Industrial Policy Dialogue inEthiopia
Transferring Mindset and Methods from East Asia

Kenichi Ohno
National Graduate Institute for Policy Studies (GRIPS)
August 2012

Studies in Industrial Policy: Typology
Type 1 - Ideological and/or theoretical debate overdesirability and feasibility of industrial policy:
Washington Consensus vs. J.Stiglitz, D.Rodrik,H.J.Chang, Justin Lin, G.Dosi
Type 2 – Narration of concrete but isolated policy
experiences in particular sectors and/or countries:
Japan, Korea, China, Singapore, Malaysia
Type 3 – Systematic collection and comparison ofpast and present best policy practices, using themas references for building policy making capability
in each country.

Wanting to Learn Good Practice(Instead of debating theories forever) East Asia generally accepts government’s role inindustrialization and widely practices industrialpolicy. Rich experiences, and no allergy.
 In Africa—Ethiopia, Zambia, Rwanda, Botswana,Ghana, Uganda, Tanzania, Egypt, Tunisia, Namibia,
African Union, East African Community are someof the countries/organizations interested in or
already practicing industrial policy.
 Ethiopian senior economic advisor: “We wantaction-oriented advice, not academic theories.” Vietnamese officials & economists: “WB chief
economist’s proposals are too simple andmechanical. We want more concrete suggestions.”More Thoughts on Industrial Policy Validity of industrial policy argument depends on

actual successes on the ground.
 For industrial policy “converts,” pragmatic anddetailed guidance is needed, not theoreticaljustification of industrial policy.
 “How” (design & implementation) is more difficult
than “what” (knowing desirable policies).
 Japan, Asian Tigers, ASEAN, China industrialized
through self-study, learning from neighbors, andtrial-and-error.
 Today’s latecomers face random and fragmentedadvice. They either adopt foreign models too
easily without deep thinking, or reject thembecause “our country is unique.”Systematic Instruction on Industrial
Policy Making is Needed
Featuring: Strong country ownership A policy package tailored to each country Policy learning and gradual expansion of policyspace
 A broad policy menu to choose from, based on
analysis of best international policy practices
 Policy dialogue with advanced country experts(individual coaching & tutoring at initial stage)
Ethiopia: “Please show us how East Asian countries
draft industrial master plans and action plans.”

Learning from East Asia
 It is NOT copying some specific policies adopted

in some East Asian country to Africa.
 Learning mindset and methodology of designingand implementing industrial strategies.
 There is a standard industrial policy menu, but
selectivity and adjustment are needed to adapt tounique conditions of each country.
 The Eastern approach should be complementary
to the Western approach – benchmarking, SWOT,
PSD, business climate, good governance, policy
frameworks, democracyFeatures of Japanese Approach toDevelopment Cooperation
Pragmatism and concern with specific industries: Target orientation—striving for concrete vision,

targets, roadmaps, and actions instead of generalcapability improvements.
 Field (gemba) orientation—working on factory
floor or crop field to solve concrete problems.
 Joint work—transferring skills and knowledge todeveloping countries by working together (OJT);use national mechanisms, avoid creating parallelmechanisms.
 Dynamic capacity development—policy
learning, and expectation of graduation from aid.

Entry Points for Japan’s Industrial
Cooperation in Africa (or Anywhere)
Japan, a small investor and donor in Africa, butwith East Asian experience, can offer the following:
1.

2.
3.

4.

For a country with reasonable visions and plans,
standard policy tools (training, QC, kaizen, SME
promotion, master plan, etc.) can be provided.
Policy dialogue for strengthening visions andstrategies, learning the East Asian way, etc.
Comprehensive regional development with core
infrastructure coupled with HRD, regional
planning, industrial projects, rural development,etc. (Thai Eastern Seaboard, Brantas River Basin,
Indian Industrial Corridor, Nacala Corridor, etc.)
Creating enabling environment for Japanese FDI
under the principle of open access and nonexclusivity.

Japan’s Policy Dialogue with Developing Countries (Selective List)
Country

PeriodHead/key players

Purpose and content

Argentina

1985-1987
1994-1996(folow up)

Thailand

1999

Vietnam

1995-2001

Shigeru Ishikawa (professor)

Large-scale joint study on macroeconomy, industry, agriculture,enterprise reform, crisis management, etc.

Vietnam

2003-current

Japanese embassy, JICA, JETRO,JBIC

Bilateral joint initiative to improve business environment and strengthen
competitiveness through 2-year cycle of action plans

Indonesia

2000

Shujiro Urata (professor)

Policy recommendation for SME promotion

Indonesia

2002-2004

Takashi Shiraishi and Shinji
Asanuma (professors)

Policy support for macroeconomic management, financial sector reform,
SME promotion, private investment promotion, democratization,decentralization and human resource development

Laos2000-2005

Yonosuke Hara (professor)

Study on macroeconomy, finance, state enterprise, FDI and poverty
reduction, etc.

