Skills, investment and exports from manufacturing firms in Africa

It has been argued that Africa will not be able to export manufactures as it lacks the necessary skills. Without an ability to export there will only be an incentive to invest in the sector if domestic demand grows rapidly. Comparative data for four African countries - the Cameroon, Ghana, Kenya and Zimbabwe - shows that in the early 1990s investment in manufacturing remained very low. The micro evidence on manufacturing exports is wholly consistent with the macro in suggesting these are, for most African countries, negligible. An exception is Zimbabwe. The paper uses a longer time series from Ghana to ask how skills have impacted on manufacturing investment and exports in the 1990s. Two dimensions of skills are defined and measured. The first is that observable in the education and experience of the workforce. The second is the underlying efficiency with which the firm operates. The latter is shown to be a significant determinant of both investment and exports. These exports are relatively capital intensive; unskilled labour intensive exports remain negligible. Possible reasons for these outcomes are discussed.