sub-Saharan Africa will include 700 million additional people; which will involve the creation of more than 20 million new jobs per year!
China's decline in labor-intensive industries therefore opens up opportunities for other developing countries. However, the number of beneficiaries of this opening remains, for the moment, limited. Most of the potential generated by China's decline in these branches is currently captured by half a dozen Asian exporters, such as Bangladesh, Vietnam and Cambodia.
If, in a first phase, the exports of these producers will partly replace those of the China, they nevertheless remain much smaller and their absorption capacity is limited. These countries will also reach a saturation point, marked by salary increases, the erosion of their competitiveness and their market shares. No longer able to absorb all the Chinese decline, they will then free up opportunities for a new generation of exporters.
30 million mobile jobs by 2030
In this second phase, at the end of this decade, exports and jobs will shift to a new generation of producers. Our study estimates, in a medium scenario, that nearly 16 million formal jobs and as many informal jobs will be affected by 2030, most of them in the branches textile-clothing-leather, or more than 30 million cumulative jobs.
However, at this time, neither East Asia, nor Bangladesh, nor North Africa and even less Latin America will be able to replace the current suppliers. Technical change and the prospects for automation will not challenge the labor intensity in the production of clothing, footwear, or leather goods.
Transitions to low-carbon economies (relocation, carbon tax) will also only have a marginal impact on the planned location of these activities by 2030. There will be no significant relocation to the North. The labor intensity of these productions will indeed remain high and will not allow massive production in countries with high or intermediate wages.
The comparative advantages in these branches will then be in India or in sub-Saharan Africa. However, if India has asserted itself so far as a major producer, with more than 50 million jobs in the clothing industry, the country remains a modest exporter whose share in world exports is stagnating. Its productions primarily target the domestic market and its international competitiveness is weak.
Certainly, these new opportunities certainly cannot transform sub-Saharan Africa into an industrial giant nor solve the employment challenge on the sub-continent. However, they open up the possibility of a doubling of current industrial employment.
Between 10 and 30 million jobs could be created in these export industries by 2030 in African countries. But which ones? At this point, reasoning on a continental scale finds its limits. If these mobile jobs take the direction ofAfrica it will be, at least initially, towards a small group of countries, which will appear more attractive and more competitive.
The main challenge will lie in “ex-factory” competitiveness. At this level, the credibility of the incentives and the quality of the infrastructures, that is to say the public policies, should make the difference.
Marc Lautier, Professor of Economics, Rennes 2 University et Jean-David Naudet, Advisor to the Executive Director Innovations, Research and Knowledge, French Development Agency (AFD)
This article is republished from The Conversation under Creative Commons license. Read theoriginal article.