At the Global Economics team of the Global Governance Programme, you are researching how to achieve sustainable growth in low-income countries. Could you tell us more about what you are working on right now?
The main goal is to explore alternatives to the methods through which growth has been achieved in middle- and high-income countries. We also examine China’s rapid growth over the last two decades and India’s current trajectory, considering whether these models are applicable to low-income countries or if new methods and mechanisms are needed.
A key difference is that China and India are large nations with substantial populations, so their growth patterns differ from what smaller, low-income African countries might achieve. Additionally, our views on growth have evolved. We now prioritise environmentally friendly approaches, better resource distribution, and reducing inequality. These new considerations mean that the markers and mechanisms for sustainable growth may also vary.
Finally, with the current state of globalisation—marked by increasing protectionism—we must explore new ways for countries to grow within more restricted environments. We focus on the role of governments, often among the biggest buyers, and how international investments can support the sustainable growth goals we are discussing.
Thank you. Which countries are you currently focusing on?
Primarily, our work is on Rwanda and Uganda. We are also considering expanding our work to other African countries like South Africa and Kenya.
Your work is divided into four areas: the growth of services, industrial policy as a driver of growth, foreign direct investment and rules of origin. How do you approach each of them?
Linking back to the earlier question about moving beyond traditional ideas for growth, we now recognise that services may offer a more effective path to boosting productivity. Manufacturing has become stagnant, particularly in smaller countries, whereas services can generate more low-skill jobs, better suited to the levels of development and education in many low-income nations.
One aspect of our work examines how the expansion of services in Uganda benefits firms by increasing productivity and employment capacity, particularly those engaged in international trade. We analyse how their productivity is impacted and how this increases their competitiveness in global markets.
Could you give us an example of what kind of firms and services you are looking at?
We work with administrative data to study firms across all sectors. One interesting finding from our research is that firms relying on low-skill services often enhance productivity, whereas those focusing on international trade and depending on high-skill services do not see a similar productivity increase. This indicates that a country’s available pool of services and skills significantly impacts firm productivity.
It also leads to policy recommendations that governments should invest in education to boost the availability of high-skill services.
To give some examples, high-skill services include financial services, consulting, and health, while low-skill services encompass tourism, personal, and household work. These findings suggest a clear policy recommendation: governments should invest in education to increase the availability of high-skill services, which could further support productivity and sustainable growth.
How about the effect of industrial policy on sustainable growth?
Industrial policy is gaining renewed importance, particularly in the context of globalisation constraints. It has become increasingly difficult for countries to pursue a growth model centred on producing for global markets due to rising protectionism. Governments, especially in low-income countries, play a crucial role by directing demand through procurement. In Uganda, for instance, the government awards contracts to firms with the aim of helping them grow. However, we have observed that these firms often shift their focus from the private sector to the government, without achieving the expected growth.
Is there an unmet demand from the private sector in this case?
This is an interesting question. We have not fully explored that yet, but it could be that firms are turning to imports or even exiting the market due to a lack of domestic suppliers. It is an area we are considering for future research.
What does the case of direct investment and rules of origin look like?
Foreign direct investment (FDI) is important for creating jobs and improving job quality, particularly in Rwanda, where the government offers tax incentives to attract international firms. However, our research found that the promises these firms make—such as creating jobs and investments—are often unfulfilled even years after they begin operating.
Regarding rules of origin, many countries grant preferential access to low-income nations if a significant proportion of the content is produced domestically. We are studying how this is measured and whether it genuinely benefits local economies. One challenge is that if firms must source a high percentage of inputs domestically, they may go out of business because those inputs are unavailable locally.
Where did the idea for your research in Rwanda and Uganda come from and what impact do you hope it will have?
Our team leader, Bernard Hoekman, has worked on countries like Uganda and Rwanda for many years through his roles at the EUI and the World Bank. This has fostered strong relationships with local governments, granting access to confidential data. Our research is impactful both in terms of academic publishing and informing policy decisions in these countries.
Academically, we aim to publish in leading journals. For instance, our paper on services was recently published in the Review of World Economics. From a policy perspective, our work directly informs government decisions. In Uganda, for example, the procurement authority is keen to better understand the effect of contract allocations, based on our findings. Similarly, in Rwanda, our research on FDI has helped the government better evaluate the effectiveness of its tax incentives.
How does this research relate to your personal academic research interests?
Much of my work focuses on exploring pathways for development. The lessons I’m learning from countries like Uganda and Rwanda are valuable, but I also apply these ideas to other countries. Personally, I am particularly interested in India’s development trajectory. Some of the questions we are exploring in this research are also relevant when considering India’s development. So, I’m drawing on both the work we are doing in these African countries and my own interest in India’s development.
Rohit Ticku is an Economist and a Research Fellow at the Global Governance Programme of the Robert Schuman Center, European University Institute. Previously, he was a Postdoctoral Fellow at the Institute for the Study of Religion, Economics, and Society, Chapman University. He earned his PhD from The Graduate Institute for International and Development Studies in Geneva, and his doctoral thesis was awarded the Institute’s Alumni Association Prize for the best thesis in Development Economics from 2017 to 2023.