Africa Can Replicate China’s Industrialization Success.doc

1、Africa Can Replicate Chinas Industrialization SuccessChina has achieved rapid economic growth because of its economic structure readjustment and successful transformation from a planned economy to a market economy. Though in the 1990s many other developing countries also undertook economic restructu

2、ring like China， many failed. So what are the real reasons for Chinas economic success？ In the 1950s， China began implementing an industrial development policy involving many capital-intensive industries. From the 1980s， it adjusted its industrial strategy to make use of its own advantages， by devel

3、oping labor-intensive industries. After shifting to its new development strategy， the Chinese Government continued to protect and cultivate enterprises that lacked competitiveness and comparative advantages. It also cut back on market access restrictions for private businesses and foreign investment

4、 into those with comparative advantages. Meanwhile， China has established industrial parks， improving infrastructure and the business environment to reduce transaction costs in them. In this process， a gradual capital accumulation and industry upgrade has bolstered the industries international compe

5、titiveness， and China has started to benefit from its comparative advantages. Chinas experience teaches us that the source of economic growth is to develop ones own industries with comparative advantages and accumulate capital for the development of a higher level of industrial restructuring. It is

6、very important to ensure the proper use of administrative intervention in the improvement of infrastructures that require substantial resources. In the context of limited resources， developing countries should first develop their industries with comparative advantages in pilot industrial parks， and

7、then across the country. Currently， Africas economy is based on agriculture and mining， while the manu- facturing industrys share in the GDP is declining. African countries have generally recognized the importance of economic restructuring， but steering the economy away from agriculture toward indus

8、try is easier said than done. Industrial policy guidance plays a critical role in the process of economic restructuring in African countries， of which there are several aspects to economic restructuring. First， Africa needs to find industries in advanced countries with similar resources structure. W

9、ith the accumulation of capital， industries in the more advanced countries that have lost their comparative advantages could be taken over. Second， after identifying the industries with comparative advantages， African countries must identify constraints， get rid of development hurdles， and help busi

10、nesses reduce transaction costs， if they find the advantages of the domestic enterprises in these industries havent been given full play. Third， if there are no such enterprises， the countries could consider attracting investment from countries with more mature industries. It means acquiring new tec

11、hniques for industrial development. Fourth， if some established businesses discover opportunities in emerging industries， governments should help the development of these enterprises. For example， in the 1980s， some Indian companies discovered the opportunity in information technology outsourcing， a

12、nd information services became a pillar industry of India with the governments support. Fifth， African countries can attract investment through the establishment and development of special economic zones or industrial parks. These would become industry clusters， which can further reduce transaction

13、costs and improve the overall business environment. Finally， African governments need to give incentives to pioneer enterprises in comparative advantage industries， such as tax reduction or exemption under certain conditions， helping enterprises directly invest in credit， or preferential policies fo

14、r better access to foreign exchanges to meet the requirements for importing equipment. Many African countries are looking to China for industrial transfer opportunities. The first of such industries is the light industry， which is labor-intensive. Ethiopia has successfully taken over the shoe indust

15、ry in China. The Chinese footwear industry created about 19 million jobs and yet lost its comparative advantage as wages began to rise. Ethiopia had independently developed footwear production capabilities but due to its poor infrastructure and business environment， international buyers lacked confi

16、dence in the country. They worried about product quality and delivery， which slowed down the development of Ethiopias shoe-making businesses. The introduction of Chinese investment has greatly facilitated the rapid growth of Ethiopias footwear trade. Rwanda enjoys similar success. It is focusing on

17、the development of its garment industry. Though developed a short time ago， Rwandas garment products have international competitiveness because of their low cost. Each country has its own advantages. It is crucial to find the correct field and change the previous methods. African countries have the ability to promote their industrialization process to achieve rapid growth. It is entirely possible for Africa to achieve the economic miracle that has happened in the rest of the world.