2013 HUMAN DEVELOPMENT REPORT IN BURUNDI DEVELOPMENT HUMAN 2013 2013 HUMAN Delivering As One DEVELOPMENT BURUNDI REPORT IN BURUNDI « Economic growth, promotion of innovations and youth employment » « Economic growth, promotion of innovations and youth employment » and youth of innovations promotion growth, « Economic 15/04/2014 United Nations system in Burundi and Government of Burundi 2014 The United Nations system in Burundi supported the national efforts for over the last 40 years to design and implement policies and sustainable development programs. The 2013 human development report in Burundi focuses on “Economic growth, promotion of innovations and youth employment”. This report is the result of a frank and productive cooperation between the whole United Nations system in Burundi, led by the United Nations Development Programme (UNDP), and the Government through the Ministry of Finance and Planning of Economic Development (MFPDE). 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Acknowledgement is requested, together with a copy of the publication. 2013 HUMAN DEVELOPMENT REPORT IN BURUNDI « Economic growth, promotion of innovations and youth employment » Table of Content List of acronyms and abbreviations ............................................................................................xiii PREFACE ........................................................................................................................................xiv ACKNOWLEDGEMENTS ................................................................................................................xvi EXECUTIVE SUMMARY .................................................................................................................xvii GENERAL INTRODUCTION ...........................................................................................................1 I.1. Recent changes in the political and socio-economic situation in Burundi ..........................................................1 I.1.1. Evolution of the political situation in Burundi .................................................................................................................1 I.1.2. Changes in the socio-economic situation .........................................................................................................................1 I.2. The rationale for choice of the theme study. .............................................................................................................2 I.3. Objective and methodology of the study ..................................................................................................................3 CHAPTER 1. THEORETICAL LINKS BETWEEN GROWTH, INNOVATION AND EMPLOYMENT: WHAT LESSONS CAN BURUNDI LEARN? ...................................................................................4 1.1. Promoting innovation makes a favorable contribution to economic growth ...................................................4 1.1.1. Definition and typology of innovation ..............................................................................................................................4 1.1.2 The Role of innovation in economic growth ....................................................................................................................5 1.1.3 The role of the state in promoting innovation .................................................................................................................6 1.2. Innovation and employment .......................................................................................................................................6 CHAPTER 2: HISTORY OF BURUNDI’S ECONOMIC GROWTH ........................................................................7 2.1. Overall trend in economic growth from 1960 to 2013 ...........................................................................................8 2.2. Main characteristics of economic growth .................................................................................................................9 2.2.1. Volatile and unstable economic growth ...........................................................................................................................9 2.2.2. Immiserizing economic growth ...........................................................................................................................................10 2.2.3. Job-poor economic growth ...................................................................................................................................................12 2.3. An unstable macroeconomic framework ..................................................................................................................12 2.3.1. A chronic budget deficit .........................................................................................................................................................12 2.3.2. The burden of public debt .....................................................................................................................................................12 2.3.3. High inflation ..............................................................................................................................................................................12 2.3.4. Current account in continual deficit ...................................................................................................................................12 2.3.5. Low efficiency of official development assistance ........................................................................................................13 2.3.6. The role of monetary policy ...................................................................................................................................................14 « Economic growth, promotion of innovations and youth employment » iii 2.4. Explanation of poor economic performance ............................................................................................................15 2.4.1. Chronic energy deficit .............................................................................................................................................................15 2.4.2. Small contribution of the private sector and the business environment .............................................................20 2.5. Potential for growth in Burundi ..................................................................................................................................21 2.5.1. High energy potential ..............................................................................................................................................................22 2.5.2. Agriculture as a pillar of growth ...........................................................................................................................................23 2.5.3. Tourism: “an exposed but growth-generating sector” .................................................................................................24 2.5.4. Regional integration .................................................................................................................................................................25 2.5.5. Promoting innovation in Burundi: “an inadequately supported sector” ...............................................................27 CHAPTER 3. THE YOUTH LABOR MARKET IN BURUNDI ..................................................................................29 3.1. Main characteristics of the youth labor market in Burundi ...................................................................................30 3.1.1. Shortage of reliable and up-to-date statistics ................................................................................................................30 3.1.2. Lack of a proper national employment policy ................................................................................................................30 3.1.3. Wide disparities in the labor market ...................................................................................................................................31 3.1.4. Imbalance between supply and demand for employment .......................................................................................36 3.2. Real employment potential in sectors offering potential for growth and sectors with high innovation potential ...........................................................................................................................................40 3.2.1. Agriculture ...................................................................................................................................................................................40 3.2.2. Tourisme .......................................................................................................................................................................................41