just 3 percent of their output (SMEs from developing Asia export 8.7 percent of their output),<sup>135</sup> the lowest in the world and providers of services barely participate in trade at all. This must change if landlocked African countries want to improve their lot in a sustained manner.

# **9. Concluding Observations on Policy Directions**

The development strategy of Malawi, Rwanda and Uganda is currently focused on urban industrialization. However, for the reasons presented above, this is unlikely to deliver the desired growth rates. The manufacturing sector and exports of light labor or resource intensive manufactures could contribute a fraction of aggregate growth but it is agriculture, agribusiness and services that will contribute the lion’s share. The comparative advantage of Malawi, Rwanda and Uganda now and in the future, lies in these activities. Extracting the maximum growth mileage will require policy action on multiple fronts.

It scarcely bears repeating that improving the quality of human capital, investment in hard and soft infrastructures, institutional upgrading that results in a more business friendly environment, increased access to financial, crop insurance and other services and greater state capabilities deserve the attention of policy makers. A reduction in the barriers to intra African trade would be advantageous. An increase in the number of African gazelle firms would help to spur growth. And as numerous commentators have pointed out, African countries need to devote far more resources to R&D particularly in agriculture not so much for the purposes of breakthrough inventions but to assimilate relevant research being done elsewhere and customize innovations for the African context. As this paper argues and is emphasized by the Global Innovation Index (2017, p.9), “An unprecedented convergence of biology, agronomy, plant and animal science, digitization and robotics is transforming the agri-food value chain. Big Data are reshaping the world of agriculture: digital agriculture has started to spread worldwide helped by developments of innovation in IT as well as data generation and analytics enabled by remote sensing and geographic innovation systems.” The opportunities are there for landlocked African countries to seize and to exploit. Effectively harnessed, these technologies promise rapid and sustainable growth even in the face of climate change. Malawi, Rwanda and Uganda with some trying can accelerate their convergence to the technological frontier and take full advantage of industrialized agriculture and agri-business.

Undoubtedly there are obstacles to transferring these advanced technologies wholesale to East Africa but their eventual assimilation is a must and it is the removal of hurdles that needs to be addressed. Success will depend upon skillful adaptation and tailoring of technologies with close attention to agro-climatic conditions, the capabilities of the farming community and the institutional realities. Many East Asian countries starting out with equally limited stocks of physical and human capital have demonstrated that new technologies can be assimilated quickly. Advances in ICT are in fact facilitating technology diffusion and its assimilation.

135 WTO (2016, p.5) https://www.wto.org/english/res_e/booksp_e/world_trade_report16_e.pdf 41