Myanmar1999-2002

Konosuke Odaka (professor)

Study on agriculture, rural development, industry, trade, finance, ITC, etc.

Mongolia

1998-2001

Hiroshi Ueno and Hideo Hashimoto(World Bank economists andStudy on the support for economic transition and development
professors)

Vietnam

2008-2010

Japanese embassy, JICA, JETRO,
businesses, GRIPS/VDF

Produce supporting industry development action plan for joint
implementation

Ethiopia

2009-

GRIPS Development Forum andJICA

Kaizen, basic metals & engineering, productivity movement, policy
procedure & organization, export promotion, etc.

Vietnam

2011-Japanese embassy, JICA, JETRO,METI, GRIPS/VDF

Select and intensively promote a small number of indutrial sectors; draftand implement detailed action plans

Saburo Okita (former foreignminister)Comperehesive study on agriculture and livestock farming, industry,transport and export promotion

Shiro Mizutani (former MITI official) Study on the master plan for SME promotion policy

Bilateral Policy Dialogue between
Ethiopia and Japan
 May 2008: 4th Tokyo International Conferenceon African Development (TICAD IV): Japan’scommitment to increase cooperation in Africa.
 July 2008: PM Meles’ request for two-partcooperation: (i) kaizen (factory improvement) byJICA; and (ii) policy dialogue with GRIPS. Actually,
two components are implemented jointly by
GRIPS and JICA.
 July 2008-: Preparation (2 sessions) Jun. 2009-May 2011: Eight quarterly sessions ofindustrial policy dialogue were conducted.
 Jan. 2012-: 2nd phase of policy dialogue &kaizen; first topic is strategic export promotion(later, technology transfer through FDI & ODA?)

GRIPS-JICA Industrial Policy Dialogue
and Industrial Support Projects, 2009Industrial policy dialoguePreparation

Secondphase
IPD conference& PM’s request
July 2008

Final session
May 2011

Official launch
June 2009

LaunchJan. 2012

Kaizen pilot project (30 firms)
Institutionalization of kaizen:
second phase

Industrial support
projects
Basic metal &engineering study(With ECBP: Ethiopia-German Program)
Note: Black squares indicate policy dialogue sessions in Addis Ababa with the prime minister, concerned ministers and state ministers, and officials and experts at
operational levels. IPD stands for the Initiative for Policy Dialogue, policy oriented meetings on various topics hosted by J. Stiglitz of Columbia University. ECBP
stands for the Engineering Capacity Building Program, a large-scale program run jointly by Ethiopia and Germany.

Purposes ofPolicy Dialogue with Ethiopia
 Transferring mindset and methodology of East

Asian policy making through working on concrete
issues and projects.
 Establishing linkage between policy dialogue andJapan’s industrial projects in Ethiopia.
 Cooperation and networking with other projects,donors, and academic institutions (Germany, WB,UK, UNIDO, Italy, Korea, AA University…)
 Creating pilot projects (models) which should bescaled up by Ethiopian effort.
 Promoting industrial policy dialogue in the rest ofAfrica.
 Providing policy information package upon PM’srequest (Japanese TVET system, kaizen, metal &chemical industry, productivity movements, etc).

Participants ofIndustrial Policy Dialogue
Ethiopian side (3 levels)
Prime Minister Meles Zenawi
 High-level policy makers headed by Mr. Newai (Senior
Economic Advisor to PM), Mr. Mekonnen (IndustryMinister), Mr. Tadesse (Industry State Minister),attended by state ministers from other ministries
 Operational levels
Japanese sideGRIPS researchers
 JICA officials and experts
 Other experts from JETRO, universities (as needed)
Supported by Japanese Embassy in Addis AbabaNote: In Phase 1, the Japanese team visited Ethiopia every three months forpolicy dialogue. Japanese experts and project teams visited additionally.
Ethiopian visits to Japan and other countries were also organized. Ethiopian
PhD students are being trained at GRIPS. In Phase 2, policy dialogue
sessions are held every six months with more preparations.

At the Prime Minister’s Office
Meeting with Senior Economic Advisor to PM

Presenting JICA’s Kaizen Report to PM

High Level Forum (minister & state minister level)

Meeting with Industry Minister

At the Ministry of Finance,Economy and Development

Main Topics ofIndustrial Policy Dialogue
 Democratic Developmentalism (DD) andAgricultural Development Led Industrialization(ADLI), two critical concepts, with PM.
 Policy formulation & document structure from
East Asian experiences and perspective.
 Advice on the next five-year plan (Growth andTransformation Plan).
 Concept, practice and institutionalization ofkaizen—global practice and Ethiopian application.
 Basic metal & engineering industries—conducting
local survey and review of global experiences.
 Strategic & customer-oriented export promotion
for creating champion products to enter
Japanese market (GRIPS-JICA-JETRO).

