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Policy-makers in Africa have been urged to improve labour market outcomes and promote inclusive growth.
This is addition to promoting commodity-based industrialization to reduce the high and challenging youth unemployment rate in Africa.
These were some of the issues raised during a parallel session on “Knowledge Generation for Structural Transformation” held on Sunday, November 2 at the 9th African Economic Conference in Addis Ababa.
During the session in Alassane Drabo Ferdi presented his paper titled “Primary agricultural commodity trade and labor markets outcomes”, which explores empirically the effect of economic openness on labour market outcomes by focusing on the role of agricultural primary commodity exports and imports. He argued that total exports of goods improve labour market outcomes, but a high primary commodity exports-to-imports ratio alleviates this benefit from trade.
As recognized by the Istanbul Programme of Actions he explained, poor countries should “adopt and strengthen, as appropriate, sector and commodity-specific policies, measures and strategies to enhance productivity and vertical diversification, ensure value-addition and increase value-retention”
This, he argued, can be achieved without affecting the dynamism of the economy through the transformation of raw products before exporting them.
“In addition to the creation of value addition, this will result in a low unemployment rate,” he said.
In Africa, the share of processed goods in exports remains very low because of the low level of industrialization.
“One way to solve for this is to abandon the short-term views, and target long-term policies in the education and financing systems.
“Education should target long-term development needs through appropriate technology acquisition, research and development, and improvement and implementation of traditional existing knowledge.
“This will enable the production of manufactures and reduce the dependence to primary commodity exports,” he said.
The paper also recommends that banking systems should be reformed in order to ease the access to credit, and the development of the private sector.
In addition, the paper highlights the need to address tariff escalation to encourage the export of processed commodities.
In his paper titled, “Diversification towards high value export production, farm household productivity and efficiency in Senegal” presented during the session, Senakpon Dedehouanou, Faculty of Economics and Business, Université d’Abomey Calavi, Benin, argued that rural farmers involved into high value green bean export production are more productive and efficient than their counterparts that are not involved in this type of crop diversification.
This result, he said, suggests that productivity and efficiency gains from involvement in high value export production can spread out to the entire farm.
“Contrary to their counterparts who were confined only in the domestic/regional production, households are more likely to benefit in terms of agricultural productivity and efficiency gains when they additionally diversified towards the high value export production.” he said.