International Comparison of
Manufacturing Performance
A Preliminary Study for Setting Ethiopia’s Light
Manufacturing Targets

GRIPS Development Forum
February 2014, Tokyo

Proposed Vision for Ethiopia 2025
PM Hailemariam (letter to GRIPS dated Sep.2, 2013):“My vision for the Ethiopian industrial sector is to become The
Leader of African Light Manufacturing by the year 2025.”

Industrial Development Strategic Plan (2013-2025), MOI &Adama Univ., revised August & September 2013:“Building on industrial sector with the highest manufacturing
capability in Africa which is diversified, globally competitive,
environmentally-friendly, and capable of significantly improving
the living standards of the Ethiopian people by the year 2025”
 GRIPS Development Forum (letter to PM, Aug.11, 2013):
The proposed vision should be concise, for example,
 “No.1 manufacturing country in Africa”
 “Highest manufacturing capability in Africa”
 “The leader of African manufacturing”
Possible Performance Indicators(GRIPS letter to PM, Aug.11, 2013)
 Manufacturing value-added (USD billion,% of GDP, or perhead) Export of manufactured products (USD billion or % of totalexport) Net export of manufactured products (adjusted for imported
inputs, USD billion)
 Manufacturing FDI inflow (number of projects or USD billion;
registration vs. implementation; annual or cumulative) Growth contribution of the manufacturing sector (%)
 Composition of manufacturing export weighted by “high-tech”
contents
 Global market share & brand recognition (champion products)

Data Issues
What is “manufacturing”?
 Distinguishing manufacture vs. raw materials- Processed food vs. agricultural products- Furniture components vs. wooden board- Jewelry vs. gemstoneDistinguishing true manufacturing vs. trade & distribution- Packaging, drying, combining, final assembly: do they qualify?
- Traders may disguise themselves as “manufacturers”

 How much processing makes a product “manufactured”?
What is “light manufacturing”? No common definition.
 Food & beverage, textile, footwear, leather products  YES
 Products of metal, wood, plastic, chemicals & paper 
Depends: these include handicrafts & simple goods vs.
sophisticated products made by large modern equipment

International Standard Industrial
Classification (ISIC), Revision 3.1
A - Agriculture, hunting and forestry 01-02
B - Fishing 05
C - Mining and quarrying 10-14
SecondaryD - Manufacturing 15-37
industries
E - Electricity, gas and water supply 40-41
F - Construction 45
G - Wholesale and retail trade; repair of motor vehicles, motorcycles andpersonal and household goods 50-52
H - Hotels and restaurants 55
I - Transport, storage and communications 60-64
J - Financial intermediation 65-67
K - Real estate, renting and business activities 70-74
L - Public administration and defence; compulsory social security 75
M - Education 80
N - Health and social work 85
O - Other community, social and personal service activities 90-93
P - Activities of private households as employers and undifferentiatedproduction activities of private households 95-97
Q - Extraterritorial organizations and bodies 99

ISIC Revision 3.1, Code D (Manufacturing)
15 - Manufacture of food products and beverages
16 - Manufacture of tobacco products
17 - Manufacture of textiles
18 - Manufacture of wearing apparel; dressing and dyeing of fur
19 - Tanning and dressing of leather; manufacture of luggage, handbags, saddlery, harness andfootwear
20 - Manufacture of wood and of products of wood and cork, except furniture; manufacture ofarticles of straw and plaiting materials
21 - Manufacture of paper and paper products
22 - Publishing, printing and reproduction of recorded media
23 - Manufacture of coke, refined petroleum products and nuclear fuel24 - Manufacture of chemicals and chemical products
25 - Manufacture of rubber and plastics products (2519, 2520, etc.)
26 - Manufacture of other non-metallic mineral products
27 - Manufacture of basic metals
28 - Manufacture of fabricated metal products, except machinery and equipment (2811-2813,
2893, 2899?)
29 - Manufacture of machinery and equipment n.e.c.
30 - Manufacture of office, accounting and computing machinery
31 - Manufacture of electrical machinery and apparatus n.e.c.
32 - Manufacture of radio, television and communication equipment and apparatus
33 - Manufacture of medical, precision and optical instruments, watches and clocks
34 - Manufacture of motor vehicles, trailers and semi-trailers
35 - Manufacture of other transport equipment
36 - Manufacture of furniture; manufacturing n.e.c. (3610 furniture, 3691 jewelry, etc.)
37 - Recycling(Source) http://unstats.un.org/unsd/cr/registry/regcst.asp?Cl=17

