SLIDE 1
Sam Ashman & Susan Newman
INDUSTRIAL POLICY AND SOUTH AFRICA’S ECONOMIC TRAJECTORY: FROM APARTHEID TO PRESENT DAY
UNU-WIDER CONFERENCE ON LEARNING TO COMPETE: INDUSTRIAL DEVELOPMENT AND POLICY IN AFRICA HELSINKI, 24-25 JUNE 2013
SLIDE 2 Largest and most industrialised economy in SSA But need to get behind ‘success story’ based on aggregate experience Moderate growth experience since 1994:
- Average annual GDP growth rate between 1994 and 2008 was 3.61%
compared with 1.44% for the period 1980-1993
Triple crisis of PUI
- Income Gini Index 63.1 in 2009 compared with 59.3 in 1993
- Unemployment rate in 2010 was 25% (30% by expanded definition)
CONVENTIONAL UNDERSTANDING OF THE NATURE OF THE SOUTH AFRICAN ECONOMY
SLIDE 3
Data source: SASSID 2012
EVOLVING INDUSTRIAL STRUCTURE IN SOUTH AFRICA: CONVENTIONAL ANALYSIS
0% 10% 20% 30% 40% 50% 60% % of f GD GDP Agriculture, forestry and fishing Mining and quarrying Manufacturing Services (excluding general government services)
Sector contributions to GDP, 1970-2010
SLIDE 4 Data source: SASSID 2012
0% 10% 20% 30% 40% 50% 60% 70% % total n numb umber of
mployees Agriculture, forrestry and fishing Mining and quarrying Manufacturing Services (excluding general government servcies)
Sector contributions to GDP, 1970-2010
SLIDE 5
Data source: Quantec 2012
DIVERSIFICATION FROM RESOURCE DEPENDENCE?
50000 100000 150000 200000 250000 300000 1970 1975 1980 1985 1991 1996 2001 2006 R millio illions ( (co constant 2 2005 05-prices) Mining and quarrying Manufacturing Services
Mining, manufacturing and service export values in constant (2005) prices
SLIDE 6
Data source: Quantec 2012
50000 100000 150000 200000 250000 300000 350000 1970 1972 1974 1976 1978 1980 1982 1984 1986 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 R millio illions ( (constant 2 2005-prices) s) Processed mining products Mining and quarrying Manufacturing less processed mining products Min Mining g an and processed m min ining p g products e exp xport v valu alue in in constant ( (2005) p pric ices
SLIDE 7 Classical Political Economy: concerned with the nature and dynamic of capital accumulation and economic growth in dynamic historical evolution
- Historical
- Class formation, dynamics and evolution and how this is played out in
the evolution of industrial structure and industrial policy
Analysis through prism of Minerals-Energy-Complex
OUR APPROACH
SLIDE 8 The MEC is is a an n ana nalys lysis o
industri rial d develo lopment s t simultane neously y focussing o ng on n dif iffere rent d nt dim imensions o
interd rdepend ndenc ncies b between n frac actions o
apital al, i , industrial al sec sectors an and the st e state e that i involves es, , but is is no not lim t limited t to:
- Econonomic and political analysis (including the state) through the
emphasis on evolving class relations and conflicts and how these are reflected in patterns of accumulation and economic and social reproduction Empirical identification based upon material interdependencies/linkages (input-output) between sectors that reveal a coherent, cohesive set of industrial sectors with very strong linkages with each other and relatively weaker linkages with sectors
THE MINERALS-ENERGY-COMPLEX: HISTORICAL EVOLUTION OF THE SOUTH AFRICAN ECONOMY
SLIDE 9 BOUND OUNDARIE IES OF OF T THE HE ME MEC: EMPIRICAL IDENTIFICATION OF THE MEC BASED UPON MATERIAL LINKAGES REVEAL A CORE SET OF INDUSTRIES MADE UP OF MINING AND RELATED INDUSTRIES
ME MEC su subsector
Share o
f in inputs fr from MEC se sector
(% of
tot
Share of
sectors ( s (% of tot
Coal mining 26 90 Gold and uranium ore mining 55 5 Other mining* 23 77 Coke and refined petroleum products 88 18 Basic chemicals 77 60 Other chemicals and man-made fibres 67 37 Plastic products 68 30 Non-metallic minerals 73 8 Basic iron and steel 82 59 Basic non-ferrous metals 91 59 Metal products excluding machinery 70 41 Machinery and equipment 63 53 Electricity gas and steam 53 47 Non-MEC m manu nufacturing 23 23 6
Data source: Quantec Input-Output tables 2011
SLIDE 10 Class interests marked by disjuncture between English and Afrikaaner Capital.
