Egyptian policymakers may find some useful tips in UNIDO's 2009 Industrial Development Report, Niveen Wahish has a read through "Breaking in and moving up: New industrial challenges for the bottom billion and the middle-income countries" is what the United Nations Industrial Development Organisation (UNIDO) concentrates on in its Industrial Development Report for 2009. The 141-page report examines various models of industrialisation and tries to draw attention to best practices that can help low and middle-income countries become part of the global industrial economy. The report classifies countries into slow growing and fast growing low income countries. Egypt falls within the second group. There are also slow growing and fast growing middle income countries. And there are high-income countries, which are the members of the Organisation for Economic Cooperation and Development (OECD). The report held a few disappointments for Egypt. In benchmarking industrial performance at the country level through its Competitive Industrial Performance Index, Egypt ranked 75th out of 122 countries. Although this ranking dates back to 2005, it still gives an idea of where Egypt is. In 2000, Egypt ranked 50th. Although this drop may in part be due to the fact that the number of countries included in the index has grown from 87 countries to 122, nonetheless, analysing the figures and comparing them with other countries Egypt does stand among the countries which have lost the most extensive ground. The index takes into account each country's industrial capacity, manufactured export capacity, industrialisation intensity and export quality. Further, the UNIDO report adds, there is a strong correlation between success in trade logistics and industrial competitiveness. But Egypt did not do well in the former either. Another disappointing figure for Egypt was in the Logistics Performance Index developed by the World Bank in 2007. Egypt ranked 97th on that index. The index provides an assessment of the trade logistics performance of 150 countries. Surveys undertaken to compile the report indicate that not only is infrastructure important, but so are institutions and the regulatory environment. Furthermore, border procedures emerged as "a significant constraint in virtually all developing countries", particularly when it comes to coordination between customs and other agencies such as those responsible for health and safety standards. The surveys undertaken indicate that "trade logistics reforms in middle income and fast growing low income countries need to move beyond the traditional trade facilitation agenda focused on trade related infrastructure and IT in customs." But these indexes matter inasmuch as they serve as a guide for countries to reach the goal of industrialisation, because the underlying theme is that industry and industrial development are important drivers of growth in low and middle-income countries. Moreover, according to the report, "countries with a broad production base and more sophisticated industrial and export structures grow faster." With this in mind the report sets out to cite examples and give tips that could help two groups in particular. The first includes the poorest one billion people, out of a global population of six billion, who are living on less than $1 per day. The second are the middle income countries that have failed to sustain production and export dynamism and are consequently growing slowly. According to the report, "the slow-growing middle income countries stand out for how little their production structures have changed over the past 30 years and for the fact that such changes that have taken place have probably retarded their growth." The help menu, for starters, stresses that diversifying production and moving up the product sophistication ladder appear to be important drivers of development in low and middle income countries. However, that does not necessarily mean producing complete products. In fact the report promotes the idea of task-based production whereby a country may produce one component of a product rather than a complete product. That formula, the report says, may be a lifeline of sorts for low income countries that would like to develop through manufactured exports but have failed to do so. "Getting started by undertaking a single task is far less daunting than breaking into the global market for an entire product," the report read. While taking into consideration the sophistication of products, the report also focuses on where production takes place. It notes that there may be an understandable desire to spread manufacturing jobs equally around a country but that may not necessarily yield the best outcome. It also questions whether governments can spur industrial growth and improve competitiveness through public policies specifically aimed at influencing industrial locations. Whether industries are encouraged to locate next to similar production units or to spread out, the report says, differs from one country to another and needs to be tailor made to individual circumstances. Nonetheless the report notes that "dynamic industrial clusters have been important drivers of industrial development and export growth in a wide range of low and middle income countries." The report also draws attention to special economic zones (SEZs) as one form of agglomerations of firms. "Given the low level of industrial export dynamism in slow growing low income countries, linking export promotion and spatial policies through an SEZ offers substantial potential benefits," the report reads. Among the benefits is that they provide a clear focus for government investments and institutional reforms designed to encourage the relocation of firms to a specific area. But the report also notes that "many SEZs around the world are dysfunctional. They fail to attract a sufficient number of firms to realise cluster economies and in many cases, they offer excessive subsidies to the few firms that they succeed in attracting. Good infrastructure, management and institutions are the key determinants of success." With this in mind, the report stresses that the management of SEZs must respond to the needs of enterprises that locate there and not be left to bureaucrats who have no experience in business. Important tips are also offered to resource-rich countries. The report stresses that "booms in commodity prices should be an opportunity to enhance prosperity," and recommends that revenues from commodity export be used to finance other forms of industrialisation. "As an asset is being depleted, there is a need to replace it with other assets," the report says, implying that revenues from the export of resources should be invested to create the necessary infrastructure and skills that could jump-start an export industry.
