INVESTMENT POLICY AND PROMOTION WEEK. A fresh look at manufacturing and tools for increasing value addition Vienna October 15, 2015

Transcription

1 INVESTMENT POLICY AND PROMOTION WEEK A fresh look at manufacturing and tools for increasing value addition Vienna October 15, 215

2 Billions Why does manufacturing matter? Capturing value Manufactures account for almost 65% of total world trade in goods. Excluding oil, this jumps to three quarters of global trade in goods. Why it matters Responds to a basic human need: when we are unable to find what we need in nature, we make it. Lies at the heart of economic development: to add value to products so as to capture more of the final profits of the end product, generating jobs and income in the process. The draw of value addition Global trade in all products (top 2 plus other, US$) 2, 18, 16, 14, 12, 1, 8, 6, 4, 2, Other Paper Misc. chemicals Rubber Apparel (not knitted) Apparel (knitted) Furniture Ores & slag Unclassified commodities Articles of iron & steel Planes & parts Iron & steel Organic chemicals Pharmaceuticals Optical equiment Plastics Gold & diamonds Cars & parts Computers & misc. machines Electronics & phones Oil Source: Trade Map, International Trade Commission: 2

3 Why does manufacturing matter? Advancing through the product space The social accumulation of productive knowledge has not been a universal phenomenon Where it has happened, it has underpinned an incredible increase in living standards The enormous income gaps between rich and poor nations are an expression of the vast differences in productive knowledge amassed bydifferent nations. These differences are expressed in the diversity and sophistication ofthe things that each of them makes Tracking Korea s industrial transformation through the product space Increase in chemicals & pharma Decrease in textile & apparel Increase in automotive Source: Hausmann, R. & Hidalgo, C. et al. Atlas of Economic Complexity. Observatory of Economic Complexity, 3

4 Billions Billions Electronics and machinery Overwhelming dominance in chips and phones Value in US$ of electrical, electronic equipment exports; CAGR over1 years China CAGR: 17.7% Other entrants Value in US$ of electrical, electronic equipment exports, select countries Vietnam 5 year CAGR: 74% RoW CAGR: 5.7% Korea Singapore Taiwan Mexico Vietnam Czech Rep. Poland Philippines Slovakia Source: Trade Map, International Trade Commission: 4

5 Billions Billions Apparel Considered a key stepping stone sector, apparel is overwhelming dominated by China which is not only large but has grown fast over the past 1 years. However, other developing countries are also developing a presence and showing similar signs of strong growth led by Bangladesh, Vietnam and India. Cambodia is in the top 1 on value for knit apparel. Knit apparel Value in US$ of top 1 exporters (213) 12 1 China Italy Germany Italy Germany Bangladesh Vietnam India Bangladesh Vietnam India Not knit apparel Value in US$ of top 1 exporters (213) 8 7 China Source: Trade Map, International Trade Commission: 5

6 Billions Planes and parts Aircraft exports are dominated by the US, and is one of two top 15 manufactures for which China is not in the top 1 in value Aircraft, spacecraft, and their parts Value in US$ of select exporters of aircraft, spacecraft, and parts thereof (average 24-13); CAGR over 1 years Average value CAGR 1 year 7% 6% % 4% 3% 2% 1% % Source: Trade Map, International Trade Commission: Aviation International New s., North Africa Aerospace Hubs Tempt Europe With Low Costs. Jun 213. Wall Street Journal. Morocco's Aviation Industry Takes Off. Mar 212. Note: Percentage data in text is shared of average value from

7 T&C solutions The objective T&C s manufacturing engagement is to: support the growth of manufacturing eco-systems that attract investment, capture increased value, and serve as a source of high-productivity jobs. Solutions Results Strategy Strategy, institutions, dialogue Investment Investment generation & access to finance Industrial infrastructure SEZs, compliance Market access Trade logistics, prod devt/mkt access Technology adoption Technology, skills, standards Strategic clarity Improved institutional capabilities Sector coordination Investment capital Operating capital FDI linkages Access to technology Serviced land Reliable, lower cost infrastructure Local linkages E&S compliance Cheaper, faster input access Cheaper, faster market access Market intelligence Buyer access New market niches Management capabilities Worker skills development Technology adoption Increased manufacturingfocused public investment Increased firm-level manufacturing investment Increased manufacturing exports Increased manufacturing value added Increased manufacturing jobs Increased manufacturing productivity Reduced carbon intensity 7

