Value Chains and Industrial Development in South Africa

2021 ◽  
pp. 374-395
Author(s):  
Mike Morris ◽  
Justin Barnes ◽  
David Kaplan
Keyword(s):  
South Africa ◽  
Automotive Industry ◽  
Value Chain ◽  
Industrial Development ◽  
Value Chains ◽  
Technological Advancement ◽  
African Region ◽  
Skill Intensity ◽  
Import And Export ◽  
Managerial Capabilities

This chapter focuses on the dynamics of global value chains (GVC) engagement and industrial development in South Africa through two case studies—the automotive and textiles/apparel sectors. The further industrialization and development of South Africa and of the Southern African region will depend heavily on further developing their engagement in GVCs and simultaneously upgrading their capacities into higher valued and more skill and intensive activities. The automotive industry is import and export intensive, offering the potential for technological advancement, increasing skill intensity and upgrading, and positive economic spillovers. Apparel is domestic market oriented, sourcing domestically, regionally in Southern Africa, and from Asia. It is an example of a low technology, labour intensive industry, exhibiting lower levels of managerial capabilities and skills. It is challenged by raising capabilities to meet new value chain requirements and extending the supplier base to increase value addition (and by implication employment) in the economy.

scholarly journals The global value chain dimension of foreign direct investment flows in the agro-industrial sector of South Africa, 2003–2014

2018 ◽  
Vol 18 (1) ◽  
Author(s):  
Henri Bezuidenhout ◽  
Sonja Grater ◽  
Ewert P.J. Kleynhans
Keyword(s):  
South Africa ◽  
Foreign Direct Investment ◽  
South African ◽  
Value Chain ◽  
Direct Investment ◽  
The United States ◽  
Industrial Sector ◽  
Value Chains ◽  
Global Value Chain ◽  
African Countries

Orientation: African countries offer many investment opportunities and also urgently need global investment finance. Along the value chains of the agro-industrial sector there are many global challenges for African countries to attract foreign direct investment. This article investigates the investment flows in agro-industries and products to and from South Africa.Research purpose: This study evaluates the nature and dimensions of the agro-industrial sector that receive investment inflows in South Africa, as well as investigating South African investment patterns into Africa.Motivation for the study: Of particular interest is the relationship between foreign direct investment (FDI) flows, their integration into global value chains and sustainable investment options.Research design, approach and method: Qualitative data and visual techniques using available data for the period 2003–2014 disambiguate the linkages in FDI patterns with regard to regions, industries and specific companies. Flows between regions and the specific companies are identified and studied.Main findings: The results indicate that the United States, the United Kingdom and the Netherlands are the largest investors in South Africa, with a strong focus on agricultural input production and subsequent agro-processing industries. South African investment into Africa follows a similar, albeit narrower and more focused, pattern. The study concludes that foreign multinational enterprises are actively involved in global value chain expansion and South African firms are following suit.Practical/managerial implications: The lack of FDI in actual agricultural crop production in Africa offers future investment opportunities.Contribution/value-add: This study creates a better understanding of how FDI in agriculture is linked to the development of regional value chains in the Southern African region. The methodology applies a novel approach to an important field of study, of which little knowledge exists, and may contribute to the creation of wealth in the countries of the region and the welfare of its population.

Competition and power in global value chains

2020 ◽  
pp. 102452942097515
Author(s):  
Pamela Mondliwa ◽  
Simon Roberts ◽  
Stefano Ponte
Keyword(s):  
South Africa ◽  
Value Creation ◽  
Value Chain ◽  
Bargaining Power ◽  
Value Chains ◽  
Global Value Chain ◽  
Barriers To Entry ◽  
Government Regulations ◽  
Competition Rules ◽  
Competition Laws

This paper bridges the understanding of power in the global value chain literature and the analysis of market power and barriers to entry in competition economics. It draws on competition economics to provide a better understanding of the ways in which bargaining power between firms shapes patterns of value creation and capture along value chains. It also considers the influence which competition laws have on the conduct of large and powerful firms. Through the case studies of supermarkets and petrochemicals in South Africa, the paper shows how the dominant bargaining power of lead firms owes much to the historical impact of government regulations and industrial policy, including those enforced by competition authorities. We conclude by highlighting that choices regarding the type of competition rules to be adopted have important implications for the ability of supplier firms to build capabilities and to upgrade in value chains.

