Pak-China Industrial Corridor to Spark Industrial Revolution in Pakistan

Industrial parks and special economic zones are part of the China-Pakistan Economic Corridor memoranda of understanding recently agreed between the leaders of the two countries. The key pre-requisites for  the establishment of these zones are resolution of the energy crisis and building of a competitive infrastructure in Pakistan.

Energy and Infrastructure:

The first phase of the economic corridor is focused on $45.6 billion worth of energy and infrastructure projects. China's state-owed banks will finance Chinese companies to fund, build and operate $45.6 billion worth of energy and infrastructure projects in Pakistan over the next six years, according to Reuters. Major Chinese companies investing in Pakistan's energy sector will include China's Three Gorges Corp which built the world's biggest hydro power project, and China Power International Development Ltd.

Under the agreement signed by Chinese and Pakistani leaders at a Beijing summit recently, $15.5 billion worth of coalwind, solar and hydro energy projects will come online by 2017 and add 10,400 megawatts of energy to the national grid.  An additional 6,120 megawatts will be added to the national grid at a cost of $18.2 billion by 2021.

The transport and communication infrastructure—roads, railways, cable, and oil and gas pipelines—will stretch 2,700 kilometers from Gwadar on the Arabian Sea to the Khunjerab Pass at the China-Pakistan border in the Karakorams.

Starting in 2015, the Chinese companies will invest an average of over $7 billion a year until 2021, a figure exceeding the previous record of $5.5 billion foreign direct investment in 2007 in Pakistan.

Special Economic Zones:

Beyond the initial phase, there are plans to establish special economic zones in the Corridor where Chinese companies will locate factories. Extensive manufacturing collaboration between the two neighbors will include a wide range of products from cheap toys and textiles to consumer electronics and supersonic fighter planes.

The basic idea of an industrial corridor is to develop a sound industrial base, served by competitive infrastructure as a prerequisite for attracting investments into export oriented industries and manufacturing. Such industries have helped a succession of countries like Indonesia, Japan, Hong Kong,  Malaysia, South Korea, Taiwan, China and now even Vietnam rise from low-cost manufacturing base to more advanced, high-end exports.  As a country's labour gets too expensive to be used to produce low-value products, some poorer country takes over and starts the climb to prosperity.

Once completed, the Pak-China industrial corridor with a sound industrial base and competitive infrastructure combined with low labor costs is expected to draw growing FDI from manufacturers in many other countries looking for a low-cost location to build products for exports to rich OECD nations.

Key Challenges:

While the commitment is there on both sides to make the corridor a reality, there are many challenges that need to be overcome. The key ones are  maintaining security and political stability, ensuring transparency, good governance and quality of execution. These challenges are not unsurmountable but overcoming them does require serious effort on the part of both sides but particularly on the Pakistani side. Let's hope Pakistani leaders are up to these challenges.

Summary: 

Pak-China economic corridor is a very ambitious effort by the two countries that will lead to greater investment and rapid industrialization of Pakistan. Successful implementation of it will be a game-changer for the people of Pakistan in terms of new economic opportunities leading to higher incomes and significant improvements in the living standards for ordinary Pakistanis. It will be in the best interest of all of them to  set their differences aside and work for its successful implementation.

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Comment by Riaz Haq on May 7, 2020 at 8:09am

Top CPEC Official @AsimSBajwa : Second phase of #CPEC crucial for #Pakistan's development: It has special emphasis on #agriculture, #industry, #trade, and #science and #technology. Just completed first phase was about #power and #infrastructure. #China http://www.xinhuanet.com/english/2020-05/07/c_139038471.htm

The second phase of the China-Pakistan Economic Corridor (CPEC) is crucial for the economic development of Pakistan, local media quoted Chairman of CPEC Authority Asim Saleem Bajwa as saying on Thursday.

The second phase of the multi-billion-dollar economic cooperation between Pakistan and China will have a special emphasis on agriculture, industry, trade, and science and technology, Bajwa said in an interaction with local media.

He said that the Pakistani government's priority about the second phase of CPEC is to make special economic zones functional, besides development projects in Gwadar, according to the report.

Bajwa, who also holds the additional position of the special assistant to the Pakistani prime minister on information and broadcasting, said that work for the completion of CPEC is in progress on a fast pace.

"There is no political hindrance in its way. The project is Pakistan's future as well as a tangible reality and no compromise will be made on it," local media quoted the official as saying.

