Twenty-first century Industrial Policy in a small developing country: The challenges of reviving manufacturing in Rwanda

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Abstract

The Rwandan government has recently focused its efforts on reviving manufacturing sector growth. Two priority sectors are apparels and cement. This paper examines how pressures from different levels – international, regional and domestic – have shaped the evolving political economy of the two sectors. Bilateral treaties have been a source of extreme pressure. In 2018, the United States announced that it would suspend Rwanda from trade preferences received through the African Growth and Opportunity Act (AGOA) after the Rwandan government hiked duties on the import of used clothing and shoes in 2016. Another striking feature of Rwanda’s industrial ambitions is the emphasis the government has placed on industrializing through regional integration. Though common markets can have the effect of locking countries into their existing static comparative advantages, the government has supported locally based companies through providing incentives and subsidies and also supporting their development through public procurement contracts. Local champions have emerged but the government is dependent on single firms within both sectors. Such dependence exposes the sector’s vulnerability if the company faces problems or reneges on its promises. This paper highlights the sources of uncertainty and vulnerability of 21st century industrial policy in a small developing country.

Bibliographical metadata

Original languageEnglish
JournalDevelopment and Change
Early online date5 Mar 2019
DOIs
Publication statusPublished - 2019

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