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This paper analyses the case for selective industrial and trade policies in Africa, drawing upon the lessons of East Asia. It reviews the theoretical arguments for government intervention in the context of technological learning, and relates this to the new environment of rapid technical change and globalisation of production. It also considers the risks of government failure in mounting selective policies, and concludes that the degree of selectivity has to be much less than in East Asia. The case for selective policies nevertheless remains strong, if Africa is to make any industrial progress. August

The paper reviews the nature of current globalization and the growing divergence in competitive performance in the developing world. It considers the case for industrial policy, contrasting the neoliberal with the structuralist approach. It argues that there is a valid case for selective interventions in overcoming the market and institutional failures in building the capabilities required for industrial development. It describes the strategies adopted by the Asian Tigers to build industrial competitiveness, and concludes with lessons for other developing countries. The kinds of industrial policy needed in the current setting are different from traditional industrialisation strategies, but globalization and technical change do not eliminate the need for intervention. On the contrary, given path dependence, cumulativeness and agglomeration economies, they increase it. There is a need to reconsider the rules of the game constraining the exercise of industrial policy, and for international assistance in designing and implementing appropriate policies.

Lesotho, a resource-poor country located inside South Africa, is now Africa's largest exporter of apparel to the U.S. Its performance, very unusual for Africa, relies heavily on Asian investors and trade privileges. This article traces the origins of FDI in Lesotho and the determinants of its export competitiveness, showing that apparel production suffers from low productivity, poor skills and weak local links. Its prospects after AGOA (the African Growth and Opportunities Act) remain uncertain unless the government addresses these structural problems. Lesotho holds important lessons for industrial development in Africa, going beyond creating a good investment environment.

These are neglected by conventional analyses of exporting, which ignore information gaps and various transaction costs. Barriers vary by industry, as do institutional mechanisms for overcoming them. The appropriateness of the mechanism depends on the capabilities of the exporter and the nature of information required. Notes the role of foreign buyers, and offers a general conceptual framework. (Abstract amended)