Standard International Trade Classification(SITC) Revision 3
0 - Food and live animals
00 - Live animals other than animals of division 03
01 - Meat and meat preparations
02 - Dairy products and birds' eggs
03 - Fish (not marine mammals), crustaceans, molluscs and aquatic
invertebrates, and preparations thereof
04 - Cereals and cereal preparations
05 - Vegetables and fruit
06 - Sugars, sugar preparations and honey07 - Coffee, tea, cocoa, spices, and manufactures thereof
08 - Feeding stuff for animals (not including unmilled cereals)
09 - Miscellaneous edible products and preparations
1 - Beverages and tobacco
11 - Beverages
12 - Tobacco and tobacco manufactures
2 - Crude materials, inedible, except fuels
3 - Mineral fuels, lubricants and related materials
4 - Animal and vegetable oils, fats and waxes
5 - Chemicals and related products, n.e.s.

(SITC, cont.)
6 - Manufactured goods classified chiefly by material
61 - Leather, leather manufactures, n.e.s., and dressed furskins
62 - Rubber manufactures, n.e.s.
63 - Cork and wood manufactures (excluding furniture)
64 - Paper, paperboard and articles of paper pulp, of paper or of
paperboard
65 - Textile yarn, fabrics, made-up articles, n.e.s., and related products
66 - Non-metallic mineral manufactures, n.e.s.
67 - Iron and steel
68 - Non-ferrous metals
69 - Manufactures of metals, n.e.s.
7 - Machinery and transport equipment
8 - Miscellaneous manufactured articles
81 - Prefabricated buildings; sanitary, plumbing, heating and lighting
fixtures and fittings, n.e.s.
82 - Furniture, and parts thereof; bedding, mattresses, mattress supports,cushions and similar stuffed furnishings
83 - Travel goods, handbags and similar containers
84 - Articles of apparel and clothing accessories
85 - Footwear
87 - Professional, scientific and controlling instruments and apparatus, n.e.s.
88 - Photographic apparatus, equipment and supplies and optical goods, n.e.s.;
watches and clocks
89 - Miscellaneous manufactured articles, n.e.s.

9 - Commodities and transactions not classified elsewhere in the SITC
(Source) http://unstats.un.org/unsd/cr/registry/regcst.asp?Cl=14

More About Data
Define “Africa” (all or Sub-Saharan or Continental?) Refer to Asian data for additional perspective.
 ISIC (all sectors) and SITC (traded goods only) are quite
different and do not match well.
 Missing or unreliable data for both Ethiopia and competitor
countries

Due to data problem, the following steps should be considered:
1/ General data review & country performance comparison
2/ Select a small number of variables to be monitored
3/ Select a small number of potential competitor countries(2/ & 3/ to be revised when necessary)
4/ Collect relevant data for selected countries forbenchmarking and monitoring progressInternational Organization Databases
Manufacturing data availability

Database

Value
added

Export &import

FDI flow &stockRemarks

International Trade
Center (ITC)

N.A.

LimitedFairlycomplete,
2000-2012• Compiled from UNCTAD,
COMTRADE, UN trade
database, etc.
• Product group data
available for FDI• Limited data for Africa

World Development
Indicators (WDI)

Fairlycomplete,
1960-2012

LimitedN.A.

• Product group data
available for VA, export &import• Good country coverage• No product group data for
FDI

UNCTAD stat

Fairlycomplete,
1970-2011

Fairlycomplete,
1995-2012

Limited• Detailed product groupdata available forexport/import• Good country coverage• No product group data for
FDI

http://www.intracen.org/

http://data.worldbank.org/products/wdi

http://unctadstat.unctad.org

Product groupdata available,
limited Africancountry data,
2000-2012
Product groupdata available,
good country
coverage,
1960-2012

No sectorial
data but goodcountry
coverage,2009-2012

Note: All data are accessible via internet free of charge. Additionally, GDP is available from
WDI (1960-2012) and UNCTAD stat (1970-2012); population is available from WDI(1960-2012) and UNCTAD stat (1970-2050f).

Swaziland
Thailand
Korea
China
Malaysia
Indonesia
Philippines
Singapore
Pakistan
Vietnam
Sri Lanka
Cote d'Ivoire
Bangladesh
Zimbabwe
Mauritius
Cameroon
Cambodia
Tunisia
MoroccoEgypt
Madagascar
Namibia
SenegalIndia
Mozambique
South Africa
Lesotho
Malawi
Kenya
Tanzania
BurundiZambiaTogo
UgandaLao PDR
Mongolia
GuineaGhana
Sudan
Burkina
Nepal
Botswana
AngolaRwandaAlgeria
Congo, Rep.
Ethiopia
Nigeria
Sierra Leone(1) Manufacturing Value Added(% of GDP, latest available data)% of GDP45

40

Africa

35

Asia

30

25

20

15

10

5

0

Source: World Bank, World Development Indicators database (accessed Oct.30, 2013).

