By Phapano Phasha
WHAT makes nations powerful and wealthy? And what sets these nations apart to exploit their competitive and comparative advantage?
Two countries we can learn from as Africa, which have leveraged both their competitive and comparative advantage, are China and India, which have both managed to join the league of global economic superpowers and assert their economic and diplomatic dominance.
Due to their population, China and India have the largest human resources base in the world with a population of over 1.4 billion people per country; however, China is facing severe population decline with an ageing population and an antagonistic relationship with the richest countries in the Global North, who were instrumental in driving their manufacturing prowess.
It was in the 80s, under the tenure of the late US President, Ronald Reagan, that the US decided to introduce policy reforms that saw the country closing down their own manufacturing factories and relocating them to China, which had also introduced policy reforms under the new leadership of Deng Xiaoping, who is considered to be the father of modern-day China.
To many pundits, the reforms by Reagan are the single reason that led to the destruction of the US working class and middle class, the rise of China, and a new form of legalised child labour were China new factories could employ children and pay workers slave wages. (The 1980s: The Demise of Protection | Making Sweatshops: The Globalisation of the US Apparel Industry | California Scholarship Online | Oxford Academic, Reagan Set Up The Death Of The Middle Class, But China Was The Clincher | OurFuture.org by People's Action.
China took advantage of Reagan’s policies, but now countries in Africa want to test and reignite their own manufacturing capabilities and to develop internally so they no longer have to export their raw materials to China and countries in the West, which many pundits have elucidated as a “sustainable path of dependency“.
An industrious Africa that adds value to the global manufacturing value chain is possible. A developing country like India, which has many dynamics similar to those of many African countries, is a perfect model for Africa's industrialisation agenda.
From a shared colonial history, socio-economic challenges, and similar class contradictions, India is a yardstick we can use to usher in a new industrial era, but it must not be at our own detriment.
India went from obscurity in 2014 to a serious global power economically and in manufacturing in just 10 years through its “Make in India” initiative. It is elucidated that between April 2014 and March 2024, just through manufacturing, India increased its employment by 36% as a result of the deliberate intention by its government to prioritise manufacturing.
Part of the key fundamentals of positioning India as a manufacturing hub was for the country to identify manufacturing projects that had a net import impact and look at the consumption of these goods in order to become a net exporter of those goods.
Part of the industries that the Indian government identified and prioritised included, but were not limited to, electronics, textiles, phones, defence, health, and automobiles.
This initiative, which is now famously known as “Make in India” was not a talk-show; the Indian Government, under the stewardship of Prime Minister Modi, developed policy reforms and strategic initiatives whereby a target was set that the manufacturing sector in India would form 25% of the GDP.
Key Component of the Make in India
Four key components of this strategy were: ensuring India becomes a net exporter so that they can earn in foreign currency; identifying a few priority products to intentionally support; preparing the right skills in the labour force to build capacity that will take advantage of the global corporations that will identify India to set up their manufacturing plants; and more importantly, implementation through policy reforms and strategic intervention. Today, companies such as Boeing, Foxconn, Samsung, and Hyundai have their biggest plants in India. In summation, the major strategic directive that Prime Minister Modi undertook to turn 'Make In India' a reality was to create an environment where global companies preferred setting up their manufacturing locations in India for both the domestic and international markets.
Make in India in numbers:
According to the World Bank, cumulative foreign direct investment (FDI) inflow to India increased to $667.4 billion during the period 2014 to 2024, which equates to an extensive growth of FDI inflows in ten years, which clearly demonstrates that India is seriously committed to attracting investments into India and positioning the country as an attractive manufacturing location. This also led to increased employment, especially among the youth.
Several key sectors of the economy are set to have witnessed remarkable transformation that fuelled economic growth and the global competitiveness of India. One of the sectors that has extensively transformed successfully is the health manufacturing industry of India, which went from being a net importer to a net exporter.
Impressively, during Covid many countries in Africa and globally purchased Covid vaccines from the Serum Institute of India, which is the world's largest manufacturer of vaccines by volume. One of the other success stories of India’s industrialisation agenda is in the IT sector and digital manufacturing.
It is well known that major CEOs of the global 500 companies are headed by people of Indian descent who are trusted by global corporations to manage and head their companies.
It is quite clear that when the Indian Government embarked on the “Make in India“ project, they didn't just make it a political slogan, but they had measurable goals, measurable interventions, and timeline-based results. More importantly, the country took advantage of its population, which they are turning into a resource and workforce, which has seen India grow into the fifth largest economy and is projected to take over Germany and Japan by 2027.
Africa cannot continue to be left behind when its counterparts, such as India, which is grappling with similar yet different challenges to our continent, are on a deliberate path of development. it's time the continent takes up its comparative and competitive advantage.
India now matters to the world, and so should Africa.
* Phapano Phasha is chairperson of The Centre for Alternative Political and Economic Thought with focus on BRICS Plus countries, countries in the Global South, and Africa-India relations. The views expressed are her own.