Anthony Black

Manufacturing development and the economic crisis: Restructuring in the eighties

The particularly severe losses of manufacturing employment since 1982 should not obscure the evidence that declining growth rates can be traced back to the mid‐seventies. This article attempts to identify the most important structural features of the particular pattern of South African industrial development which are responsible for this deepening crisis. The manufacturing sector faces fundamental constraints on further expansion and these can be partially attributed to the highly ‘polarised’ pattern of industrial development engendered by import‐substitution and the failure to develop a broadly based mass market due to the existence of extreme income and wealth inequalities. Efforts to restore a stable growth process have taken the form of restructuring by manufacturing firms and a shift towards the introduction of neo‐conservative economic policies by the state. These have serious implications for wages and employment but it is argued that they are unlikely to provide a way out of the current economic ...

Shifting the growth path to achieve employment intensive growth in South Africa

‘Employment intensive growth’ has become a centrepiece of government policy and implies that at any given level of growth, the economy needs to become more labour absorbing. State intervention (or the lack of it) is examined in two areas that are important for employment – agriculture and manufacturing. In the case of agriculture, it is argued that declining and ineffective state support has accelerated the rationalisation of commercial agriculture and failed to regenerate agriculture in the former Bantustans. With regard to the manufacturing sector, we argue that since 1994 the government has set a multiplicity of objectives but, de facto, there has been a surprising level of continuity in the overly generous assistance for heavy, capital-intensive industry. This paper argues that the negative impact of previous ‘distortions’ requires much more than a levelling of the playing field via market-based reforms. Pro-employment policies have to be placed at the centre of the policy agenda.

Industrial Policy, Multinational Strategy and Domestic Capability: A Comparative Analysis of the Development of South Africa’s and Thailand’s Automotive Industries

For developing countries seeking to promote the automotive industry, it has been essential to attract foreign investment, and the terms under which this takes place are key determinants of the resulting development impact. This article examines the development of the sector in South Africa (SA) and Thailand. Both industries have been driven by growing domestic demand, government support and rapid international integration, but the Thai industry has grown at a significantly faster pace. The article demonstrates that the Thai automotive industry has major firm-level cost and market advantages. The combination of a favourable location, supportive trade and industrial policy and supply-side strengths has led to large-scale investment and Thailand’s development as a major regional hub. Foreign investment in SA on the other hand has been at a lower level, aimed primarily at accessing the domestic market. The consequence has been more limited development of the automotive cluster.AbstractPour les pays en développement cherchant à promouvoir l’industrie automobile, il a été essentiel d’attirer les investissements étrangers et les conditions dans lesquelles ces investissements se déroulent sont des facteurs déterminants pour l’impact sur le développement qui en résulte. Cet article examine le développement de ce secteur en Afrique du Sud et la Thaïlande. Ces deux industries ont été stimulées par une demande intérieure croissante, le soutien du gouvernement et par l’intégration internationale rapide, mais l’industrie thaïlandaise a grandi à un rythme nettement plus rapide. L’article démontre que l’industrie automobile thaïlandaise possède d’importants avantages au niveau des coûts d’entreprise et du marché. La combinaison d’un emplacement avantageux, de politiques commerciales et industrielles favorables et de forces au niveau de l’approvisionnement ont conduit à des investissements à grande échelle et au développement de la Thaïlande en tant que pôle régional majeur. D’un autre côté, les investissements étrangers en Afrique du Sud ont été moindre, visant principalement l’accès au marché intérieur. La conséquence a été un développement plus limité du cluster automobile.

The Limits to Regionalism: The Automotive Industry in the Southern African Development Community

As the southern African region moves closer towards the full implementation of the 1996 Southern African Development Community (SADC) Trade and Investment Protocol, which is intended to lead eventually to a full free trade arrangement, much closer economic ties are developing among the countries of the sub-continent. Indeed, the impetus for regional integration reflects both political imperatives and the economic necessity to consolidate southern Africa’s small national economies into a market of reasonable size.1 Even as a consolidated grouping the 14 SADC member states constitute a minor economic block with a combined regional product of approximately US

Globalization in a Middle-income Economy: FDI, Production, and the Labor Market in South Africa

180 billion (Table 11.1). As far as the automotive industry is concerned, SADC is even less significant, accounting for less than one per cent of global output. SADC comprises economies of very varying sizes. The region is dominated by South Africa,2 which accounts for 71 per cent of regional GDP and over 95 per cent of automotive production.3 So while South Africa’s relative size may give it some of the attributes of ‘formal’ or ‘informal hegemony’, to use the van Tulder and Audet (Chapter 2) classification the small economic size of SADC as a whole means that it is more aptly described as ‘outside dominated’.

Foreign Direct Investment in South Africa.

This chapter examines the impact of foreign direct investment during the 1990s on South Africa, a middle-income semi-industrialized economy with an established industrial base, a segmented labor market with very high unemployment, and real exchange rate depreciation during the 1990s. The paper argues on the basis of survey data and sectoral analysis that FDI has had some impact on the globalizing of production, in the sense of output being exported into global production networks. But most new FDI in South Africa has not been part of the latter processes, focusing rather on domestic and regional markets. Integration of domestic production processes into global networks remains limited. Furthermore, overall FDI levels have been low, so that policy objectives of increased output and employment from FDI have not been met. In particular, the contribution of FDI to savings, investment and thus employment-creating growth has been low, a matter of concern given unemployment rates in excess of 40 percent. On the other hand, FDI has contributed to skills upgrading, particularly among high-skilled blacks, which is important given the importance of ‘black economic empow-erment’ in the current South African context. But in doing so, it may have also worsened the skills bias in the labor market.