The Making of High Priority
Development Strategies
International Comparison of Policy Procedure and Organization

Kenichi Ohno
National Graduate Institute for Policy Studies (GRIPS)
January 2011

Ethiopia’s GTP:
Priorities in the Industrial Sector
 Eight priority sectors for medium/large enterprises(export & import substituting) Kaizen: dissemination, institutionalization andnational movement (capacity building) Strengthening MSE strategy (for job & income
creation), with MoUDC
 Industrial clusters Requiring training, technology transfer, and local
procurement in FDI & ODA projects

Methodological Problems in
Ethiopia’s Industrial Policy Making
In the course of Industrial Policy Dialogue since 2009,
the Japanese side has identified the following problems:
1.

2.

3.

Priority policies are formulated in too much hasteat the cost of quality and implementability (e.g.
kaizen institutionalization, MSE promotion, andperhaps also industrial clusters).
A mechanism for inter-ministerial cooperation in
multi-sectoral issues (kaizen institutionalization &MSE promotion) is lacking.
On the issue of scaling up of kaizen, common
basic understanding on the players, process andspeed does not yet exist.

Key Factors for Success
1.
2.
3.
4.
5.

6.

7.

Leadership
National movement for mindset change
Policy procedure (Interim, ch.4)
Policy organization (Interim, ch.4)
Policy structure—vision, strategy, actions,monitoring (Interim, ch.6)
Effective interaction among government,
businesses, academics & experts
Fostering private actors (for sustainability andprivate initiative in the future)

Note: The circulated paper covers issues 1 to 5.

National Movement for
Mindset Change
If mindset doesn’t change spontaneously, state may
have to force it from the top until it becomes part ofnational culture.
 Strong personal commitment of top leader
 Top-down guidance for grassroots participation
 Performance-based incentives and rewards
 Supporting institutions and mechanisms at central

and local levels
 Authorized and standardized training programs forconcerned officials, leaders and participants Long-term implementation with evolving emphasis(from state-led to market-driven)

Examples of National Movement
 Japan’s Rural Life Improvement Movement(1948-)
 Japan’s productivity/kaizen movement (1950s-)
 Singapore’s Productivity Movement (1960s-),with Japanese assistance Korea’s Saemaul Movement (1970s-)
 Botswana’s Productivity Movement (1990s-), with
Singapore’s assistance Rwanda’s ITC Drive (2000s-)

Saemaul Movement(Korea’s New Village Movement, 1970s-)
 Nationwide movement for rural life & income

improvement, value shift from passivity to action.
 Top-down—centralized administration by Ministryof Home Affairs with hierarchical structure down
to village level.
 Bottom-up—projects responding to village needs(roads, bridges, water, irrigation…); village
leaders and active participation of villagers.
 Rewards (more support) for high-performing
villages based on ex post project evaluation.
 Training provided for project management,
agricultural technology and tools, etc.

President Park visiting a rural
housing construction site

Farmers receiving training
in cooperative dairy

Class at Saemaul Leader’s
Training InstituteMorning jogging

Neighborhood meeting

Village meetingin town hallHome improvementclass for womenPolicy Making Procedure
Necessary steps:
1. Clear vision given by top leader
2. Consensus building (broad goals & directions)- Brainstorming among related ministries and agencies- Collection and analysis of international best practices- Discussion with non-government stakeholders

3. Documentation- Drafters can be officials, academics, or consultants- Participation of all stakeholders in drafting & commenting

Ethiopia is weak in the second step.

Standard Policy Making Procedure
Top leader
1. Vision

2. Consensus
building process

3. Documentation
process

Brainstorming

Studies& surveys

Set broadgoals &
direction

Drafting
work

Finalize& approve(May beoutsourced)

Stakeholder
consultation

Participation
Ministries＆agencies

Comments& revisions

Regions &localities

Participation
Businesses& bus. assoc.