- Economic power concentrated in the hands of English mining and finance capital
- Afrikaaner interests in control of the state (in particular since 1948)
Industri trial policy a y as means t to create a an Afr frikaane ner indu ndust strial c class a ss and nd therefore e erode t the he di disjuncture Complex interdependence between English and Afrikaaner capital in this process In consequence, industrial policy involved:
- Promotion of finance
- Promotion of Afrikaaner mining interests
- State owned mega projects critically dependent on mining inputs and as inputs
into mining (energy)
- Heavy protection of consumer durables serving a small section of society
- Labour intensive activities small scale and focussed on addressing the ‘poor
white’ problem
Outcome: heavily skewed industrial and highly concentrated ownership in the form of 6 diversified conglomerates Broad ba d based d econo nomic de development nt w was no not the he goal o
f indu ndust strial policy cy
INDUSTRIAL POLICY AND STRUCTURE UNDER APARTHEID
SLIDE 11 1924 24 1948 948 197 975 197 975+ 1990 990+ 2000 000+ 201 010+ Tot
indust stry 63.2 51 51.7 38.7 38.4 43.3 36.1 33.8 Chemicals a s and chemi mical products ts 12.1 9.5 11.4 11.5 16.8 23.9 23.9 Pot
, glass, ot ss, other n non
metallic m minerals 7 6 5.3 4.7 4.0 2.5 2.7 Basic m metals s indust ustries 8.9 17.6 13 8.5 8.6 9.8 11.7 Metal p prod
and ma machinery 3.3 5 22.7 18.1 12.4 9.4 8.9 Transp sport e equi uipme ment 5.3 7.8 7.2 13.0 9.6 12.9 13.9 Rubb bber er p products ts 0.2 2.4 1.7 0.9 1.2 1.1 0.9 Tot
heavy i indust ustry 36.8 48.4 61 61.3 56.8 52.6 59.7 61 61.9
SHARE OF SECTORAL NET VALUE OF OUTPUT IN TOTAL MANUFACTURING 1924-2010
SLIDE 12
CONTRIBUTION OF MEC AND NON-MEC SECTORS TO GROSS DOMESTIC OUTPUT
0% 5% 10% 15% 20% 25% 30% 35% 1970 1975 1980 1985 1990 1995 2000 2005 2010 % % Gross Do Domestic Ou Outp tput non-MEC manufacturing MEC MEC incl. transport and storage Finance and business services* Source: Quantec (RSA Standardised Industry) 2011
SLIDE 13 CONTRIBUTION OF MEC AND NON-MEC SECTORS TO EXPORTS
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 1970 1975 1980 1985 1991 1996 2001 2006 % tot
expor
s of goods a s and s services MEC total (inc. transport and storage) MEC manufacturing Non MEC manufacturing Mining and quarrying Source: Quantec (RSA Standardised Industry) 2011
SLIDE 14
CONTRIBUTION OF MEC AND NON-MEC SECTORS TO EMPLOYMENT
0.5 1 1.5 2 2.5 1970 1975 1980 1985 1990 1995 2000 2005 2010 Emp mployees (mi (millions) non-MEC manufacturing MEC MEC incl. transport and storage Finance and business services* Source: Quantec (RSA Standardised Industry) 2011
SLIDE 15 Late 1980s:
- Economic and political disjuncture eroded
- South African economy controlled by 6 diversified conglomerates
Trade and financial liberalization and privatisation adopted in closing years of apartheid driven by:
- capital’s fear of political transformation
- potential gains from global reintegration
Macro policy GEAR onwards serves particular class interests
- Offshore listing and managed capital flight seeking to benefit from
financialised accumulation
Washington consensus conception of industrial policy:
- Narrowly focussed on stable macroeconomic environment
- Industrial intervention scattered and small scale (supply side oriented)
Any gains in terms of industrial diversification made in the 1970s and 1980s quickly unwound with import competition and deconglomeration
INDUSTRIAL POLICY AND STRUCTURE POST- APARTHEID I
SLIDE 16
DISTRIBUTION OF CAPITAL STOCK ACROSS SECTORS
