Aim for the top tier, SA urged
Thématique :
sud afrique
By Ethel Hazelhurst, 18/06/2008
South Africa must move towards producing world-class goods with unskilled workers, which can be achieved with the right business model, according to Ricardo Hausmann, who chairs a panel of international economic experts advising the government.
He said yesterday that this had been achieved in other parts of the world. South Africa could do the same if the government proved open to innovative ideas from the private sector.
The panel, engaged by the national treasury in January 2006, is helping the government meet the targets of its accelerated and shared growth initiative for South Africa (Asgisa), which aims to achieve growth of 6 percent a year by 2010, and to reduce unemployment to below 15 percent and poverty to less than one-sixth of households by 2014.
Hausmann presented the panel's findings at the Gordon Institute of Business Science yesterday, after the national treasury published its 21 recommendations on its website last month.
In an interview, he said a wide range of measures could be introduced simultaneously by the government, to transform the structure of the economy and make exports more competitive globally.
He suggested that innovative South Africans who came up with effective business models that could create jobs, should be treated as national heroes.
The approach is part of a prescription for more rapid economic growth at a time when the economy's traditional labour-intensive sectors - mining, agriculture and manufacturing - have shed jobs over long periods.
The report pointed out that mineral exports per capita had been on a downward trend over the past 45 years. Finding other areas of activity to replace them had been slow and difficult.
The process is complicated because changes to economies usually involve gradual shifts to similar areas of specialisation. "However, mining does not facilitate the move into other sectors," Hausmann said.
He recommended a search for the products and models that would lead to "new high-productivity tradeable activities that will create jobs that can pay decent wages".
But he said the government should facilitate the process by being responsive to ideas from the private sector, rather than by picking sectors to promote.
"What is needed is open architecture - a window for ideas to flow in." The Industrial Development Corporation could help the government identify and remove obstacles, and facilitate the process.
He stressed that highly skilled workers did not threaten the jobs of low-skilled workers. Instead, high- and low-skilled workers were strongly complementary. In other words, the greater the supply of skilled workers, the greater the demand for unskilled workers.
So the panel advised that the constraint on importing highly skilled people be relaxed, especially in sectors that faced competition from abroad.
Hausmann pointed out that the US had benefited greatly from imported skills.
He advised changes to the way the sector education and training authorities (Setas) operated, to allow business to choose which Seta to belong to.
Hausmann warned of the potential costs of interventions in the area of ownership and control. A reminder was the recent performance of the mining sector.
"The introduction of a new law associated with the redistribution of ownership and control rights, as well as black economic empowerment requirements, have contributed to a decline in investment and output at a time when the industry has been facing very high international prices and investment has been rising elsewhere," he said.
The panel's members were drawn from several institutions including Harvard, the Massachusetts Institute of Technology and the University of London. The panel has made several visits to South Africa to hold workshops with government officials, economists, business representatives, trade union officials and other stakeholders.
Hausmann, who was Venezuela's minister of planning in 1992 and 1993, has served on a number of international think-tanks and is now a professor at Harvard University's Kennedy School of Government.
South Africa must move towards producing world-class goods with unskilled workers, which can be achieved with the right business model, according to Ricardo Hausmann, who chairs a panel of international economic experts advising the government.
He said yesterday that this had been achieved in other parts of the world. South Africa could do the same if the government proved open to innovative ideas from the private sector.
The panel, engaged by the national treasury in January 2006, is helping the government meet the targets of its accelerated and shared growth initiative for South Africa (Asgisa), which aims to achieve growth of 6 percent a year by 2010, and to reduce unemployment to below 15 percent and poverty to less than one-sixth of households by 2014.
Hausmann presented the panel's findings at the Gordon Institute of Business Science yesterday, after the national treasury published its 21 recommendations on its website last month.
In an interview, he said a wide range of measures could be introduced simultaneously by the government, to transform the structure of the economy and make exports more competitive globally.
He suggested that innovative South Africans who came up with effective business models that could create jobs, should be treated as national heroes.
The approach is part of a prescription for more rapid economic growth at a time when the economy's traditional labour-intensive sectors - mining, agriculture and manufacturing - have shed jobs over long periods.
The report pointed out that mineral exports per capita had been on a downward trend over the past 45 years. Finding other areas of activity to replace them had been slow and difficult.
The process is complicated because changes to economies usually involve gradual shifts to similar areas of specialisation. "However, mining does not facilitate the move into other sectors," Hausmann said.
He recommended a search for the products and models that would lead to "new high-productivity tradeable activities that will create jobs that can pay decent wages".
But he said the government should facilitate the process by being responsive to ideas from the private sector, rather than by picking sectors to promote.
"What is needed is open architecture - a window for ideas to flow in." The Industrial Development Corporation could help the government identify and remove obstacles, and facilitate the process.
He stressed that highly skilled workers did not threaten the jobs of low-skilled workers. Instead, high- and low-skilled workers were strongly complementary. In other words, the greater the supply of skilled workers, the greater the demand for unskilled workers.
So the panel advised that the constraint on importing highly skilled people be relaxed, especially in sectors that faced competition from abroad.
Hausmann pointed out that the US had benefited greatly from imported skills.
He advised changes to the way the sector education and training authorities (Setas) operated, to allow business to choose which Seta to belong to.
Hausmann warned of the potential costs of interventions in the area of ownership and control. A reminder was the recent performance of the mining sector.
"The introduction of a new law associated with the redistribution of ownership and control rights, as well as black economic empowerment requirements, have contributed to a decline in investment and output at a time when the industry has been facing very high international prices and investment has been rising elsewhere," he said.
The panel's members were drawn from several institutions including Harvard, the Massachusetts Institute of Technology and the University of London. The panel has made several visits to South Africa to hold workshops with government officials, economists, business representatives, trade union officials and other stakeholders.
Hausmann, who was Venezuela's minister of planning in 1992 and 1993, has served on a number of international think-tanks and is now a professor at Harvard University's Kennedy School of Government.