Academics &consultants

Note: the entire process is managed and coordinated by a lead ministry or agency.

Thailand:
Automotive
Industry Master
Plan 2007-2011
Brainstorming;
agreeing on goals& directions“CEO Forum”
FDI & local firms
Exporters
MoI, MoST, MoEdu
Professors’ team
(Chulalornkorn Univ)• The whole process (about 1 year) is managed
by Thailand Automotive Institute (TAI).
• Goals are set by private firms; no government
approval is needed for final M/P.

Set up formal
committee fordrafting M/P
M/P Steering
Committee
Organized by MOI

Subcommittees
study identified
issuesHuman resource

Productivity

M/P
Drafting
By TAI staff

Businesses
Officials
Experts

MarketingEngineering

Business
Gov’t

Experts(Informal)

Business
Gov’t

Experts(Formal)Investment& linkage

Comment &dissemination

Implementation

Malaysia: 3rdIndustrial Master
Plan 2006-2020

Industrial Planning
Committee (IPC)
Steering Committee (SC)Grand total 338+advisors

1st draft
brainstorming

SC

Review and inputs byprivate sector & MITI
TRGs are called
and start work

(25)

Services

Mar.2005

Business Business

SectoralDevelopment

IPC

SC

Logistics

Sep.2004

Headed by MITI Official; members from MITI,
EPU, econ. agencies, businesses (23)Marketing/branding

Enabling
technologies & ICT

Human resource
development

SME
development

Investments

External tradeMacroframework

Advisor/
Coordinator

MDC
MITI MATRADE MIDA SMIDEC MEF/
business
(38)
(19)
(23)
(19)
(34)
(25)

Headed by MITI Minister; members from
MITI, EPU, economic agencies (27)MITI

MIDA :Head of TRG(39)(26) (=>Total 288)

(40)

Technical
Resource
GroupsAug.2006

SC

IPC

MITI
More fine-tuningwith TRGs

Further work by TRGs

Source: MITI website, and VDF mission to Kuala Lumpur, Jan.2006.
Note: Numbers in parentheses indicate the number of members in each committee or group.

MITI

FinishFinal adjustments
in data & words
within MITI

Common Mistakes
Practices that do not lead to policy learning or policy
improvement:
1.
2.

3.

4.

Lack of clear vision or directive from top leader
Policy making within a narrow circle of officials
without deep involvement of other stakeholders
Outsourcing of entire policy drafting to outsideacademics or consultants, with policy makers
only making comments & revisions (Marunage)
Bottom-up collection of ideas drafted by various
ministries which ends up in unconnected
chapters and too many priorities

Policy Organization
There are several alternative models for policy
formulation and coordination:
 Elite technocrat group under PM/President todesign policies as nation’s brain National Councils or Committees
 Super-ministry Sector/issue-specific institute acting as a hub Strong national leader as a policy making hub
without institutionalization
These approaches are not mutually exclusive. For
Ethiopia, I recommend the second approach.

Technocrat Group Approach- Elite technocrat groupwith full planning authority
given by top leader- Members are selected
officials, business leaders& experts with goodeducation & experience

Prime Minister
Direction, fullauthority forpolicy making

Technocrat Group(Policy Maker)
Policy,guidance andmonitoring

Korea – Econ. Planning Board
Malaysia – Econ. Planning Unit
Thailand – NESDB
Taiwan – Kuomintang Elites
Indonesia – “Berkeley Mafia”
Chile – “Chicago Boys”

Faithful
execution andreportingBusinesses
Academics
Experts

Faithful
executionand reporting

Ministries (Policy Implementers)National Council/Committee
Approach
Typicalconfiguration:

PM or
President
Chair, give mandate

Businesses
Academics
Experts

National Councilor Committee

Plan

Supportworking groups or task forces
for specific issues and sectors

Ministries and agencies

Implement

Comparing the Two Approaches
Technocrat groupserving top leader

National councils/
committees

NumberOnly one

Up to several

Tasks

Multiple and variable

Single task

Time
scope

Semi-permanent(until this system is nolonger needed)

