Commodity dependence Botswana‘s success in this regard. The first is economic diversification. The second is sustainable fiscal policy, which delinked expenditure from revenue. Together, these were only possible with strong institutions and good governance.132 And this is where the APRM can make a contribution. According to the African Development Bank (AfDB), Africa‘s commodity dependence has historically produced adverse, counter-developmental outcomes for a variety of reasons. These include:127      Rising real wages and exchange rates that undermine a country‘s competitiveness typical of extractive-dependent economies (so-called ‗Dutch disease‘); Rent seeking, which diverts energy from productive activities; Price volatility and ‗asymmetry of adjustment‘ – that it is easier to increase public spending than to reduce it; The creation of inflexible labour, product and asset markets; and Tensions between those parts of the country that are endowed with resources and those that are not. Survey results: The factors described above were also cited in the responses to the survey for this report. When asked about the obstacles to industrialisation, innovation and value-adding activity, the most prominent ones included lack of skills and education, shortage of financial resources, and governance obstacles. What – or what more – can the APRM do about lack of industrialisation and low value addition While there are no easy solutions for these bottlenecks, the APRM can assist in a number of ways, including: 1. Encouraging the development of industrial policy at the national level. This could be done as part of efforts to publicise the findings of reviews, and also at the APR Forum. In the latter, peer support to participating states in formulating industrial policy plans would be of great help. 2. Making an explicit reference to industrial policy issues in the questionnaire to ensure it figures in country self-assessment reports and the final country review report. 3. Looking at successful examples on industrialisation policy and implementation, both from within the continent and beyond, and using the APRM platform to disseminate best practice for the benefit of all African countries; 4. Promoting conversations on national policies and institutional arrangements conducive to successful industrialisation; 5. Using the APRM platform to sensitise citizens and their governments to encourage African countries to work together in the effort to reshape the international trade and investment regime so it can be more conducive to African industrialisation. The latter objective is a large, ambitious one, and is beyond the scope of the APRM as such. However, meetings of the APR Forum and interactions at the Committee of Focal Points The negative consequences of resource dependency are addressed extensively in many APRM country review reports. To take one example, the Nigeria CRR points to that country‘s overreliance on oil and consequent neglect of much of the rest of its economy, including manufacturing.128 Likewise, the Tanzania CRR notes the problem of remaining dependent on minerals, which are ―depleting resources‖,129 while Zambia is described as having ―a small and open economy that is highly dependent on mineral exports, which makes it vulnerable to external shocks.‖130 The challenge, of course, is how to build a sustainable economy on the back of exhaustible resources. The AfDB argues that, in the past, some resource-rich developing countries have attempted to use resource rents to finance industrialisation projects. This strategy was vulnerable to price fluctuations, and when commodity prices fell, so did the finances available to support industrialisation programmes. Globally, there are good examples of countries that have managed to turn their resources into developmental assets and to avoid the pitfalls of resource dependence. These include Canada, Norway, Chile, and Botswana.131 The AfDB argues that two dynamics account for 127 128 129 130 131 AfDB, African Development Report 2007 (2007) pp. 96-97. Nigeria CRR, pp. 140, 159. Tanzania CRR, p. 117. Zambia CRR, p. 142. Durns S, „Four countries that beat the resource curse‟, Global Risk Insights (22 April 2014). 132 34 Meijia PX and V Castel, Could Oil Shine like Diamonds? How Botswana avoided the resource curse and its Implications for a New Libya (AfBD Chief Economist Complex, October 2012) pp. 7-12.