Supporting Economic Transformation (SET)

November 2014 to June 2018

Supporting Economic Transformation is a four year ODI programme supported by the UK Department for International Development over 2014-2018.

The programme will look at promoting economic transformation in developing countries and aims to provide practical policy support to country governments and their partners.  

SET’s three core areas of work are:

  • Country analysis – analytical support for developing countries and their partners to identify politically feasible pathways for economic transformation
  • Sectoral and thematic work – understanding themes, including trade or gender, and different sectors, such as manufacturing and services, important for economic transformation
  • Data portal – bringing together data relevant for the analysis of economic transformation

Background

The quality of economic growth matters. Although many low income countries have enjoyed fast economic growth over the past two decades, the growth has been low in quality and accompanied by little economic transformation. Many low income countries have experienced a lack of significant structural shifts in production and employment (declining shares of manufacturing in gross domestic product in sub-Saharan Africa); weak levels of and growth in (labour) productivity within sectors; concentrated export baskets and lack of diversification into complex products; and substantial differences in productivity levels among firms, sectors and locations, suggesting scope for the enhancement of productivity.

We define economic transformation as a continuous process of (i) moving labour and other resources from lower- to higher-productivity sectors (structural change) and (ii) raising within-sector productivity growth. Within-sector productivity growth entails the adoption of new technologies and management practices that increase the efficiency of production. It can be brought about by increasing the efficiency of existing firms or by reallocating resources away from the least-productive firms towards more productive firms. Enhanced productivity typically also involves trade and production diversification and increased value addition in export activities.

Policies to promote economic transformation distinguishing between (a) policies that are ‘horizontal’ and improve fundamentals (skills, infrastructure, or investment climate) and (b) policies that are more targeted and display some measure of selectivity – for example they are aimed at specific economic activities. The evidence suggests that countries that have transformed substantially have used a combination of policies from all cells but also that countries struggle to effectively implement selective transformation policies because such policies require an appropriate institutional context.

All outputs and analysis can be found on the Supporting Economic Transformation website.

Outputs

Economic transformation and job creation in Mozambique

Research reports and studies | October 2017 | Neil Balchin, Peter Coughlin, Phyllis Papadavid, Dirk Willem te Velde and Kasper Vroljik
Mozambique's economic growth has not resulted in sufficient job creation. This study explores promising sectors, binding constraints and policy options.
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Local content policies and backward integration in Nigeria

Research reports and studies | October 2017 | Neil McCulloch, Neil Balchin, Maximiliano Mendez-Parra and Kingsley Onyeka
Nigeria has experienced rapid but low-quality growth over the past decade. Local content policies could be one way to help drive economic transformation.
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The outlook for the Zimbabwean economy

Working and discussion papers | September 2017 | Godfrey Kanyenze, Prosper Chitambara and Judith Tyson
Zimbabwe has failed to match the recent successes of other sub-Saharan African economies. Without political change, the situation is unlikely to improve.
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Rwanda: financing for manufacturing

Research reports and studies | June 2017 | Linda Calabrese, Phyllis Papadavid and Judith Tyson
Despite Rwanda's economic success, development of manufacturing has been limited. Private financing could drive greater growth and more exports.
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Supporting economic transformation: an approach paper

Working and discussion papers | March 2017 | Margaret McMillan, John Page, David Booth and Dirk Willem te Velde
Economic transformation has the potential to create sustainable, inclusive growth in developing countries. This paper explains how and why transformation is so important.
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Trade in services and economic transformation

Research reports and studies | November 2016 | Neil Balchin, Bernard Hoekman, Hope Martin, Maximiliano Mendez-Parra, Phyllis Papadavid, David Primack and Dirk Willem te Velde
Current debate on economic transformation mostly focuses on agriculture and manufacturing. This report highlights the contribution services can make to economic development.
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Supporting economic transformation in Nigeria

Briefing papers | May 2016 | Dirk Willem te Velde, David Booth, Danny Leipziger and Ebere Uneze
Nigeria has enjoyed fast economic growth in the past decade but compared with many other African countries it has experienced little in the way of economic transformation.
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Developing export-based manufacturing in sub-Saharan Africa

Research reports and studies | April 2016 | Neil Balchin, Stephen Gelb, Jane Kennan, Hope Martin, Dirk Willem te Velde and Carolin Williams
This paper describes how production, employment, trade and investment in the manufacturing sectors in nine sub-Saharan African countries has increased over the last decade.
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Trade facilitation and economic transformation in Africa

Working and discussion papers | March 2016 | Joe Amoako-Tuffour, Neil Balchin, Linda Calabrese and Maximiliano Mendez-Parra
Trade facilitation has the potential to stimulate economic transformation in Africa. However, the implementation of facilitation agreements has generally been problematic.
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Promoting manufacturing in Africa

Working and discussion papers | March 2016 | Yaw Ansu, Margaret McMillan, John Page and Dirk Willem te Velde
Although African countries face difficult challenges in breaking into world manufacturing markets, expansion in this sector is crucial for Africa's economic transformation.
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Trade policy and economic transformation

Briefing papers | July 2015 | Marie-Agnes Jouanjean, Maximiliano Mendez-Parra and Dirk Willem te Velde
This briefing explores the relationship between trade policy and economic transformation and identifies several areas that require empirical work.
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