Temporary(until the assigned task iscompleted)

Relationwithministries

A planning body above all Ministers and officials
ministries; the latter are
participate in policy making
implementing bodies
as members

Commenton
Ethiopia

PM’s advisors—supporting
PM individually but notworking together as one
autonomous body; no
official planning function

Monthly Export Steering
Committee—executing andmonitoring agreed export
policy rather than policy
makingEast Asian Examples of Technocrat
and/or Council Approach Korea—high growth drive, current policy

making Singapore—productivity drive Malaysia—five-year plan, SME policy,
industrial master plan Thailand—industrial restructuring &Eastern Seaboard development
 Vientam—Michael Porter’s proposal for
National Competitiveness Council

Korea 1960s-70s: Economic Planning Board

President(Blue House)Economic
SecretariatsState Council

Five-year plan

KDI
- Policy analyses

Chaired by Deputy PM

Economic Minister’sCouncil

EPB
Deputy PM- Development planning- Public investment planning- Budget- Monitoring- Aid management

Govt.-BusinessMeetings:- Export promotion- Economic briefs- HCI drive, etc.







MCI

Ministries/Agencies

Business FinanceDirect presidential
control overeconomic policies
EPB as superministry
Research institute(KDI, etc.),
providing analysis
for MLT economic
policies
Govt.-business:very close &cooperative
relations
Performancebased rewards &penalties

Korea Now: Presidential Committees
Vision & Priority
AgendaPresident of the Republic of Korea

Chairman
Co-chaired byPrime Minister

Chairman

Chairman

ChairmanPC.
Green Growth

PC.
Future & Vision

PC. National
CompetitivenessPC. Nation
Branding(Feb. 2009)(May 2008)(Feb. 2008)(Jan. 2009)

Secretariat

Secretariat

Secretariat

Secretariat

about 60 staff(seconded officials
from various govt.
agencies

about 30 staff(seconded officials
from various govt.
agencies)

PolicyMinistry A

Staffing

Drafting, Inter-ministerial coordination, etc.

Ministry B

Ministry C

Ministry D

Implementation

Ministry E

Ministry FSingapore Now: National Productivity andContinuing Education Council
Direction set by
the Economic
Strategies
Committee’s Report

Chaired by Deputy PM
Members from ministries/agencies,
business, unions
Joint secretariat: MTI, MOM(ministers)

National Productivity andContinuing Education Council (NPCEC)
Review & submit

Oversight
Review & approval

Led by MTI, MOM (PS level)
Inter-agency coordination

Working Committee for Productivity andContinuing Education (WCPCE)
Sectoral “Productivity Roadmap”
for the next 10 years
Draft & propose

Financial Incentives
Scrutiny

National
Productivity
Fund

Productivity& Innovation
CreditSkills Dvt. Fund
Lifelong Learning
E.F.

Sector WGs (12 priority sectors)
Construction
BCA
UnionsIndustry

Electronics
EDB
UnionsIndustry

Precision Eng. Transport Eng. General Mfg.
EDB
EDB
SPRING
UnionsUnionsUnionsIndustry
Industry
Industry

Cross-cutting issues
Low wage workers
Research & benchmarking
Information, communication and logistics

F&B
SPRING
UnionsIndustry

Retails
SPRING
UnionsIndustry

OthersOthersMalaysia Now: Economic Planning Unit
NPC

PM’s Dept.

NAC
PM
Deputy PM

EPU(planning)

ICU(monitoring)

Vision 2020
Malaysia Plan (Five-Year DP)

Central
Bank
IMP2

MOF

MITI

Chaired by MITI Minister,
Govt & business.

