Many countries are seeing a revival of industrial policy. This previously discredited approach has found new believers. As national economies and international trade were liberalized after the stagflation of the late 1970s, governments increasingly decided to allow corporate behavior to follow commercial logic. Multinationals set up shop where it made most sense, allocating resources, outsourcing labor, and automating factories to minimize costs and maximize profits. The reforms lifted hundreds of millions out of poverty even as they delivered fat returns for shareholders.
But what is the right way for Africa and South Africa to promote an industrial revival and manufacturing, in particular? In 1975-2014 manufacturing’s share of GDP in sub-Saharan Africa fell from 19% to 11%. As much of the continent opened to imports in the 1990s, manufacturers struggled to hold their own against hyper-competitive Chinese firms with the scale to drive down costs. Which begs the questions, is South Africa suffering from premature deindustrialization? It is not enough for government(s) to do no harm, but what needs to be done?
We think the problem is imports, so the solution must be to stop them. We think migrants are stealing our jobs, so we deport them or fiddle with their work permits. The real problem in both cases is that we are not competitive, and very little is being done far too late to deal with this. Productivity matters, and you cannot fix it by making rules.
In this talk Francois will explore the manufacturing sector via a macroeconomic analysis of the manufacturing sector. Whereto from here? How to adjust and where to find new growth opportunities.
Executive Director | Growth Diagnostics
Francois hails from the earlier Wharton Econometric Forecasting Associates (WEFA), a USA-based commercial think tank founded by Nobel Prize winner Dr Lawrence Klein. Since 2008’s electricity load shedding crises, he focused on energy economics and import tariff-related industry research. He acted as an advisor to the Reserve Bank of South and advised the Department of Energy’s (DOE) Independent Power Producers (IPP). Today Francois advises central banks, governments and industry on all matters trade and investment related, like evidence-based export strategy development and investment attraction. Francois is a research fellow at GIBS’s Centre for African Management and Markets (CAMM) and director of Growth Diagnostics, an economics advisory firm.