Bajwa said Pakistan takes decisions which are within the best interest of the country and there is a political consensus that CPEC is the best for the interest of the country and for that matter "no external pressure against CPEC will be accepted," according to the report.

Many projects focusing on infrastructure and energy sectors in the first phase of CPEC have been completed and are already operational, and work on the second phase is underway. Enditem

Comment by Riaz Haq on November 8, 2020 at 4:24pm

#China Radio on #CPEC: Improvements in #energy & #transportation infrastructure have laid the foundation for the #industrial development of #Pakistan. The next phase of the CPEC project focuses on industrial cooperation. #industries #Manufacturing https://tribune.com.pk/story/2271510/cpecs-rapid-progress-laying-fo...

The projects implemented under the China-Pakistan Economic Corridor (CPEC), a flagship project of the Belt and Road Initiative, will not only benefit certain areas but also development in Pakistan, commented China Radio International (CRI) Urdu on Sunday.

“The way in which the CPEC projects have been implemented over the past five years and the results that have emerged show that the purpose of building up CPEC is not to benefit certain areas, but to promote development in Pakistan,” the CRI Urdu said of the progress made in the construction of CPEC projects.

The Urdu service stated that the infrastructure, construction of industries and the elimination of energy shortages will provide an environment for Pakistan according to its resources, which will also benefit the people of Pakistan and guarantee a bright future.

The Orange Line Metro train in Lahore is the first electric public transport project, the introduction of which not only increased travel facilities for the people but also created new jobs.

In the past five years, CPEC projects have created 55,000 direct jobs in the road infrastructure sector, of which 48,000 have been created specifically for local Pakistanis.

According to a spokesman for the Chinese Ministry of Foreign Affairs, major projects with a direct investment of US $25 billion have been completed since the inception of CPEC. The projects completed under it are are part of The Belt and Road Initiative.

As for the shipping of cargo, the trade began at the Gwadar port during the first six months of this year, through which up to 20,000 tons of goods were shipped to Afghanistan; the initiative also created jobs in the shipping sector. There was no doubt that these projects entailed infrastructure as well as energy supply, and job opportunities, the CRI maintained.

According to the proposed two-gap model of economist Hollis B Channery, developing countries should introduce foreign investment and stimulate exports to boost their national economies. In this regard, CPEC has played an important role in the development of Pakistan.

The initiative has also addressed the issue of limited investment potential, insufficient foreign exchange savings and deficits in Pakistan, and has provided excellent quality for Pakistan’s economic growth.

Pakistan’s GDP growth rate is significant and it has created 70,000 jobs in Pakistan, the China-based Urdu service added.

Since its inception, CPEC has considered the elimination of energy shortages in Pakistan as an important sector for construction. Over a period of five years, energy projects under the CPEC framework added 3,340 MW of electricity to Pakistan in early April 2019, accounting for 11% of the installed capacity in the country.

The shortage of electricity has been significantly reduced and in addition to power generation projects, China has built the Matiari-Lahore (an 878 km long, 660 kV) HVDC transmission line project in Pakistan – the second HVDC transmission line in the world to extend the life of the country's power grid.

The construction of the corridor is progressing rapidly, significantly reducing Pakistan's energy problem in the process. Improvement in the transportation infrastructure has laid the foundation for the industrial development of Pakistan. The next phase of the project focuses on industrial cooperation.

Given the pace of the projects, their completion and results, it can be said that CPEC is undoubtedly a new impetus for the sustainable development of Pakistan, the CRI added.

Comment by Riaz Haq on July 8, 2021 at 5:13pm

#China completes work on $1.7 billion project to transform #Pakistan’s dysfunctional national grid. The 878km, 660kV DC, #Matiari–#Lahore transmission line will provide the national grid with a new backbone. 1300 #Chinese & 650 #Pakistanis worked on it. https://www.globalconstructionreview.com/sectors/china-completes-wo...


A $1.7bn electricity transmission line on the China–Pakistan Economic Corridor (CPEC), which was begun in December 2018, was inaugurated in a ceremony held in Islamabad and Beijing at the end of last month.
The 660kV Matiari–Lahore high-voltage direct current line will provide Pakistan’s national grid with a new backbone and improve chronic problems with the country’s energy transmission and distribution grids.

The 878km line was financed and built by the State Grid Corporation of China, which will operate it for the next 25 years.

More than 1,300 Chinese and 6,500 Pakistani workers were employed on the scheme.

Hammad Azhar, Pakistan’s energy minister, said the project would bring stability to the country’s power system. Speaking at the online ceremony, he said the project would “enhance transmission capability and bring relief to consumers”.