Industry Coordination
Council (ICC)
Budgetdialogue

Political Parties

Govt. only (8 ministries/agencies)

Industry Policy and Incentive
Committee (IPIC)

Malay
society

Chinesesociety

Indiansociety

Annualdialogue

Govt.& businessIndustry Cluster Working
Groups (18 CWGs)

IndustrygroupsChambers of Commerce

Individual
firmsMalaysia Now: National SME Dev. Council

Thailand 1980s:
Eastern Seaboard Development Committee
Cabinet
ProposeEastern Seaboard Development Committee (ESDC)
Chair: Prime Minister (later, Deputy PM)
Secretary: Secretary General of the National Economic and Social
Development Board (NESDB)
Propose・Approve・Control・Direct
・Supervise

Secretariat

Appoint

Sub-committees
Chair: Minister of government agency in charge
Office of the Eastern Seaboard
Development
Committee(OESD) within the NESDB
BudgetBureau of the
Budget (BOB)

Technical Assistance
Department of Technicaland Economic Cooperation(DTEC)

Loan
Fiscal Policy
Office (FPO)

Government agencies (central, regional, local) and State enterprises

・Coordinate
・Oversee・AdviseThailand late 1990s:
National Industrial Development Committee
Prime Minister
CabinetGovt.-business consultation body,established in the early 80s.

Economic Cabinet
Meeting

JPPCC

NESDB
Financial Sector
ReformIndustrial
Restructuring

Chaired by Deputy PM

Chaired by Deputy Minister, MOI

National Industrial
Development Committee

Sub-committee on National
Industrial Restructuring

SocialInfrastructure

OthersExamine & discuss basic
policy & direction
Examine & discuss detailed
measures & actions

Operated jointly by public ＆ private
Institutes
sectors
Textile, Food, Automobile, Iron & Steel, SME,
Productivity, Mgt. System Certificate, etc.

Information sharing;Specific MP formulation, etc.

Line Ministries

Thai EXIM Bank
IFCT
SICGC

Federation of Thai Industries
Industry Associations
Chamber of Commerce

Commercial
Banks

Michael Porter’s Proposal for Vietnam

Source: M. Porter’s Presentation at Vietnam Competitiveness Report launching seminar,
Hanoi, Nov. 2010.

Super Ministry Approach One ministry with broad authority for industry(sectors, trade, technology, training, standards,
SMEs, FDI, IPR, regional development…)
 Performing multiple tasks—planning, interface
with politicians, working with businesses andother stakeholders, trade negotiation, draftinglaws and regulations, monitoring, dissemination….
 Highly motivated and capable officials, andextensive information networks are needed.
 No charismatic leader is needed for this approach
to work.

Organizational Structure of Japan’s Ministry ofInternational Trade and Industry, 1960s
MITI
Minister

Main Bureau

Politically appointed VM
Administrative VM
Deputy VMs
Special assistants

Minister’s Secretariat(incl. Research & Statistics)
Int’l Trade Policy Bureau
Int’l Trade Admin. Bureau
Industrial Policy Bureau
Industrial Location &Environment Protection Bureau
Basic Industries Bureau
Machinery & Information Industries
BureauConsumer Goods Industries Bureau

Deliberation Councils
Industrial Structure
Export Insurance
TextilePetroleum
Electrical Works.........

Attached Organizations
and External Bureaus
Agency of National Resources& Energy
Patent Office
SME Enterprise Agency
Agency of Industrial Science& Technology
Trade & Investment Training
Other(*) Industrial Structure Council:
influential in the 60s (18 special
committees): industrial pollution,
int’l economy, consumer economy,
heavy industry, chemical industry, etc.

Int’l Trade Transaction
Industrial Location & Water
Product Safety & Household Goods Quality Indication
Aircraft & Machinery Industry
Traditional Crafts Industry...................

Hub Institution Approach A semi-official sector/issue organization set up by

government plays policy coordinating role.
 As a neutral NPO, the hub institution organizes
and manages policy drafting.
 This approach requires (i) deep trust among all
stakeholders; (ii) capable leader & staff at hub
institution; and (iii) flexible and pragmatic policy
making culture (MOI lets hub institution to
produce policy).

