PERIODIC REVIEW AND REFORMULATION OF STRATEGY

Evaluation mechanisms are essential for the good conduct of public policy and can be of different types.

Review Mechanisms

For most countries in Africa, strengthening the capacity of statistical agencies is the first step towards improving policy evaluation. In particular, firm-level data can be an invaluable tool for diagnostic purposes, while better-quality macroeconomic data can provide a more accurate picture of the state of the economy.

Governments implementing industrialization strategies can introduce institutionalized review mechanisms as part of their industrial policy’s institutional architecture. At the aggregate level, the Central Bank and the Ministry of Finance should by default have procedures for adapting macroeconomic policy to changing circumstances. Other agencies responsible for implementing horizontal policies should adopt similar routines for judging the success of their initiatives in changing firms’ operating environment, based on the data they can assemble. For instance, agencies responsible for improving the business environment can assess the ease with which firm obtain permits or licenses to export, while those responsible for energy can use data to assess the reliability of the electricity grid. Pilot agencies and sectoral organizations should also have their own institutionalized review mechanisms, making use of employment, trade, market and firm-level data to assess the performance of firms within their remit.

This data and their accompanying reports should provide the senior politicians and bureaucrats responsible for the industrialization strategy with plenty of hard evidence with which to judge the success of their efforts, and reveal their shortcomings.

Consultation Mechanisms

Consultation mechanisms have the purpose of providing a qualitative assessment of the state of industrial policy, and can be of both a formal or informal nature. Informal consultations between top politicians, top bureaucrats and (possibly) business leaders should be ongoing. Formal mechanisms of consultation can also be put in place, and could take the shape of regular meetings between the leadership (preferably the head of state), leaders of the pilot agencies and the business community.

Consultation mechanisms are also relevant at the sectoral or sub-sectoral level and should help identify obstacles to firms’ operations, as well as point out areas for improvement of government policies. Given that many vertical policies will be active and seek to change the behaviour of the private sector, these consultative fora can also provide opportunities for the government to question business if they have fallen short of agreed objectives. [1]

Reformulation

The objectives of industrial policy are bound to change as a country grows. For this reason, a board of ministers, or whatever organization is responsible for economic strategy, should periodically meet to discuss the overall direction of the country’s industrialization, using the information gathered through review and consultation mechanisms. These high-level meetings might lead to the design of multi-year plans, although this is not strictly necessary.

The reformulation of strategy might be a difficult endeavor, as for any policy there will be parties interested in its continuation, both within the state and outside it. This was a common pitfall of past industrial policies in the developing world; hence the importance of making sure that the policies implemented are consistent with the government’s political and administrative capabilities.

Politicians may also be very reluctant to take the blame for failed policies, adding a further difficulty to the process of reformulation. Therefore, it is important that the government conduct industrial policy as a fairly technical affair, even if politics will never be too far removed, and that the leadership have a clear commitment to industrialization, as opposed to merely the appearance or the rhetoric of industrialization.

[1] For a more detailed treatment of the design of business-government councils, See Ben Ross Schneider (2015) – Designing Industrial Policy in Latin America: Business-State Relations and the New Developmentalism. New York: Palgrave Macmillan.