Beyond manufacturing: Reconsidering structural change in Uganda

Policy brief 26 Feb 2020 Firms

Authors

Uganda, along with other African countries, needs targeted policies to shift employment into more productive activities.
“Industries without smokestacks” – tradeable services and agro-industrial activities that have more in common with manufacturing industries than more traditional services and agriculture – offer a new path for structural change in African countries.
Industrial policies to promote productive structural change no longer have to focus solely on manufacturing, but can also target these new, high productivity sectors. Since these industries share many of the characteristics of classic manufacturing firms, they also respond to broadly similar policies. Improving countries’ investment climates, helping firms to export, and harnessing agglomeration effects are key to the development of industries without smokestacks.
Aid can help the process of structural change from agriculture towards these new industries and manufacturing by providing necessary infrastructure, supporting policies that improve firms’ capability to export and helping the development of industrial clusters. Some degree of experimentation and learning will be needed in promoting these new types of industries, and aid programmes should reflect this.