South African Manufacturing: The challenge of growth with jobs

Driver, Ciaran

Abstract

This paper evaluates South African manufacturing performance over 25 years. It reports the evolution of five basic variables: employment, mark-ups, exports, domestic sales, and investment, using an aggregated sample of firms from a reliable business database. The approach differs from other economic models by the complementary use of management perceptions in estimated equations.The results reinforce some previous findings; for example, wage pressure tends to constrain domestic sales while the relative wage incentivizes capital investment. The exchange rate matters for exports and investment is constrained by skill shortages. Other findings add evidence to contested issues such as the importance of the interest rate level for investment and exchange rate stability for export growth. Relationships between key variables can help to identify growth constraints and the potential for manufacturing jobs. In particular, the lack of transmission from exports to employment or to domestic sales and the response of the mark-up to investment suggest institutional failures in coordinating market activity.

Citation

Driver, C. (2024). South African Manufacturing: The challenge of growth with jobs. Structural Change and Economic Dynamics, 68, 433-445. https://doi.org/10.1016/j.strueco.2023.10.015

• Journal Article Type: Article
• Acceptance Date: Oct 30, 2023
• Online Publication Date: Oct 1, 2023
• Publication Date: Mar 1, 2024
• Deposit Date: Jan 23, 2024
• Publicly Available Date: Jan 23, 2024
• Journal: Structural Change and Economic Dynamics
• Print ISSN: 0954-349X
• Electronic ISSN: 1873-6017
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 68
• Pages: 433-445
• DOI: https://doi.org/10.1016/j.strueco.2023.10.015
• Keywords: South African Manufacturing, Employment, Mark-ups, Competition, Trade, Investment
• Publisher URL: https://www.sciencedirect.com/science/article/pii/S0954349X23001455