8 Deployment Developing a support ecosystem Supporting Bangladesh s manufacturing eco-system Lead stakeholder dialogue process involving government, industry, brands and civil society on cleaner production practices Assessments of factory compliance with national and international labor standards, publish findings, and provide advisory support on improvements Support Bangladesh Export Zones Authority to engage PPP developers for two proposed economic zones and first IT park Facilitate sectoral adoption of cleaner production practices and investment in technologies to reduce ground water extraction and surface water pollution Provide short-term financing to suppliers based on acceptance of receivables by buyers through IFC s Global Trade Supplier Finance (GTSF) program Support Capital City Development Authority to strengthen and automate factory building permitting, inspections and occupancy certification Provide investment capital for building and fire safety improvements through IFC and VF Corporation (Wrangler, North Face, Timberland) partnership Firm-level results 41 factories participating in project have started implementing cleaner production practices 61% increase in compliance in dealing with hazardous materials in firms located in SEZs Compliance with labor standards increased in economic zones from 3/4% to 9% in 4 years Sectoral/cluster results Industry standards and harmonization of procurement by brands Textile Technology Business Center set up to provide advice to textile factories on technological options Market for service providers/bds providing advisory services on resource use efficiency Systemic results Regulatory and institutional framework in place for private economic zones Green Zone Guidelines adopted by BEPZA mostly targeted at textile operations. Source: Internal note, WBG Interventions in Bangladesh Textile Sector. Not all projects/interventions and results from this note are represented. 8

9 INVESTMENT POLICY AND PROMOTION WEEK THANK YOU Aref Adamali Regional Economist M T E aadamali@ifc.org W Büyükdere Cad. No. 185, Kanyon Ofis Bloğu Kat 2 Şişli 34394, Istanbul, Turkey

10 ANNEX

11 Building on momentum, igniting change Where a country has an established foothold, this can be built on further, to grow the sector and increase value addition. For countries that have shown few signs of making a headway in manufacturing, the examples of sectors where similar countries have made progress can serve as encouragement and impetus for change. Growth momentum: Country-sector combinations Select developing and emerging market countries / country groupings Top 15 manufactures in which country is notpresent (i.e. everything but) Notes: Country or region selection based largely from top 1 presence in the major 15 manufactures, assessed by value or grow th. Exceptions: Eastern Europe depicts products in w hich two or more of Bulgaria, Lithuania, Poland and Romania are present; Central and Latin America apparel depicts a combination of high grow th Nicaragua, Guatemala, El Salvador and Brazil aircraft w ith is 11 th ranked by value. SSA depicts manufactures that feature in SSA s top 1 exports plus top 5 SSA exporters of apparel products. 11

12 Strategy Strategy, institutions, dialogue Investment Investment generation & access to finance Deployment Examples Global: Comparative automotive sector regional value chain analysis in four countries Ghana: Sector prioritization analytics and structured dialogue Haiti: Building the capacity of 1 cluster-support institutions Global: MAS investment and operating capital Brazil: FDI sector identification, state-level institutional strengthening, location identification support Industrial infrastructure SEZs, compliance Ethiopia: $25 million IDA investment operation, financing for industrial infrastructure, as well as linkages to the domestic economy, matching grants, skills-development center Bangladesh: Partnership for Cleaner Textile (PaCT, the Program) on textile water mgt. Market access Trade logistics, prod devt/mkt access Technology adoption Technology, skills, standards Global: esw systems deployment Global: Diagnostic work to identify emerging market segments (automotive and textile-apparel) Kenya: Apparel green market opportunity analysis and buyer linkage support India: $2m Technology Centre Systems Project invests in hard and soft infrastructure including facilities development and partnerships to diffuse technologies Kenya: Climate Innovation Center supports bio-briquette innovation, linking in to textile-apparel sector green market strategy 12