Note: Data are for 2012. For countries with no 2012 data, data for the latest available year are used.

Manufacturing Value Added per Head
(USD, latest available data)

Source: World Bank, World Development Indicators database (accessed Oct. 30, 2013).
Note: Data are for 2012. For countries with no 2012 data, data for the latest available year are used.

Manufacturing Value Added: Asia(% of GDP)
% of GDP
40
Thailand35
Malaysia
Korea

30
25

Indonesia
Pakistan

20

Sri Lanka

15
India

Bangladesh

10
Mongolia

5
0
1965

1970

1975

1980

1985

1990

1995

2000

Source: World Bank, World Development Indicators database (accessed Oct. 30, 2013)

2005

2010

Manufacturing Value Added: Africa(% of GDP)
% of GDP
40
Swaziland

35
Zambia30
25

S.Africa

Mauritius

20

Tunisia
Zimbabwe
Egypt

15

Senegal
Kenya

10
Ghana

Tanzania

UgandaRwandaEthiopia

5
0
1965

1970

1975

1980

1985

1990

1995

2000

Source: World Bank, World Development Indicators database (accessed Oct. 30, 2013)

2005

2010

ChinaKorea
Singapore
India
Thailand
Malaysia
Indonesia
VietnamPhilippines
S. Africa
Pakistan
Egypt
Tunisia
MoroccoBangladesh
Sri Lanka
Cambodia
Botswana
Nigeria
MyanmarNamibia
Kenya
Mauritius
Algeria
Cote d'Ivoire
Swaziland
Tanzania
SenegalGhana
ZambiaUgandaZimbabwe
Madagascar
Nepal
Togo
Ethiopia
Mozambique
Mongolia
Rwanda(2) Manufactured Export (USD billion)$ billion
200
China $1,923.8b, Korea $466.3b, Singapore $285.1b
Africa

Asia

150

100

50

0

Source: World Bank, World Development Indicators database (accessed Oct. 30, 2013).

Note: Data are for 2012. For countries with no 2012 data, latest available data are used.

Net Manufactured Export (USD billion)(Manuf. export - manuf. import)
China $920.2b, Korea $206.5b
Africa
Asia

China
Korea
Singapore
Malaysia
Philippines
Bangladesh
Swaziland
Botswana
Togo
Cambodia
MyanmarThailandMadagascar
Mauritius
RwandaPakistan
SenegalMongolia
Zimbabwe
Namibia
Nepal
UgandaCote d'Ivoire
MozambiqueTunisia
ZambiaTanzania
Ethiopia
Sri Lanka
Kenya
MoroccoVietnam
Ghana
India
Egypt
Nigeria
Algeria
S. Africa
Indonesia$ billion
70
60
50
40
30
20
10
0
-10
-20
-30
-40
-50
-60
-70

Source: World Bank, World Development Indicators database (accessed Oct. 30, 2013).
Note: Data are for 2012. For countries with no 2012 data, latest available data are used.

Manufactured Export(% of total export, latest available data)% of total export
100
Africa

90

Asia
80
70
60
50
40
30
20
10
China
Cambodia
Botswana
Banglade
Korea
Philippine
Pakistan
Nepal
ThailandTunisia
Singapore
Swaziland
Sri Lanka
MoroccoVietnam
India
Malaysia
Mauritius
Togo
Madagasc
Egypt
Namibia
SenegalS. Africa
Indonesia
Kenya
UgandaMyanmar
Tanzania
Zimbabwe
Ethiopia
RwandaZambiaCote
Ghana
Mozambiq
Mongolia
Nigeria
Algeria0

Source: World Bank, World Development Indicators database (accessed Oct. 30, 2013).
Note: Data are for 2012. For countries with no 2012 data, latest available data are used.

Manufactured Export: Asia
100(% of total export)

%

China

Korea
90
80

PakistanThailand70
Sri Lanka

India

60

Malaysia

50
40

Indonesia

30
20
10
0
1965

1970

1975

1980

1985

1990

1995

2000

Source: World Bank, World Development Indicators database (accessed Oct. 30, 2013)

2005

2010

Manufactured Export: Africa(% of total export)

%

100
90
80

Botswana
Tunisia70

Togo
Morocco
Mauritius

60
50

S. Africa
SenegalZimbabwe

40
30

Tanzania
Ghana

Kenya
20

Uganda10

Ethiopia
Mozambique

0
1965

1970

1975

1980

1985

1990

1995

2000

Source: World Bank, World Development Indicators database (accessed Oct. 30, 2013)