Thailand: Specialized Institutions
Name

Start-up Date

Organizations

Thailand Productivity InstituteJune 1995

Originated from MOI industry promotion dept.
20 Board members, 161 staff.

Thai-German InstituteNov. 1995

Financial cooperation from KfW, GDC. Technicaltraining (CNC, CAM/CAD, etc.), 12 Board
members, 79 staff, 5 German experts.

Thailand Textile InstituteJune 1997

Based on MOI industry promotion dept. andindustry association. 20 Board members, 27
staff.

National Food Institute (NFI)

Oct. 1996

Based on MOI industry promotion dept. andindustry association. 20 Board members, 27
staff.

Management Systems
Certification Institute (MSCI)March 1999

Originated from Thai Industrial Standard
Institute (TISI). 14 Board members, 55 staff.

Thailand Automotive Institute(TAI)

April 1999

Supporting industry development. 20 Board
members, 28 staff

Electrical & Electronics Institute(EEI)

Feb. 1999

Supporting industry development. 29 Board
members, 28 staff.

Foundation for Cane & Sugar
Research Institute

April 1999

Originated from Cane & Sugar ResearchInstitute. 13 Board members.

Institute for SME Development

June 1999

Modeled on Japan’s SME Univ. Operated by
Thammasat Univ. in cooperation with 8 local
universities. 21 Board members.

The Iron & Steel Institute ofThailandDec. 1998

Aimed at joint marketing promotion of four
steel companies (oversupply)(cabinet approval)

Note: These institutions are required to be self-financing without official financial support.

Thailand: Institutional Hub for linking businesses,
government and experts(Under Thaksin Government, 2001-2006)

Strong Leader
Without Institutionalization
 A powerful and enlightened leader plays an

instrumental role in every policy function.
 The leader works bilaterally with ministries,
businesses, investors, donors, experts, etc. andintegrates all policy actions without horizontal
coordination.
 In the early stage of development, such a leader
can quickly put the nation on a growth track.
 However, risk of relying on one good leader isreal—institutionalization, delegation of authority,and preparation for smooth power transition arenecessary for sustainability.

Suggestion for Ethiopia 1

Take Proper Steps in Policy Making
 Quality over Speed—New policy must be createdin proper steps over 2-3 years. Most countries
take 2-3 years for drafting new policies, and at
least one year for revising old ones.
 Missing Middle—PM’s vision cannot be directly put
into M/P documents. The “middle” process foragreeing on broad goals and directions among all
stakeholders should be consciously created.
 No Marunage—policy substance must be decided
and owned by the ministry in charge. JICA, AAU
and other experts can support MOI from sideline
only. Outsourcing the drafting work is fine but
only after main policy contents have been agreed.

Standard Policy Making Procedure
Top leader
1. Vision

2. Consensus
building process

3. Documentation
process

Brainstorming

Studies& surveys

Set broadgoals &
direction

Drafting
work

Finalize& approve(May beoutsourced)

Stakeholder
consultation

Participation
Ministries＆agencies

Comments& revisions

Regions &localities

Participation
Businesses& bus. assoc.

Academics &consultants

Note: the entire process is managed and coordinated by a lead ministry or agency.

Suggestion for Ethiopia 2

National Movement for Kaizen
 Do not rush. A good roadmap cannot be createdwithin months. Singapore’s productivity
movement took decades through trial-and-error.
 Ethiopia is on track—Mr. Meles asked Japan for
kaizen assistance in July 2008. Policy discussions& PR have been conducted. Pilot project is going
well, 1st batch results are reviewed, reports aredrafted, and standardization (manuals, videos,etc.) is started.
 Initiating big actions now before a good roadmap
is agreed may turn out to be ineffective in thelong run.