World Economy as Global Value Chain’s Network

2015 ◽  
pp. 5-17
Author(s):  
V. Kondrat’ev
Keyword(s):  
Value Chain ◽  
Financial Services ◽  
Industrial Development ◽  
Full Range ◽  
Global Value Chains ◽  
Motor Vehicles ◽  
Value Chains ◽  
Business Services ◽  
Specific Product ◽  
Fragmentation Of Production

World trade and production are increasingly structured around “global value chains” (GVCs). A value chain identifies the full range of activities that firms undertake to bring a product or a service from its conception to its end use by final consumers. Technological progress, cost, access to resources and markets and trade policy reforms have facilitated the geographical fragmentation of production processes across the globe according to the comparative advantage of the locations. This international fragmentation of production is a powerful source of increased efficiency and firm competitiveness. Today, more than half of world manufactured imports are intermediate goods (primary goods, parts and components, semi-finished products), and more than 70% of world services imports are intermediate services. The emergence of GVCs during the last two decades has implications in many areas, including trade, investment and industrial development. Some of these implications have been explored in recent OECD work but the empirical evidence on GVCs remains limited. The last few years have witnessed a growing number of case studies on the globally integrated value chains at the product level, but such analyses only depict the situation for a specific product. The main objective of the article is to provide more and better evidence allowing to examine the position of countries within international production networks. The author deals with quantitative indicators that give a more accurate picture of the integration and position of countries in GVCs. A detailed assessment of global value chains is provided in six industries: agriculture and food products, chemicals, electrical and computing machinery, motor vehicles, business services, financial services.

scholarly journals Metals, Machinery, and Mining Equipment Industries in South Africa

2021 ◽  
pp. 53-77
Author(s):  
Antonio Andreoni ◽  
Lauralyn Kaziboni ◽  
Simon Roberts
Keyword(s):  
South Africa ◽  
Industrial Policy ◽  
Value Chain ◽  
Policy Design ◽  
Value Added ◽  
Poor Performance ◽  
Value Chains ◽  
Central Position ◽  
Mining Equipment ◽  
Middle Income

The metals, machinery, and mining equipment industries have been at the heart of South Africa’s industrial ecosystem. Their central position is associated with the long-term importance of mining, with which there are extensive demand- and supply-side linkages. This chapter reviews key turning points in the development and restructuring of these value chains in post-apartheid South Africa, from 1994 to 2019. The overall record is of a basic steel industry that performed better in terms of value added relative to the more diversified downstream industries, despite government industrial policy targeting more labour-intensive downstream industries. The downstream machinery and equipment industry struggled to compete with imports in the 2000s and 2010s and only partially engaged with digitalization. In explaining these developments the grand bargains struck by the state with the main company producing basic steel and the use of procurement as a demand-side industrial policy are critically examined. The chapter also provides micro-level evidence of the evolving relationships between mining houses; engineering, procurement, and construction management services companies; and input suppliers along the value chain. Overall, it is argued that the relatively poor performance of this industry grouping in South Africa has been due to power asymmetries along the value chains, upstream concentration, high levels of fragmentation in the domestic ecosystem, the lack of key institutional ingredients, and poor policy design. Lessons for resource-endowed middle-income countries are discussed, and policy challenges for upgrading and diversification are presented.

scholarly journals The Czech automotive industry in global production networks: regional dimensions of upgrading between 1998 and 2008

Geografie ◽  
2013 ◽  
Vol 118 (2) ◽  
pp. 116-137 ◽  
Author(s):  
Jan Ženka ◽  
Petr Pavlínek
Keyword(s):  
Automotive Industry ◽  
Value Chain ◽  
Regional Level ◽  
Value Chains ◽  
Production Networks ◽  
Global Production Networks ◽  
Firm Level ◽  
Value Capture ◽  
Level Data ◽  
Economic Upgrading

In this article, we draw on the global production networks (GPNs) and global value chains perspectives to examine the regional development effects of economic upgrading in the Czech automotive industry between 1998 and 2008. We investigate how the position of Czech-based automotive firms in GPNs affects the intensity of upgrading and the amount of value captured for the benefit of the host regions through wages, corporate taxes revenues and reinvested profits. Based on the statistical analysis of firm-level data aggregated at the micro-regional level, the intensity of economic upgrading and value capture is measured for groups of regions and for different tiers of the automotive value chain. The results suggest large differences in profitability and value capture between the regions hosting vehicle assembly firms and those hosting component suppliers.

scholarly journals The strategic positioning and configuration of national mapping organisations as enablers of economic and social growth in South Africa

2008 ◽  
Vol 39 (3) ◽  
pp. 41-55 ◽  
Author(s):  
M. Denner ◽  
H. Oosthuizen
Keyword(s):  
South Africa ