Accelerating Growth and Development: The Contribution of an Integrated Manufacturing Strategy¶
Department of Trade and Industry (the dti), South Africa (2002). Accelerating Growth and Development: The Contribution of an Integrated Manufacturing Strategy. Department of Trade and Industry, Pretoria.
| Type | primary source |
| Scope | Post-1994 South African economy |
| Method | policy analysis |
| Period studied | c.1890s–2002 |
| Regions | South Africa, SADC region |
| Themes | manufacturing industrial policy, transition post apartheid, business and state, sanctions divestment, labour markets wages, inequality poverty unemployment |
| Citation key | departmentoftradeandindustrythedti2002 |
Argument¶
This is a government strategy document by the Department of Trade and Industry, introduced by Minister Alec Erwin. It argues that manufacturing, defined broadly to include related services and value chains, should be the fulcrum of accelerated growth, employment and equity by 2014. Part 1 gives a brief official history: apartheid-era import-substituting, resource-oriented industrialisation built behind protection, with distorted factor markets and a legacy of concentration, spatial inequality and 'two nations'. Post-1994 reforms (tariff liberalisation, competition policy, SDIs, Nedlac partnership) are said to have avoided deindustrialisation but to have failed to deliver growth, jobs and equity. Parts 2-3 propose an Integrated Manufacturing Strategy built on value-chain analysis, sector programmes and stakeholder partnerships.
Evidence and method¶
No systematic data or archives. The document cites summary statistics (IMF and WTO trade growth, Ntsika 2000 on SMMEs, manufacturing output, export shares and productivity figures) without detailed sourcing, and it says outright that it does not present supporting statistics. It draws on consultation with Nedlac and written submissions to the May 2001 discussion paper, and on the dti's own eight years of experience.
Findings¶
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Apartheid industrial policy continued import-substituting, resource-oriented industrialisation while entrenching racial ownership and consumption patterns. (p. 7)
The apartheid regime’s industrial policy continued this trend of import-substituting industrialisation and resource-orientation, while entrenching a racial dimension to ownership, production and consumption.
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Capital-cost incentives, notably in agriculture, were deliberately used to reduce labour demand. (p. 7)
The cost of capital was deliberately influenced in order to reduce demand for labour through a range of government incentives, notably in the agricultural sector.
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Land Acts and Group Areas undermined black capital accumulation and savings, raised living costs and produced uneconomic settlement patterns. (p. 7)
The 1913 Land Act and subsequent Land Acts, and the Group Areas Act, fundamentally undermined black peoples’ ability to accumulate capital, contributing to South Africa’s relatively poor investment and savings record.
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Manufacturing was large and diversified by the 1960s-70s but protected and inward-looking; distorted factor markets reduced employment and raised poverty. (p. 8)
Distorted markets for factors of production, particularly for capital and labour, significantly dampened employment creation, distorted domestic prices and increased levels of poverty.
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In the sanctions era policy turned to self-sufficiency and strategic industries, with high protection into the early 1990s and rising concentration. (p. 8)
In the sanctions era, manufacturing policies moved further towards import substitution and self-sufficiency in strategic products leading to huge government investments in oil-from-coal and weapons industries
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Late-apartheid public infrastructure investment fell, and the economy was described as dualistic ('two nations'). (p. 8)
public investment in infrastructure began to fall, leading to a backlog of new infrastructure development and maintenance of existing infrastructure.
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Pre-1994 export subsidies (GEIS) and the regional decentralisation programme (RIDP) were politically driven and proved costly and counterproductive. (p. 9)
In both cases, little attention was given to economic sustainability or the opportunities for exploitation and corruption that were created. These programmes therefore proved to be both expensive and counterproductive.
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Post-1994 manufacturing growth was slow (1.8% a year), though the document judges this a success in avoiding deindustrialisation. (p. 15)
on average output has increased by 1.8% per annum. While slow, this growth represents a significant success in avoiding the very real threat of deindustrialisation.
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Manufactured exports rose from 39% of exports in the early 1990s to 51% in 2000 as mining declined in relative importance. (p. 15)
expanding from 39% of all exports in the first half of the 1990s, expanding to 51% in 2000.
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Labour productivity rose 26% since 1994 while manufacturing shed labour, reflecting capital- and skill-intensive investment. (p. 17)
There has been a sustained and steady rise in labour productivity since 1994, with labour productivity having increased by 26% since 1994.
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Black-controlled firms' share of market capitalisation collapsed after 1998, and the hoped-for broadening of black ownership did not materialise. (p. 19)
The market capitalisation of black controlled firms rose from 3% in October 1997 to 6,8% in November 1998, but was significantly damaged, in part due to the East Asian crisis, dropping to less than 1.5% by 2001.