Candid Comments fromJapanese Experts and Officials
 Ethiopia’s strong policy ownership, clear visionand eagerness to learn are highly admirable.
 Bold policy vision must be backed by effective
implementation at operational levels. Capabilities
of ministries and agencies are still weak.
 Coordination mechanisms among different
ministries must be set up without relying on one
powerful leader (cf. alternative E. Asian models).
 Development planning, MSE policy, and kaizen
institutionalization must be greatly enhanced as
the focal points of industrial policy learning.
 Quality over speed: policy is made too hastily
without sufficient interaction with stakeholders.

Issues Discussed at High Level Forums (Phase 1)
1st HLF(Jun. 2009)

2nd HLF(Sep. 2009)

3rd HLF(Nov. 2009)

4th HLF(Mar. 2010)

5th HLF

Presentations by Japanese side

Presentations by Ethiopian side(1) “JICA’s plan to policy dialogue anddevelopment study” (Masafumi Kuroki)(2) “ADLI and future directions for industrialdevelopment” (Kenichi Ohno)(1) “Cross-cutting issues on industrializationand policy menu under the age ofglobalization: examples from East Asia”(Kenichi Ohno)(2) “Organizational arrangements for industrial
policy formulation and implementation:
examples from East Asia” (Izumi Ohno)(3) “Planning and decision-making process for
SME policies in Japan” (Go Shimada)(1) “Designing industrial master plans:international comparison of content andstructure” (Kenichi Ohno)(2) “Industrial policy direction of Ethiopia:
suggestions for PASDEP II and the next
five years” (Izumi Ohno)(1) “Basic metals and engineering industries:
international comparison of policy
framework and Ethiopia’s approach” (ToruHomma)(1) “Result of basic metal and engineering(1) “Evaluation of current PASDEP focusing on
industrial development and related sectors”(HE Tadesse Haile)(1) “Comments and feedback by the Policy
Dialogue Steering Committee on thepresentations by GRIPS and JICA” (HETadesse Haile)(1) “Concept for the industrial chapter ofPASDEP II and the formulation plan” (HETadesse Haile)(1) “Draft plan of industry sector for PASDEP
II” (HE Tadesse Haile)(2) “Overview, contents of PASDEP II draft ofchemical subsector” (Shimelis Wolde)(1) “Report of kaizen training for capacity

5th HLF(Jul. 2010)(1) “Result of basic metal and engineering
industries firm-level study – parts
conducted by MPDC and JICA” (ToruHomma)

6th HLF(Oct. 2009)(1) “Singapore’s experience with productivity
development: internalization, scaling-up,and international cooperation” (Izumi Ohno)

7th HLF(Jan. 2011)(1) “The making of high priority development
strategies: international comparison ofpolicy procedure and organization” (KenichiOhno)(1) “Ethiopia's industrialization drive under theGrowth and Transformation Plan” (KenichiOhno)(2) “Achievements in the Quality andProductivity Improvement (Kaizen) Project”(Go Shimada)(3) “Overview of national movement for quality
and productivity improvement: experiencesof selected countries in Asia and Africa”(Izumi Ohno)(4) “Taiwan: policy drive for innovation” (KenichiOhno)

8th HLF(May 2011)(1) “Report of kaizen training for capacity
building of Kaizen Unit and pilot projectcompanies in Osaka, Japan” (Tola Beyene)(2) “Report of kaizen training for capacity
building of Kaizen Unit and pilot projectcompanies in Chubu, Japan” (BekeleMekuria)(3) “Current status of kaizen project andinstitutionalization of kaizen” (GetahunTadesse)(1) “Contents of industry sector in Growth andTransformation Plan” (HE Tadesse Haile)(2) “Singapore’s productivity movement andlessons learned” (Daniel Kitaw)(1) “Organizational structure of Ministry ofIndustry and linkage with other ministries”(Ahmed Nuru)(1) “MSE development strategy of Ethiopia”(Gabremeskel Challa)(2) “Kaizen dissemination plan andinstitutionalization plan” (Getahun Tadesse)(3) “Botswana's productivity movement and its
Implication to Ethiopia” (Daniel Kitaw)

Documents and Reports Produced for
Policy Dialogue, and Related Works
JICA & GRIPS, Study on Industrial Policy Dialogue in the
FDRE: Final Report, Dec.2011.
JICA & GRIPS, Handbook of National Movements for Quality
and Productivity Improvement (Kaizen), Dec.2011.
GRIPS Development Forum, ed, Introducing Kaizen in Africa,Oct.2009.
Ohno, K., Learning to Industrialize: From Given Growth to
Policy-aided Value Creation (Routledge, forthcoming).
Ohno, I. & K. Ohno, “Dynamic Capacity Development: WhatAfrica Can Learn from Industrial Policy Formulation in EastAsia,” ch.7, Noman, Botchwey, Stein & Stiglitz, eds (2012).
Comparative research on industrial policy making inSingapore, Korea, and Taiwan (2010-2011).
“Backgrounds, Policy Measures and Outcomes forDevelopment of Supporting Industries in ASEAN: Malaysiaand Thailand in comparison with Vietnam” (JICA,Feb.2010).