Electricity generation in Pakistan has increased dramatically in recent years, thanks to the large-scale construction of mainly coal-fired plants funded by China.

As a result the country has an installed capacity of around 37GW and peak demand of only 25GW, although this is growing at a rate of about 5% a year. However the grid is able to handle only 22GW of power, resulting in chronic blackouts and load shedding, particularly in the summer when demand is highest.

However, problems occur in winter as well. In January of this year, the entire country suffered a blackout after a fault at a power station in southeast Sindh province caused the grid to lose its 50Hz frequency, which caused power stations throughout the country to close down.

This makes the reinforcement of the grid, arguably, the single most important infrastructure scheme for the country’s socio-economic development.

Zhang Jianhua, head of China’s National Energy Administration, told those present at the ceremony that the Matiari-Lahore line was the first large-scale transmission project of the CPEC, and would provide “solid assurance” for power transmission in the south and power supply in the north.

Speaking about the economic corridor in general, Azhar added: “The CPEC is of utmost importance for Pakistan. It will enable the country to enhance industrial production, upgrade energy and communication infrastructure and improve connectivity within the region.”

Of Pakistan’s 207 million people, roughly 58 million lacked access to grid electricity in 2018, including 46% of the rural population.

Comment by Riaz Haq on January 4, 2022 at 10:19pm

First HVDC transmission line tested with full load of 4,000MW


https://www.thenews.com.pk/print/878333-first-hvdc-transmission-lin...

Dubbed as flagship China Pakistan Economic Corridor (CPEC) project, 660kV Matiari-Lahore HVDC Line is the largest ever transmission sector project of the country in terms of its capacity as well as one of the longest in distance, connecting power generation units in the south with load centers upcountry.
“The HVDC line transcends a geographical length of about 900 km, marking the start of an era of long-distance power transmission in the country,” said an official of National Transmission and Despatch Company (NTDC).

“It is a unique project in the sense that it introduces HVDC technology for the first time in the national grid, enriching the technology mix of the grid.”

The official added that the trial operation was being carried out through NTDC transmission system.

“The Project has a design capacity of 4,000MW and will help evacuate power from cheaper Southern coal power plants and deliver it to load centers in the North of the country.”

Above all, the official said, the ongoing trial operation of the transmission line helped in contributing the record highest power transmitted on August 11, 2021 at 24,467 MW through the national grid.

“In 2020, peak load sustained by the national grid was 23,370MW for one day and in 2018 it was just 20,811 MW. With the launching of HVDC Matiari-Lahore Transmission Project, power dispersal capacity of the national grid has seen a massive jump of 4000mw in one go,” said an official.

He added that the ongoing trial operation marked one of the last steps in the completion of the project.

“In this last stage it will be trial-operated for a few days continuously at various power levels and under various configurations to test it in full running condition,” said the official.

Furthermore, the Capability Demonstration Test of the Project will also be performed during this period.

It is informed that the equipment debugging, station commissioning, and system commissioning up to the level of high power bipole testing of the project has already been completed, certified by both the Independent Engineer from Italy and Owner Engineer from Canada.

Despite Covid-19 pandemic, the overall work was completed by end of 2020. Earlier, the project was expected to be commissioned by March 2021 after going through trial run. However, after reaching an amicable solution, the contractor and NTDC agreed in writing to conduct trial run during peak load of summer months with COD in September 2021.

Comment by Riaz Haq on February 2, 2022 at 6:54am

ADB study stresses economic corridor development to transform Pakistan's economy

https://www.dawn.com/news/1672882


https://www.adb.org/sites/default/files/publication/768396/economic...

Pakistan has the potential of becoming a hub of economic activity for Central, South and West Asian countries if it follows the model of economic corridor development (ECD), the Asian Development Bank said in a study released on Wednesday.

The ADB study, titled "Economic Corridor Development in Pakistan: Concept, Framework, and Case Studies", examined how Pakistan could address economic challenges through ECD.

In the foreword, ADB Central and West Asia Department Director General Eugene Zhukov noted that Pakistan had not yet been able to attain a sustained growth path "to move beyond its historic lacklustre and stop-and-go pattern, characterised by 'booms and busts' every three to four years".

"Through market reforms, Pakistan needs to transform its economy into an export-led growth trajectory. In addition to improving the economy’s competitiveness and productivity with a vibrant private sector, it is critical to attracting domestic and foreign investments to support this transformation," he said.


The official went on to say that Pakistan had already adopted and implemented an ECD-focused strategy as part of its core development and growth framework.

