This project responds to a request from the Government of Rwanda for advice in relation to the upcoming review of its industrial policy. The Government is keen to learn from experience with its existing industrial policy, and to use that insight to develop a range of interventions that can support rapid productivity growth and structural change over the 2050 time horizon. Recent work by the World Bank has highlighted the “big think” aspects of Rwanda’s development challenges, but it has not developed pointed recommendations in the area of industrial policy as it affects manufacturing and commercial services.
The policy relevance of the project is that carefully designed and implemented industrial policy can help Rwanda achieve its development goals. Conversely, a poorly designed policy could see it repeat the mistakes of other countries, where industrial policies have supported increasingly uncompetitive industries at the expense of consumers and taxpayers. A key objective is for policymakers and stakeholders to use the output to guide and frame discussion on the industrial policy review at an event in Kigali in September 2018, in which IGC was involved as a key partner.
The study will undertake a rigorous review of the available data to assess the extent to which structural change has been happening in Rwanda over recent years. The analysis will be comparative, looking at countries with similar starting points and ambitions, such as Ethiopia and Mauritius (in Africa), and Viet Nam, China, and (from an earlier time) Singapore in East and Southeast Asia. The relationship between trade policy in goods and services will be a key part of the discussion, with original empirical work to estimate Ricardian comparative advantage by sector and track its evolution over time and with respect to comparator countries. The emphasis will be on identifying, in the first instance, horizontal interventions that could support productivity growth over time. A secondary emphasis will be the identification of sector-specific strategies that could be considered once horizontal procedures have proceeded to a sufficient point. Key government stakeholders will be consulted through the process to ensure that the output is responsive to the Government’s needs.