Overview of Industrial Policy and Institutions in Africa

Abstract

This paper reviews the role played by institutions, including political and economic institutions, in industrial development in Africa. The paper notes that African countries are still struggling to structurally transform their economies and to stimulate inclusive development despite some industrial policy efforts. The lagging performance in industrial sector in Africa can be mainly explained by the lack of institutional frameworks impede good coordination and monitoring of industrial policies. The paper argues that industrial policies are critical to correct the widespread existence of market and coordination failures and the role of governments and institutions in Africa in regulating these market failures should be a priority for the industrialization of the continent. The paper also analyzes the evolution of industrial policy in Africa during the last decade in terms of constraints and structural reforms to industrialization in Africa. It appears that constraints faced by industrial sector in Africa and that need to be addressed includes productive, trade, institutional, and human/technical capacity constraints as well as financial constraints. Structural reforms include promoting green industrialization and gender parity.

Keywords: Industrial Policy; Institutions; Structural Change