"ECD can be one of the most credible ways to help the government achieve its socio-economic objectives of reaching the upper-middle-income status by 2025," Zhukov said.

However, he cautioned that private sector development and a fair and efficient tax system were also required for transforming the economy to export-led growth.

Defining ECD, the study said that it aimed to promote economic growth by connecting different economic agents along defined geographic areas.

When implemented successfully, ECD supports economies of scale and scope and induces economic transformation and diversification through foreign direct investment.

"By enhancing domestic connectivity and linking lagging regions [including secondary cities] with urban growth centres, ECD can help Pakistan become a hub of economic activity for Central, South, and West Asian countries," the study said.

It stated that the country could "revitalise" its economic growth through facilitating economic centres by bolstering them with an efficient transport network based on "robust infrastructure and supported by a business-enabling policy framework".

However, it pointed out that Pakistan currently lacked the administrative machinery for effectively managing ECD.

"Its complex tax administration and compliance requirements impede growth and expansion of private investment, project management and implementation are weak, and a coherent regulatory framework for land use and urban development is lacking."

The study proposed several recommendations which could enable Pakistan to tackle these challenges:

Empowering a central corridor planning and development agency to oversee the overall development and management of ECD.
Strengthening an overall policy framework for ECD, including streamlining policies for transport, logistics, public-private partnerships, land use, zoning regulations, business regulatory framework and taxation regimes.
Providing institutional support for skills development to align labour force skills with industry needs.
Link current industrial clusters and urban areas with new industrial hubs and urban centres through infrastructure networks.
Seeking ways to channel partial resources from overseas Pakistanis into profitable investment ventures to fund ECD-related projects.
The study also identified four routes that could be used for a pilot ECD programme: M4 Motorway linking Faisalabad and Multan, N70 (national highway) connecting Multan and Killa Saifullah, N50 (national highway) linking Dera Ismail Khan and Kachlak, and the Hazara Motorway (E35 Expressway) from Islamabad to Mansehra

Comment by Riaz Haq on February 2, 2022 at 6:54am

ADB study stresses economic corridor development to transform Pakistan's economy

https://www.dawn.com/news/1672882


https://www.adb.org/sites/default/files/publication/768396/economic...


Explaining the rationale behind selecting the routes, the study said: "[They] offer real untapped economic potential with opportunities to diversify; good development synergy for linking production networks especially small and medium-sized enterprises with markets and other economic agents; close links to the CPEC (China-Pakistan Economic Corridor) and Carec (Central Asia Regional Economic Cooperation) routes; and favourable prospects for connecting and realising the economic potential of underdeveloped regions in Balochistan and Khyber Pakhtunkhwa."

Maximising CPEC benefits
The study also touched upon CPEC and said that it could pull off a number of economic objectives if it was implemented successfully.

However, it cautioned that CPEC alone could not improve the economy and would need to be supported by structural reforms to unleash its true potential.

The ADB report suggested four policy recommendations to fully benefit from CPEC.

Undertaking structural reforms to facilitate private sector development.
Broadening the tax base to make use of the country's tax revenue potential and improve fairness of tax collection.
Utilising transport infrastructure under CPEC to maximise investment return and turn it into a multilateral initiative.
Expediting development of nine special economic zones planned along CPEC routes.

Comment by Riaz Haq on June 17, 2022 at 1:36pm

Pakistan light oil pipeline project undertaken by CPP completed

http://en.ce.cn/Insight/202206/13/t20220613_37750580.shtml

FAISALABAD, Jun. 13 (Gwadar Pro) –Recently, the MFM MoGas Project – (MFM MP) Phase-II (TS-3 & TS-4), constructed by China Petroleum Pipeline Engineering Co., Ltd. (CPP) was officially completed and successfully passed the owner's inspection.


“Since we officially entered the Pakistani market in July 2014 and registered the Pakistan Branch of China Petroleum Pipeline Engineering Co., Ltd. in October 2017, we have completed a total of 9 projects here. Beyond all question, the light oil pipeline project means another challenge for us," said Wang Desheng from the TS-3 & TS-4 EPC Project Department in an exclusive interview with Gwadar Pro.

