Strategies for Structural Transformation in Countries in South and South-West Asia. Bangkok, 6 September 2012

Transcription

1 Strategies for Structural Transformation in Countries in South and South-West Asia Bangkok, 6 September 2012 Clovis Freire Economic Affairs Officer Macroeconomic Policy and Development Division (MPDD) Economic and Social Commission for Asia and the Pacific (ESCAP) Based on: MPDD Working Paper WP/12/04: Strategies for Structural Transformation in Countries in South and South-West Asia ESCAP Expert Group Meeting on Inclusive Development and Regional Cooperation in South and South-West Asia, held in New Delhi, July 2012 SSWA: Afghanistan, Bangladesh, Bhutan, India, Iran (Islamic Republic of), Maldives, Nepal, Pakistan, Sri Lanka, and Turkey Note: references are listed in the in the paper 1

2 Content Introduction structural transformation in SSWA Development, diversification and productive capacities Methodology and data Opportunities for diversification The role of the State SSWA - Little progress in structural transformation in the past 40 years Share of South and South-West subregion on global production, trade and technology (percentage) Indicator Population Rural population GDP Manufacturing, value added High-technology exports Receipts of royalty and license fees Scientific and technical journal articles Source: Author based on data from the World Bank. 2

3 Development is associated with diversification (Imbs and Wacziarg, 2003; Carrere et all, 2007; ESCAP, 2011) 100,000 Diversification (number of products exported) 10,000 1,000 y = x R 2 = ,000 10, ,000 1,000,000 10,000, ,000,000 GDP (Millions US$) Source: Author based on data from the United Nations Commodity Trade Statistics Database (COMTRADE) and from the World Bank s World Development Indicators. More diversified countries face lower competition (ESCAP, 2011; Hausmann and Hidalgo, 2010) Source: ESCAP (2011), Economic and Social Survey

4 Theoretical framework (Hausmann and Hidalgo, 2010) Products require specific combinations of capabilities to be produced Countries have some capabilities but not others Countries will produce goods as long as they have all the required capabilities Source: Hidalgo and Hausmann (2009) Hidalgo and Hausmann (2009). The building blocks of economic complexity. Method of reflections Source: Hidalgo and Hausmann (2009) 4

5 Product complexity Abdon and others (2010): Major exporters of more complex products are high-income countries and major exporters of less complex products are low-income countries Maldives Bangladesh Japan ESCAP (2012): Rich countries export products with a wide range of complexity Product complexity (global average=0, sd=1) Product complexity by industry Food and live animals Beverages and tobacco Crude materials, inedible, except fuels Mineral fuels, lubricants and related materials Animal and vegetable oils, fats and waxes Chemicals and related products Manufactured goods classified chiefly by materials Machinery and transport equipment Miscellaneous manufactured articles Source: Freire,

6 Path dependency C. A. Hidalgo, B. Klinger,A.-L. Barabási,R. Hausmann (2007). The Product Space Conditions the Development of Nations. Source: Hidalgo, C.A., and others (2007) What a country produces today affects what it will be able to produce tomorrow Source: ESCAP (2011). 6

7 1990 Pakistan Lin (2012), with Celestin Monga Six-step procedure to identify and facilitate growth Governments in developing countries to identify the list of tradable goods and services that have been produced for about 20 years in dynamically growing countries with similar endowment structures and a per capita income that is about 100% higher than their own. 7

8 Hausmann (2012) better method to identify the potential industries for diversification is by using the product space and measures of product complexity. MPDD WP 12/01 uses similar method to identify potential products for diversification in least developed countries taking into consideration the higher export opportunities. Methodology identify the opportunities for countries in SSWA Identify the products that are more complex and that are nearby in the product space to the existing product-mix of the countries Calculate product complexity using Method of reflections Map the structure of the product space Analyze price incentives (export, import substitution)

9 Data Trade data disaggregated at 6-digit level of HS 2002 Products are also differentiated based on their unit value 43,293 products in 2010 Source: Author based on data from COMTRADE. code = 6-digit (HS) + 1digit (quantity unit code) + 1 digit (unit value range) Map of potential new products 9

10 Map of potential new products Top five industries with higher percentage of potential new products Afghanistan Bangladesh Bhutan India Iran (Islamic Republic of) Maldives Nepal Pakistan Sri Lanka Turkey BASE METALS MACHINERY & ELECTRICAL EQUIP. OPTICAL, PHOTO, WATCHES, MUSICAL INSTR. TEXTILES CHEMICALS MISCELLANEOUS MANUFACTURING PLASTIC & RUBBER OTHER 10

11 Demand Effects Demand Effects 11

12 Demand Effects Demand Effects 12

13 Demand Effects The Role of Government 13

14 Facilitate the creation of new private sector activities that increase the productive capacity of the economy by supporting of both the emulation and innovation strategies. Balance depends on the level of diversification. 2,500 AFG NPL Number of potential new products (above 0% probability) 2,000 1,500 1, MDV BTN BGD IRN LKA PAK TUR IND 0 0 5,000 10,000 15,000 20,000 Number of existing products age of new products with above country s average product complexity 100% age of potential new products with above country's average complexity 90% 0% 70% 60% 50% 40% 30% 20% 10% AFG NPL MDV BTN BGD LKA IRN PAK TUR IND 0% 0 2,000 4,000 6,000,000 10,000 12,000 14,000 16,000 1,000 20,000 Number of existing products 14

15 Effect of export opportunities on the incentives for diversification Share of export opportunities of potential new products with above country's average complexity 90% 0% 70% 60% 50% 40% 30% 20% 10% MDV BTN AFG NPL BGD IRN LKA PAK 0% 0 2,000 4,000 6,000,000 10,000 12,000 14,000 16,000 1,000 20,000 Number of existing products TUR IND Effect of import substitution opportunities on the incentives for diversification Share of import substitution opportunities of potential new products with above country's average complexity 100% 90% 0% 70% 60% 50% 40% 30% 20% BTN MDV 10% AFG NPL IRN LKA PAK 0% 0 2,000 4,000 6,000,000 10,000 12,000 14,000 16,000 1,000 20,000 Number of existing products TUR IND 15

16 The role of the State Share of import substitution opportunities of potential new products with above country's average complexity 100% 90% 0% 70% 60% 50% 40% 30% 20% 10% AFG BTN MDV NPL (1) Import substitution: Laissez faire Export: strategic diversification PAK LKA IRN (3) Import substitution: strategic diversification Export: strategic diversification (2) Import substitution: Laissez faire Export: Laissez faire (4) Import substitution: strategic diversification Export: Laissez faire 0% 0% 10% 20% 30% 40% 50% 60% 70% 0% 90% 100% Share of export opportunities of potential new products with above country's average complexity IND TUR Thank you Clovis Freire 16