The sTaTe of indusTrial developmenT in africa: unexploited opportunities amidst growing challenges

In recent years, African countries have demonstrated renewed commitment to industrialization as part of a broader agenda to diversify their economies, build resilience to shocks, develop productive capacity for high and sustained economic growth, create employment opportunities and substantially reduce poverty. The renewed commitment to promoting industrial development in Africa is timely. African countries have been buffeted by three very serious and interrelated external shocks, namely hikes in food prices, increases in energy prices and the global financial and economic crisis, whose economic and social costs in Africa have been quite substantial. The triple crises have refocused attention on Africa’s high vulnerability to external shocks and the need for policymakers to take urgent action to diversify their production and export structure to build resilience to shocks. The region is currently the least diversified in the world and, more importantly, has made relatively slow progress in this area in the last two decades. The export diversification index for the region improved slightly from 0.61 in 1995 to 0.58 in 2009. In developing countries in Asia, it fell from 0.32 to 0.26 and for developing America it fell from 0.36 to 0.33.