“Our owner, Pak–Arab Refinery Limited (PARCO), operates a pipeline transportation system of more than 2,000 kilometers, from Karachi in the south to Lahore in the north, which can be described as the main artery that helps Pakistan’s north-south energy transmission. In recent years, demand for motor gasoline has grown rapidly in north and central Pakistan, so the PARCO started planning to use the same pipeline to transport gasoline to alleviate the shortage in the region, thereby stabilizing its market share in north-central Pakistan,” Wang told Gwadar Pro, “therefore, Mahmood Kot-Faisalabad-Machike (MFM) Pipeline Phase II Reconstruction and Expansion Project came into being, which also included our project.”

The TS-3 and TS-4 stations are located in Faisalabad and Sheikhupura, Punjab, respectively. The former includes a single gasoline storage tank (42 meters in diameter, 12.6 meters in height, and a tank capacity of 15,000 cubic meters), a fire water storage tank (15.24 meters in diameter, 13.1 meters in height and a tank capacity of 2200 cubic meters), etc. The latter includes 2 single gasoline storage tanks (42 meters in diameter, 12.6 meters in height and a tank capacity of 15,000 cubic meters), a fire water storage tank (18.2 meters in diameter, 14.63 meters in height and a tank capacity of 3500 cubic meters) and related supporting facilities.

According to Wang, their project has always adhered to the strictest engineering quality standards since the start of construction in November 2017 until the owner issued the completion certificate recently. “During the construction period of several years, our team overcame challenges such as local climate, customs differences, project safety, and successfully overcame the huge difficulties brought by the COVID-19 epidemic, and the project proceeded smoothly. It can be said that the owner's affirmation means our success,” Wang emphasized.

Besides, as for employment, the project also created a series of jobs to local technical talents. The reporter learned that during the peak construction period, the total number of people on site reached nearly 400. The project department recruited a group of skilled and experienced Pakistani engineers, and the person in charge of HSE also provided training on epidemic prevention and various rules and regulations.

In Wang’s view, there are huge opportunities for cooperation between CPP and Pakistani companies in the oil and gas industry, which has a considerable market in Pakistan. At present, the CPP has established good cooperative relations with major oil and gas industry owners such as SSGC, SNGPL, PARCO, ISGS, OGDCL, etc. in Pakistan, and has won a good reputation locally. “In the future, we will always pay attention to local policy trends and seize the opportunity to promote the comprehensive development of large-scale oil and gas projects in the China-Pakistan Economic Corridor. China-Pak friendship Zindabad!”

Comment by Riaz Haq on September 21, 2022 at 10:25am

Muneeb Sikander
@MuneebASikander
1/2 Pak Flood hit rural economy

Work produces things of value and transforms physical world in ways to make life better and survival possible.

But without organised and purposeful productive action, i.e., work, not possible for most people asis at the base of economic order


https://twitter.com/MuneebASikander/status/1572606162939289601?s=20...

----------------

2/2 Flood hit rural areas

Agrarian to agriculture/livestock based or limited workshop industry. Limited Agri TFP + 15.4 million at poverty risk

1. Need for agri TFP improvement
2., Need to diversify economic base by Proto-industrialization,

https://www.stlouisfed.org/publications/regional-economist/second-q...

https://twitter.com/MuneebASikander/status/1572606221076819970?s=20...

Comment by Riaz Haq on September 21, 2022 at 10:42am

How to Jump-Start Industrialization in Sub-Saharan Africa
May 27, 2021
By Yi Wen , Iris Arbogast

https://www.stlouisfed.org/publications/regional-economist/second-q...

KEY TAKEAWAYS
Most sub-Saharan nations have such low per capita incomes that it would take decades of double-digit growth to attain U.S. living standards.
Nations that industrialize successfully often begin with small-scale efforts and progress to mass-producing heavy industrial goods.
African countries could follow this development pattern with government-provided infrastructure and other support.

When considering income disparities across nations, the differences often can be striking, particularly for nations in the sub-Saharan region of Africa. Per capita income in many poor countries like these is 30 to 50 times smaller than in the U.S. In sub-Saharan Africa, 38 of 48 countries had gross national income (GNI) per capita levels below $2,300 in 2019, while GNI per capita was $65,850 in the U.S., according to data from the World Bank’s World Development Indicators database.

Generations of economists have studied economic development and given policy suggestions to officials in poor countries in Africa and elsewhere, but the disparities remain. To catch up to U.S. living standards, they would need to grow at about 11% per year for 40 to 50 years—an almost impossible standard that only China has come close to achieving in recent history.

