South African Manufacturing Industries - Catching up or Falling Behind?

Abstract

This paper argues that intraindustry trade with developed countries is an important source of technology transfer, and creates incentives to climb up the learning curve. South Africa has an industrial structure that could be suited to such trade, but high costs and weak social capacity to assimilate technology are an impediment to productivity growth. Therefore, reintegration into the world economy is likely to reinforce dependence on resource-intensive industries. In the short run this need not adversely affect economic growth, but unless the quality and quantity of education are improved, the prospects for rebuilding the technological capacity and catch up with OECD countries are bleak.