Antonio Andreoni and Fiona Tregenna
Industrial policymaking is a complex process as it entails the management of multiple interactive measures and instruments (Andreoni, 2016). In his account of the lessons learned from East Asia, Stiglitz (1996) emphasises how the successful industrialisation of these countries can only be understood by analysing their “packages of interactive measures” whereby companies were exposed to different types of internal and external competitive pressures.
Antonio Andreoni and Fiona Tregenna
Over the past two decades, the world economy has undergone profound structural transformations. Despite a number of catching-up economies having registered fast economic growth during this period, world industrial production has remained highly concentrated. Today, fewer than twenty countries control 80% of the world manufacturing value-addition activities. Many low- and middle-income countries are not part of this group of industrialised nations, and indeed many of those countries that have managed to reach middle-income status have shown signs of premature deindustrialisation. South Africa is one of these middle-income countries.
Pamela Mondliwa and Simon Roberts
The South African economy has prematurely de-industrialised with low investment and a shrinking manufacturing sector in relative terms. This is especially so in more sophisticated activities, as reflected in the undiversified export basket.[3] The economy is also characterised by high levels of concentration and barriers to entry and expansion. While profits have been high, investment levels have been low.
Countries develop by changing the structure of the economy to move from sectors of low to high productivity and complexity, and within sectors through upgrading to higher value-added activities. This is a process of structural transformation. South Africa has, however, not made significant progress in transforming its economy in this way and has prematurely de-industrialised. At the same time, the economy remains highly concentrated and unequal.
Zavareh Rustomjee and Lauralyn Kaziboni
The competitiveness of the upstream sector[3] in the metals and machinery value chain has been underpinned by large scale investment in the 1990s to upgrade plant and equipment, supported by investment incentives and Industrial Development Corporation (IDC) investments. However, this advantage has been eroded over time. Upstream firms have been facing financial difficulties in 2016 and 2017 arising from what appears to be a profit maximising or asset stripping approach during the commodity super-cycle between 2002 and 2008.
Ndiadivha Tempia, Maria Nkhonjera, Reena das Nair and Shingie Chisoro
Structural transformation in agro-processing involves developing processing industries to transform raw agricultural inputs into high value-added products (known as sectoral transitioning) and upgrading of technology and productivity within agro-processing (sectoral deepening).[3] Developments in agro-processing industries and their dynamic linkages to other sectors of the economy, such as retail, logistics and packaging are a key source of technology-driven productivity growth and innovation, with direct implications for industrialisation.
Lorenza Monaco, Justin Barnes and Anthony Black
The production of the thousands of components which make up a vehicle comprise the heart of the automotive industry. All host country governments seek to promote greater levels of localisation of parts production. These efforts have a long history in South Africa (SA). The recently announced South African Automotive Masterplan (SAAM) sets ambitious targets in this respect, aiming to raise local content to 60% by 2035. This would represent a substantial increase on current levels of local content which are below 40%.
Anthony Black, Justin Barnes and Lorenza Monaco
The signing in March 2018 of the agreement to establish an African Continental Free Trade Area (AfCFTA) is a significant step along the road to full regional integration in Africa. Achieving this long standing objective is critical for industrialisation in the continent and is of particular importance to the development of the automotive industry.
Lauralyn Kaziboni, Zavareh Rustomjee and Ian Steuart
The bias in electricity prices between and among municipalities and Eskom has emerged as an important impediment to the growth of the metals, machinery and equipment value chain. Excessively priced electricity reduces the competitiveness of local cast products, and encourages local machinery and equipment manufacturers to import cast components that can be produced locally.
Shingie Chisoro, Reena das Nair, and Maria Nkhonjera
Structural transformation of the economy to move productive resources to higher value activities cuts across the traditional boundaries of manufacturing, agriculture and services. This is illustrated by the substantial scope for changes in agriculture to apply more sophisticated technologies to produce higher value crops such as fruits and supply them to markets around the world.
Teboho Bosiu, Sumayya Goga, and Simon Roberts
The extreme concentration of ownership and control within the South African economy, with a small number of large firms dominating most sectors remains one of the country’s greatest economic challenges. Debates about whether or not these companies are ‘hoarding cash’ or business is on an ‘investment strike’ miss the point.