The New Stage Theory of Development
The commonality between successful Asian countries’ industrialization (such as China’s rapid rise in the past 40 years) and successful European nations’ industrialization (such as the British Industrial Revolution in the 18th* and 19th centuries) is that these economies all went through three key stages during their industrialization, according to the New Stage Theory of Development (NST):1

Proto-industrialization, which features massive numbers of workshops in rural areas with small-scale production of basic consumer goods for long-distance trade
A first industrial revolution, which features mass production of labor-intensive, light consumer goods for domestic and international markets
A second industrial revolution, which features mass production of capital-intensive, heavy industrial goods
The first stage is very important but has been largely ignored by development economists. During this initial stage, rural farmers or poor households in urban areas use their free time to manufacture simple products and engage in long-distance trade. This raises their income and nurtures the formation of an increasingly unified market and primitive production networks, while developing entrepreneurship and labor skills. 2

During the second stage, large-scale factory systems become prevalent for light industries such as textiles, processed food, toys and furniture. This mass-production stage is labor-intensive, export oriented and benefits from poor countries’ comparative advantage in cheap labor. Mass production in the second stage is profitable only because proto-industrialization has created a large enough market and distribution networks for consumer goods.

Finally, the expansion of light industry in the second stage facilitates the formation of a large enough market for heavy industrial goods—such as means of transportation, energy, steel and heavy equipment. This is not only because the income of workers needs to be high enough to purchase big-ticket items such as automobiles, but because mass production of heavy industrial goods is profitable only after the second stage creates a mass-production chain to support their demand. 3

Comment by Riaz Haq on September 21, 2022 at 10:43am

How to Jump-Start Industrialization in Sub-Saharan Africa
May 27, 2021
By Yi Wen , Iris Arbogast

https://www.stlouisfed.org/publications/regional-economist/second-q...


In some newly emerging Asian economies, such as Vietnam and Bangladesh, about 30% of rural households were participating in nonfarm wage employment in the early- to mid-2000s (29% in 2002 in Vietnam and 35% in 2005 in Bangladesh). Rates of nonfarm wage employment in poor African countries, such as Ethiopia, Ghana, Malawi and Nigeria, remain between 5% and 18%.

In 2019, the GNI per capita in Bangladesh and Vietnam was $1,940 and $2,590, respectively. GNI per capita was $850 in Ethiopia, $2,220 in Ghana, $380 in Malawi and $2,030 in Nigeria. Although GNI per capita in Nigeria and Ghana is relatively high for the region, these economies are more dependent on income from oil and other natural resources than Bangladesh and Vietnam, according to data from the World Bank’s Development Indicators.

On the other hand, when China engaged in full-fledged proto-industrialization in the 1980s and kick-started its first industrial revolution around the early 1990s, the number of village workers as a fraction of the total rural labor force increased greatly. These workers went from 9% of the labor force in 1978 to 23% by 1988, and then increased to 30% by 2000.5
The Chinese experience in recent decades and the British industrial revolution in the 17th and 18th centuries imply that proto-industries must reach 40% to 50% of total agricultural value added—or about 25% to 30% of total rural labor force in their employment share—to spark a full-fledged first industrial revolution, or to render mass production of light consumer goods profitable and internationally competitive. 6
Based on this criterion, Vietnam and Bangladesh should possess the market conditions for supporting mass-production technologies in light industries like textiles. Indeed, these two countries are currently the largest clothing exporters after China, according to data from the World Trade Organization. But countries such as Ethiopia, Ghana, Malawi and Nigeria do not appear ready to support mass-production technologies in light industries, since their textile and clothing exports are very low.

Policy Implications for Africa
Based on the New Stage Theory of Development, we have a few policy suggestions for countries where rural manufacturing is not yet prevalent. Policymakers should provide every means possible to enhance proto-industrialization, which will help their countries embark on a healthy path of economic development.

The goal is to absorb as many rural households as possible into small-scale manufacturing workshops to increase their income and create a primitive supply chain and a disciplined labor force. This is one of the critical steps for nurturing a mass market to support full-fledged mass-production in light industries.

Governments should provide the necessary infrastructure and social capital to allow farmers to organize themselves into firms and send their goods to distant markets. Part of the income earned could be used to support government initiatives such as building local roads and canals, which reduce transportation costs and are a better use of resources than large projects like high-speed trains—which are better suited to the second industrial revolution stage.

Successfully creating proto-industrial supply chains, commercial distribution networks and competition between proto-industrial firms would eventually help give rise to large firms that mass produce light industrial goods such as textiles. A nation can also be more likely to attract large foreign firms that outsource their labor-intensive manufacturing industries by using subsidization policies such as providing ports, roads and free land as incentives.

* This article has been updated to correct the start of British industrialization.

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