Singapore: Productivity Organizations
PeriodOrganization

Remarks

1964

Productivity Unit, within Economic
Development Board (EDB)

65:Charter for
Industrial Progress,
Productivity
Code of Practice

1967-72

National Productivity Center

71:Tripartite Interim
Committee (toprepare NPB)

- Autonomously-run division under EDB

1972-95

National Productivity Board (NPB)- Statutory body, initially affiliated with
Ministry of Labor and later with Ministryof Trade and Industry (MTI)

19962001

Productivity Standard Board (PSB)

2002presentStandards, Productivity andInnovation Board (SPRING)- Statutory body, affiliated with MTI- Statutory body, affiliated with MTI

73:Singapore
Productivity
Association (SPA)
formed81:Productivity
Movement LaunchedSingapore: Productivity Movement, 1981-1990s

Awareness stage
1981-85

Create widespreadawareness of productivity
among companies andthe workforce

Action stage
1986-88

Translate “Awareness”
into specific programs
To improve productivity
At the workplace

Follow-up stage
1989-90s

Encourage ownership of
Productivity Movement
by private firms

JICA-supported Productivity Development Project(PDP: 1983-90)
Training of NPB staff
Massive campaign

 NPB staff (with JICA experts)
conduct company visits,model company project, etc.

Private management
consultants

90s-

Start international
cooperation

Suggestion for Ethiopia 2(Cont.) JICA will dispatch EKI experts (Phase 2) aroundFeb.2011. Let Kaizen Team work with them tocreate a preliminary roadmap proposal for kaizen
institutionalization.
 The lead ministry of kaizen should be MOI(Capacity Building Directorate?). Top leader(s) of
MOI must supervise the work directly and closely.
 There should be an official mechanism for active
involvement of other ministries in kaizen. Kaizen
Movement should not be the monopoly of MOI.

Suggestion for Ethiopia 3:

National Competitiveness Council
 Create NCC chaired by PM and attended byrelevant ministers, business representatives ororganizations, and selected academicians.
 Set broad goals & direction for industrialization,
supervise & coordinate over different ministries
and policy components.
 Create 4 or 5 working groups under NCC to workon priority sectors/issues (WGs shown in thenext diagram are Ohno’s suggestions only).
 Each ministry has triple functions: (i) minister as
member of NCC; (ii) officials as members of
WGs; and (iii) implementer of agreed policies.

Ethiopia: “Tatakidai” Proposal for NCC
Prime Minister
Direct, give mandate

Plan

National Competitiveness Council

Commission
studies, reports

Chaired by PM
Secretariat: PM OfficeMembers: concerned ministers,
business leaders, academicians

Support, report, draft

Working groups for specific issues or sectors

MSEs

KaizenClusters

TVET

Eng. Educ.

Secretariat:
MoUDC

Secretariat:
MOI

Secretariat:
MOI

Secretariat:
MOE

Secretariat:
MOE

Ministries,
businesses,
academics

Ministries,
businesses,
academics

Ministries,
businesses,
academics

Ministries,
businesses,
academics

Ministries,
businesses,
academics

Ministries and agencies

Implement

Note: This is a preliminary idea of K. Ohno to initiate discussion; listed issues and ministries
are suggestions only; everything is subject to addition, deletion or change.

For Reference: MSE Policy Organizationas Currently Envisaged
Source: Drawn by K. Ohno
based on interviews with
policy makers. Blue is myaddition.

Mr. Arkebe

Prime Minister(Advisor to PM)

Council of Ministers
Ministry of Urban Dev.
& Construction
FeMSEDA(To be restructured& expanded)

Lead ministry

Policy coordination

TVET
(MoE)

City & Town
Offices (800)

Micro credit(NBE)

Technical &HR support

One-stop service
for MSE matters,
clusters, etc.

Credit

MOI- Manuf. MSEs
- Kaizen- Graduation to
M/L enterprises