Investment and Competitiveness in Africa Six Annual Conference on Regional Integration in Africa ACRIA6 1-3 July 2015, Lagos, Nigeria Investment and Competitiveness in Africa “Upgrading in value chain: the case of sub-Saharan African countries” by Manfred KOUTY Patrice Ongono University of Yaounde 2

Presentation Outline Research issues and context Methodological approach Findings Policy implications ACRIA6

Research issues and context What is Value Chain (VC)and how can firm Upgrades? Where is Africa in Global Value Chain (GVC)? ACRIA6

Research issues and context Global value chain (GVC) is one of the main feature of globalization. It’s characterized by the fragmentation of the production process between countries The VC includes the full range of activities that firms undertake to bring a product or service from its conception to its end-use by final consumers (Porter, 1985; Kaplinsky and Morris, 2001) These activities include design, production, marketing, distribution and support to the final consumer. ACRIA6

Research issues and context Upgrading is acquiring technological, institutional and market capabilities that allow firms to improve their competitiveness and move into higher-value activities (Gereffi and Memedovic, 2003). The literature (Porter, 1985; Kaplinski and morris, 2001) distinguishes four typology of upgrading strategies. ACRIA6

Research issues and context Table 1: Typologies of upgrading ACRIA6

Research issues and context Where is Africa in GVC? The reality is that: Africa is the region with low GVC participation Most African countries are located in the least profiting sectors in term of GVC They are linked at the bottom of the chains (downstream component) ACRIA6

Research issues and context Where is Africa in GVC? Figure 1: GVC participation in 2011 ACRIA6 Source: African Economic Outlook(2014)

Research issues and context Figure 2: VA content of selected developing countries’ cocoa export, 2011(%);UNECA (2013) ACRIA6

Methodology approach We use statistical and econometric approaches The analysis is based on enterprise surveys database of World Bank (Data are available at: https://www.enterprisesurveys.org/)  The database contents 1287 firms for three sub-Saharan African countries (Cameroon, Côte d’Ivoire and Mauritius) for the year 2009. The choice of this year can be justified by the availability of the data for all these three countries. We focus on these three sub-Saharan African countries for three reasons. First, the availability of data. Second, Cameroon, Cote d’Ivoire and Mauritius are central, western and southern African countries respectively. Third, these countries represent each one an important part of the economy of their regional communities. Understanding the strategies used by the firms of these countries to upgrade can help to learn lesson about the sub-Saharan region in general. ACRIA6

Findings: what does firm level evidence show For the analysis, we just consider the process and product upgrading Figure 3: Share of upgrading firms according to the firm characteristics (2009) ACRIA6

Findings: what does firm level evidence show Figure 4: integration between firms (2009) ACRIA6

Findings: business environment Figure 4: Country business environment (2009) ACRIA6

Findings: ecometrics regression ACRIA6

Policy implications From these results, several lessons about facilitating firm upgrading have emerged. it’s important to put in place all policies which improve the profitability of the firm, support lead firms that have strong economical capacity to upgrade and strength for exporting products, diversify the partnership with foreign firms, encourage cooperation and coordination between firms, and promote a good business environment. ACRIA6