“The book is set at the junction of two agendas, raising pertinent questions related to the need for integrating economic transformation, sustainable management of natural resources, social inclusion, sustainable agriculture and industrial develop- ment, sustainable urbanization and rural prosperity. It also suggests the need to calibrate the post-2015 SDGs agenda according to the needs of specific regions and countries. The book and its content could not have been timed better.” – Amina Mohammed, United Nations Special Advisor on Post-2015 Development Planning “This book not only deepens our understanding of the sustainable development goals but it is also persuasive in its argument for redirecting our collective efforts in Africa to the central role of industrialization as an engine of economic devel- opment. It is well researched and refreshing in the techniques it deploys to make the case. I fully recommend it to academia, political players and policy actors.” – Professor Yemi Osinbajo, Professor of Law and Vice President, Federal Republic of Nigeria “The book is a collection of eight excellent chapters written by nine African and non-African specialists addressing the general theme of sustainable industrializa- tion and development of Africa. The lead authors are authorities in the field who give insightful definitions for ‘sustainable development,’ profound analysis of the status and potential of Africa’s services sector, linkage dynamics and natural resources, diversification and catch-up, and a thorough treatise on sustainable development and inequality of opportunity in Africa. I would consider the book as essential reading by all the stakeholders of development – economists, policy makers, development partners, university professors in the developmental sciences and graduate students.” – Professor Berhanu Abegaz, Executive Director, African Academy of Sciences “Too much emphasis on trade in the last 20 years has overlooked that industri- alization is key to fostering economic and social development. This book must be welcomed not only because it stresses this notion but also for many other reasons. It analyzes in-depth the situation and industrialization prospects for Africa, often seen as condemned to be a mere supplier of raw materials; emphasizes the role of the states in leading the transformation of national economies; advocates an environmentally sustainable and equity-based policy, adapted to the reality of each country; recognizes the importance of innovation (including by imita- tion and learning); and brings the discussion of these issues in the context of the Sustainable Development Goals that were elaborated pursuant to the World Conference on Sustainable Development – Rio+20. The quality and coverage of the research conducted for this book provide a unique set of materials valuable to academics, policy makers and the broader public interested in the future of African societies and sustainable development.” – Professor Carlos Correa, Director, Center for Interdisciplinary Studies on Industrial Property and Economics, University of Buenos Aires “A key aspect of Sustainable Development Goals is building the productive capacity of developing countries. This book offers a most comprehensive and balanced approach to this issue, which has been rarely available so far. It analyzes the ‘three main alternatives’ of manufacturing, service, and resource-based paths toward development, besides the roles of the GVCs, and thereby provides evidence-based policy suggestions.” – Professor Keun Lee, Professor of Economics, Seoul National University “This book ‘Sustainable Industrialization in Africa: Toward a New Development Agenda’ promises to re-open the debate on the role of industrialization in Africa and its contribution to economic growth. The book is well focused with defini- tive policy recommendations drawing on the MDGs and anchored on the 2030 Agenda for Sustainable Development. I fully endorse and recommend this novel book to policy practitioners, academics as well as industrialists.” – O. Ibidapo-Obe, past president, Nigerian Academy of Sciences and Fellow African Academy of Sciences; Distinguished Professor; Vice Chancellor University of Lagos (2000–2007) Sustainable Industrialization in Africa Toward a New Development Agenda Edited by Padmashree Gehl Sampath and Banji Oyelaran-Oyeyinka Selection and editorial content © Padmashree Gehl Sampath and Banji Oyelaran-Oyelaran 2016 Chapters © Contributors 2016 Foreword © Amina J. Mohammed 2016 Softcover reprint of the hardcover 1st edition 2016 978-1-137-56111-4 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6–10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2016 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN 978-1-349-57360-8 ISBN 978-1-137-56112-1 (eBook) DOI 10.1007/978-1-137-56112-1 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress. Contents List of Illustrations v ii Foreword ix Amina J. Mohammed Preface xii Notes on Contributors xiii 1 Sustainable Industrialization in Africa: Toward a New Development Agenda 1 Padmashree Gehl Sampath 2 Revisiting the MDGs in an African Perspective: Lessons for the Sustainable Development Goals 20 Olumayokun Soremekun and Banji Oyelaran-Oyeyinka 3 Challenges to and Opportunities for