2005

2010

Asia: Light Manufactured Export

Source: UNCTADstat, accessed Nov. 2013. Light manufacturing is defined using SITC as shown in previous slide

Asia: Net Light Manufactured Export(LM Export – LM Import)

Source: UNCTADstat, accessed Nov. 2013. Light manufacturing is defined using SITC as shown in previous slideAfrica: Light Manufactured Export

Source: UNCTADstat, accessed Nov. 2013. Light manufacturing is defined using SITC as shown in previous slideAfrica: Net Light Manufactured Export(LM Export – LM Import)

Source: UNCTADstat, accessed Nov. 2013. Light manufacturing is defined using SITC as shown in previous slide(3) FDI Inflow in Secondary Industries（Annual Average of 2003-2012）

Sources: International Trade Centre (World Bank and UNCTAD) and Ethiopian Investment Agency.
Note: Preliminary calculation from ITC database. Average inflow during 2003-2012. Average of available years only when
there are missing data. Data definition and quality need to be confirmed. For Ethiopia, average manufacturing FDI
inflow for 2004-2013 (EIA data).

Ethiopia: FDI Inflow (EIA Data)

Source: Ethiopian Investment Agency.

Ethiopia: Light Manufacturing FDI Inflow(Calculated from EIA data on individual projects)

Note 1. Light manufacturing is defined as products of food, textile, leather, wood, furniture& jewelry. “Other” manufacturing does not include machinery assembly.
Note 2. Figures here are far smaller than manufacturing FDI in the previous slide. The gap is
too wide (5-8 times in recent years) to be explained by differences in definition.

About EIA Data
Based on the letter of Mr. Fitsum Arega, EIA Director (Feb. 2014):
Monitoring project status
 EIA has seven sectoral teams that follow up the progress ofregistered projects (priority projects only) – coverage, duration andfrequency of monitoring?
 Old projects still in “pre-implementation” and “implementation”
stage will be canceled unless good reason is shown by Feb.7, 2014
– may we know the result?
EIA’s data coverage
 EIA uses ISIC codes (reported by investor) – then identification oflight manufacturing by code relatively easy?
 EIA does not cover mining (MoM); or hospitals, higher education &tour operation (respective federal or regional agencies).
 Positive-listed services are handled by EIA; FDI is not permitted in
trade & distribution – no traders in manufacturing disguise?
 Ayka has four projects totaling Birr 1.334 billion (<$100 million) –sounds small?

Tentative Conclusion
Ethiopia’s current (light) manufacturing capability is very
limited by global standards. There is a long way ahead.
 However, recent light manufacturing FDI inflow and rising
investor interest in Ethiopia are good signs.
 The meaning of “becoming the leader in African lightmanufacturing” must be defined. It does not have to mean
becoming No.1 in every variable.
 Some suggestions for (light) manufacturing targets: Aim at 15-20% of GDP (currently less than 5%)
 Move from near-zero to persistently positive tradebalance in (light) manufacturing—it is difficult to quickly
become a large net exporter of manufacturing.
 Become No.1 in attracting light manufacturing FDI in
Africa; market Ethiopia as a new relocation destination
for LM.
 Create at least three export champions in this category.
Potential Competitor Countries
A Very Preliminary List
The following countries were most frequently ranked Top 10 inAfrica in our bar charts (except net manufactured export)- Egypt, Morocco, Tunisia (6)- Mauritius, Namibia (5)- Botswana, S. Africa (4)- Cote d’Ivoire, Swaziland (3)- Algeria, Ghana, Kenya, Madagascar (2)- Angola, Cameroon, Malawi, Mozambique, Nigeria, Senegal,
Tanzania, Togo, Uganda, Zambia, Zimbabwe (1)With further analysis, a small number of potential
competitors for Ethiopia should be identified, andbenchmarking and monitoring should be conducted.

Suggestions for Next Steps
Ethiopia should have its own definition of “lightmanufacturing” to fit its policy objective. My suggestion,
based on SITC/ISIC, was indicated in this PPT.
 Prepare and improve Ethiopian data (VA, trade, FDI) forinternational comparison and monitoring progress during
GTP2 and toward 2025.
 Classify activities/projects into 2-digit ISIC or SITC
 Especially for agro and mining sectors, distinguish raw
materials and processed goods
 Distinguish true manufacturing and trade/distribution
 Press international organizations and research centers formore effort in collecting and analyzing light manufacturing
data in Africa (UNCTAD, WB, ACET…)
 Conduct a study on where the country currently stands inlight manufacturing, to define the starting point toward
Vision 2025 (part of GTP2 preparation?)