MEC sectors non-MEC manufacturing Services
SLIDE 17 NON-MEC MANUFACTURING SECTORS: GROSS DOMESTIC FIXED CAPITAL INVESTMENT
10000 20000 30000 40000 50000 60000 70000 Food Beverages Tobacco Textiles Wearing apparel Leather and leather products Footwear Wood and wood products Paper and paper products Printing, publishing and recorded media Glass and glass products Electrical machinery and apparatus Television, radio and communication equipment Professional and scientific equipment Motor vehicles, parts and accessories Other transport equipment Furniture Other manufacturing R millions (constant 2005-prices) 1990 2000 2010
SLIDE 18
NON-MEC MANUFACTURING SECTORS: VALUE ADDED AT FACTOR COSTS
10000 20000 30000 Food Beverages Tobacco Textiles Wearing apparel Leather and leather products Footwear Wood and wood products Paper and paper products Printing, publishing and recorded media Electrical machinery and apparatus Radio, TV, instruments, watches and clocks Motor vehicles, parts and accessories Other transport equipment Furniture Other manufacturing R millio illions (co constant 2 2005 005-prices) s) 1990 2000 2010
SLIDE 19 NON-MEC MANUFACTURING SECTORS: EMPLOYMENT
100000 200000 300000 Food Beverages Tobacco Textiles Wearing apparel Leather and leather products Footwear Wood and wood products Paper and paper products Printing, publishing and recorded media Electrical machinery and apparatus Radio, TV, instruments, watches and clocks Motor vehicles, parts and accessories Other transport equipment Furniture Other manufacturing number bers o
ees 1990 2000 2010
SLIDE 20 In consequence, macroeconomic policy sets in chain interdependent developments:
- Trade liberalisation, increased imports and volatile export earnings
leading to persistent current account deficit (largest as a share of GDP compared with economies of comparable income)
- Strong defence of inflation targeting and high interest rate policy to
attract short-term policy inflows for balance-of-payments
- Short-term inflows as a source of instability
- Reduce the availability of funds for long-term investment (high cost of
borrowing and maturity mismatch)
- Inflate and ‘develop’ the financial sector
- Employment generation largely in service sectors and highly procyclical
(credit-driven)
Gap between MEC core and the rest of the economy now wider than before Premature deindustrialisation? – question of industrialisation processes and stages
INDUSTRIAL POLICY AND STRUCTURE POST- APARTHEID II
SLIDE 21
Data source: World Bank WDI 2012
‘PREMATURE’ DEINDUSTRIALISATION
5 10 15 20 25 30 2000 2500 3000 3500 4000 Man Manufac acturing v g valu alue ad added as as % % GDP DP GDP DP p per cap apit ita in in constant 2 2000 US$ US$ 1960-1993 1994-2010
SLIDE 22 Discussion of industrial policy in SA predates the re-emergence
- f industrial policy on the global agenda
- NIDP 2007, IPAP 2007, 2010, 2013
Greater challenges to successful industrial policy today compared with 1994
- Gap between MEC sectors and the rest of the economy
- Fragile macrostructure; macropolicy undermining industrial policy
- Financialisation
If industrial policy aims to bring about structural change, reindustrialisation and sustainable job creation it requires an integrated, interconnected approach to bring about the same in structure (maximise pull effects) National Development Plan (NDP) purports to be supportive of job creation but industrial policy weak and modest in its aims.
concern for structural c change
INDUSTRIAL POLICY AND REINDUSTRIALISATION TODAY
