Education and Skills Enhancement

associated investments in new technologies. Access to credit, land, key infrastructure (for example, electricity), and foreign exchange to purchase imports may be allocated accordingly.

Local and central governments may also impose complicated licensing regulations that restrict entry. In many countries, industrial policies that are intended to support a few strategic sectors may create distortions that restrict entry and hence limit the gains from the selection that increases productivity and job creation. Policies should aim to reduce the costs of entry by easing regulatory barriers to entry and minimizing the distortions in allocation associated with state-owned and state-affiliated incumbent firms.

Education and Skills Enhancement

Coordinating and Aligning Industrial and Trade Policies with Education and Skills Enhancement Policies

Manufacturing firms in Sub-Saharan Africa are largely operating in the laborintensive segments of GVCs. The benefits of specializing in these segments are limited, particularly in GVCs that use cheap labor and low levels of technology. Economies such as the Republic of Korea, Singapore, and Taiwan, China, reaped significant gains from assembly manufacturing by using it as a basis for building higher-level productive capabilities, including nationally controlled GVCs, as part of ambitious industrial policy strategies.

The existing evidence suggests that there is a strong correlation between international fragmentation of production and the skills endowments of countries, and that the mix of skills of workers (skills bundle) plays a critical role in countries’ industrial specialization and integration into GVCs. Thus, although integrating into GVCs and reaping sizable benefits will require development of the skills that are necessary for higher-level tasks, policies focused only on selected, specific skills rather than bundles of skills may reduce the ability of countries to reap the benefits of GVC participation.

Investing in education and skills development is the starting point for helping the youth in developing countries take advantage of the opportunities for employment in GVCs (World Bank 2020). Presently, many SubSaharan African countries’ education systems are not designed to provide the skills needed for GVC-related activities. Furthermore, the region faces the future of work with a weak human capital base, and there is a huge gap between the demand for skills by employers and the supply of skills (Choi, Dutz, and Usman 2019). Hence, skills-enhancement policies should aim to equip the potential workforce with a set of skills—such as transferability, adaptability, and problem-solving, as well as managerial skills—to improve the productivity of workers involved in GVC-related activities. Policies

should also facilitate access to education at all levels by removing restrictive bottlenecks.

Policies that target the development of specific industries could lower a country’s comparative advantage if workers’ skills do not match the requirements of the industry. Thus, understanding and anticipating skills requirements in production would be necessary for countries to seize the opportunities that emerge as a result of specific comparative advantages.

Furthermore, for the majority of Sub-Saharan African countries, upgrading their position in the value chain and reaping the benefits thereof is currently a policy priority. Upgrading into higher value chains is associated with larger expected economic benefits, including high-wage employment and higher incomes. Currently, integration into GVCs and upgrading in the region have happened mostly in less knowledge-intensive manufacturing industries although there is some evidence of upgrading in knowledge-intensive manufacturing industries in some countries.

The skills of workers in Sub-Saharan Africa at present are weakly aligned with the requirements for participation in activities downstream of the value chain, which partly explains the region’s low specialization in industries in the lower rungs of the value chain. Thus, whether Sub-Saharan African countries will upgrade into other sophisticated segments of the value chain would depend on implementation of policies that support and make such a transition possible.

Education and skills-development policies can significantly influence countries’ industrial structures and specialization in international trade; and the coordination and alignment of industrial and trade policies with education and skills-enhancement policies would be needed to maximize the gains from integrating into GVCs (Grundke et al. 2017).

Facilitating the Transition from Training to Jobs

Education policies should focus on innovative curriculum and teaching strategies that include a strong work-based learning component and that build strong literacy, numeracy, and cognitive skills and management and communication strategies that align with the characteristics of industries’ skills requirements (OECD 2017). Education policies in countries that are ready to upgrade into activities higher up the value chain in technologically advanced industries should also focus on building social, emotional, and adaptability skills to complement cognitive skills (OECD 2017).

Enhancing International Cooperation for Skills Mobility

Policies should make room for the use of foreign talent. Skilled migrants have been found to contribute positively to Sub-Saharan Africa’s participation in manufacturing GVCs, especially in countries with acute shortages of skilled labor (Nadege and Jammeh 2019). It is therefore imperative to have policies