African countries need to industrialize to increase incomes, create employment, raise value-added activity and diversifytheir economies. Industry has traditionally been a central source of generating employment—in developed and developing countries. In Africa, though, high rates of economic growth over the past decade have not translated into the structural transformation of the economy required. Manufacturing, also, has not made the expected contribution to aggregate output, trade or gross domestic product growth (ECA, 2014). African income levels are the lowest in the world, with 34 African nations among the least developed countries. --
As described in Chapter 1, high economic growth in recent years has been based largely on commodity trade, especially oil and other extractive industries. African countries remain marginal players in domestic and international markets for manufacturing, and they provide a negligible share of manufactured exports in world markets. Tellingly, manufacturing often has a lower share of gross domestic product (GDP) today than it was 30 years ago. Given the ubiquity of market failures, industrial policy interventions are needed to address these failures, as markets are unable to generate the kinds of structural transformation needed to achieve the leap from low- to high-productivity activities.