Deindustrialisation of the South African Economy

Abstract

South Africa has never been a fully-fledged industrial economy, and the only time in which it had a significant manufacturing sector was during the World War II. This happened because South Africa was geographically far away from the raging and destructive war. Investors therefore moved capital into the country, and many technically skilled professionals moved to South Africa. This led to a significant growth of the manufacturing sector. Most manufactured goods were exported to international markets. The manufacturing boom in South Africa continued beyond World War II, however, this boom ended drastically in 1960 after the Sharpeville massacre. This occurred on 21 March 1960, when police officers used live ammunition to disperse a crowd of around 5000 peaceful and unarmed protesters who were outside a police station in the township of Sharpeville. Police officers did not warn the crowd before they opened fire, and as a result, 69 people were brutally murdered by the apartheid government while 180 were severely injured. The dead and injured included 29 children, and the massacre was publicised around the world. The South African apartheid regime received lots of criticism globally, and sympathetic demonstrations towards the victims followed in many countries. The United Nations condemned this brutality against black South Africans after which the Security Council passed a resolution on 1 April 1960 criticising the segregation policies in the country. The Sharpeville massacre marked a major turning point in South Africa’s international relations and trade. For example, many countries declared and implemented trade sanctions against the country, capital and many highly skilled professionals left the country, and the manufacturing sector bore the brunt of these developments. Since 1960, the South African economy has deindustrialised. This means the large-scale collapse of manufacturing firms and massive loss of employment in the sector. This phenomenon has increased since the ushering of the new democratic dispensation in 1994 and can largely be attributed to the poor formulation and implementation of macroeconomic policy. Having said this, it should be mentioned that since 1994, successive democratically elected administrations and presidents have Page | vi tried to reindustrialise the economy through the large-scale revival of the manufacturing sector, but to no avail. The purpose of this study was to investigate factors which affect the deindustrialisation of the South African economy. Searches in various scholarly databases showed limited studies that focused on the use of public policy instruments to reindustrialise the South African economy. Moreover, there is no study that has ever produced a conceptual public policy framework to guide policymakers and other stakeholders on how the economy of this country can be reindustrialised. This study employed a qualitative research approach to collect data using individual interviews, focus groups, observations, and document analysis. The reason for using a qualitative methodology was that the research participants would provide rich and valuable information. Among other things, this study assured trustworthiness by attaining triangulation. During the fieldwork, 58 individuals were interviewed, while 25 persons participated in the focus group session. The use of qualitative data analysis methods revealed that migration regulations and rigid labour laws deter reindustrialisation. Moreover, a shortage of skilled labour thwarts reindustrialisation; some tax instruments discourage direct investment and reindustrialisation; and poorly conceived public policy leads to deindustrialisation. The researcher proposed five possible solutions and interventions to reindustrialise South Africa’s economy. These included revision of immigration regulations to promote reindustrialisation; the labour market should be stabilised to increase direct investment; and quality education and training should be provided to create a large pool of skilled labour. Furthermore, major commercial and labour market hubs should be connected; the broad-based black economic empowerment public policy should be implemented prudently. South Africa should also spearhead the use of technology to keep the identity records of nationals across the African states. Most importantly, the researcher has produced a conceptual framework for employing public policy to industrialise the South African economy. This framework is his intellectual property. It synthesises theory, extensive fieldwork, practice and cognitive perspectives gained over decades of studying and practical work experience in academia, entrepreneurship, and public and private sectors. The study yielded theoretical, methodological and practical contributions, however, after careful consideration, this researcher has concluded that using only Page | vii qualitative research methodology was a major weakness of this study. A mixed research methodology would have been more suitable for this study. Nevertheless, recommendations were made which were aimed at various stakeholders and other scholars. This study has contributed to the knowledge bodies of public policy and development economics.