Structural Transformation: Africa’s Service Sector 46 Padmashree Gehl Sampath and Donatus Ayitey 4 Linkage Dynamics and Natural Resources: Diversification and Catch-Up 6 6 David Kaplan 5 External Opportunities, Innovation and Industrial Growth: The Case of GVCs in Africa 85 Padmashree Gehl Sampath and Donatus Ayitey 6 Growth and Structural Change in Africa: Development Strategies for the Learning Economy 113 Bengt-Åke Lundvall and Rasmus Lema v vi Contents 7 Using Industrialization to Raise Urban Living Standards 1 39 Oyebanke Oyeyinka 8 Sustainable Development and Inequality of Opportunity in Africa 173 Olumayokun Soremekun, Oyebanke Oyeyinka and Dominique Haughton Index 201 List of Illustrations Box 7.1 Sample questions of subjective living standard measurements 149 Figures 2.1 DAG pattern by PC algorithm 28 2.2 PC DAG model 32 2.3 Research model 36 2.4 PLS formative model 38 5.1 Results of policy effects on industry value-added and participation in GVCs over the two policy periods 102 5.2 Results of R&D policy effects on industry value-added and participation in GVCs over the two policy regimes 104 6.1 A model linking transformation pressure to the capacity to change and to the distribution of the costs and benefits of change 127 A 7.1 Levels of deprivation in households in Nigeria and the Otigba cluster 167 8.1 A framework for inequality of outcome and opportunity 176 Tables 2.1 MDGs – selected targets and indicators in our model 2 5 2.2 Indicator loadings and bootstrap results 39 2.3 Path coefficients with bootstrap values, T values 39 3.1 Definition of variables 51 3.2 Correlation matrix 55 3.3 Estimated output 56 3.4 Estimated output 60 5.1 Transition from science and technology (S&T) policies to science, technology and innovation (STI) policies in selected African countries 93 vii viii List of Illustrations 5.2 Descriptive statistics 96 5.3 Definition of variables 97 5.4 Policy effects on industry value-added and participation in the GVCs 100 5.5 Estimated multiple linear models (main effects) 106 A 5.1 GERD as a percentage of GDP in selected sub-Saharan African countries (2010–2012) 109 7.1 Overlap in MPI, UN-Habitat and study indicators 151 7.2 Percentage of firms involved in the market for various products and services 153 7.3 Profile of employees in Otigba 155 7.4 Association of standards of living and main source of lighting 158 7.5 Summary – standardized measures of living standards among Otigba employees 161 8.1 Proportion of urban population in slum areas 178 8.2 DHS-V survey characteristics for select countries 183 8.3 Example dataset 1 85 8.4 Opportunities 187 8.5 Circumstances 188 8.6 Coverage of opportunities 189 8.7 Logistic regression estimates – access to electricity 190 8.8 D-Index 1 91 8.9 Human Opportunity Index 193 A 8.1 Logistic regression estimates – access to water 197 A 8.2 Logistic regression estimates – access to sanitation 197 A 8.3 Logistic regression estimates – access to education 197 Foreword Over the two decades, the international community has been engaged in an intense debate to agree upon new, common global milestones to guide long-term development efforts of countries worldwide. The first effort that began shortly before the year 2000 culminated in the adop- tion of the Millennium Development Goals (MDGs), which are set to expire this year. The process of finding a worthy successor to this framework has been ongoing from 2012, coming out of the World Conference on Sustainable Development – Rio+20. This widely inclusive global process has engaged diverse actors within the international development debates in order to build consensus around the proposed S ustainable Development Goals (SDGs). Both sets of goals have some similarities, but differ substantially in their core philosophies and proposed outcomes. Both focus broadly on the long-term agenda of ending poverty and attenuating vulnerabili- ties in developing countries in its multi-dimensional forms such as the lack of income, equality, education, water, sanitation and the right to political participation among others that became the capstone of the Millennium Development Goals. But at the same time, there are large differences. For example, the developmental vision advanced by the Millennium Development Goals for eradicating poverty and attenuating multiple vulnerabilities that are widespread in developing countries was far less sanguine about the prospects of endogenous productive capabili- ties in poor countries. However, not much emphasis was placed on the drivers of wealth creation such as innovation (broadly defined), indus- trialization, and ultimately sustainable production and consumption and equitable development. Perhaps a more robust engagement with these issues in MDGs may well have triggered greater investment into more appropriate knowledge-driven programs and solutions. On the contrary, at the heart of the Sustainable Development Goals for all countries is an emphasis on productive activities represented by four core goals, namely Goal 2: “End hunger, achieve food security and improved nutrition, and promote sustainable agriculture”; Goal 8: “Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all”; Goal 9: “Build resil- ient infrastructure, promote inclusive and sustainable industrialization ix