Industrialization Options for the Poorest Countries

2001 Occasional Paper
By Pack, Howard

This paper considers how the poorest countries, measured in GDP per capita, can improve their living standards through industrialization. GDP per capita is closely though not perfectly correlated with the HDI and the use of either standard shows a very large percentage of the worst-off countries are in sub-saharan Africa (SSA). Moreover, of the lowest ranking countries, they are among the few that have experienced significant declines in per capita GDP and other indices over the last quarter century and have experienced few sustained periods of improvement. The most fundamental need in SSA and other very low income countries is to revitalize the agricultural sector. Abundant evidence suggests that the sector has been harmed by policy measures that severely discriminate against it. Farmers receive lower prices than warranted by world prices, pay higher prices for productive inputs due to tariffs on imports, have little access to rural credit, suffer from an absence of research that is specific to their agro-climate requirements, and rarely benefit from agricultural extension services. All of these deficiencies are amenable to improvements in government policy. The first step in improving living standards is to rectify the intensity of discrimination against the agricultural sector. Perhaps new development in technology services such as the various World Bank web sites can aid governments in learning about appropriate policies or improve the training of agricultural extension agents. But the required changes in policies have been understood for a long time – the difficulty in implementation is a political rather than a technical one.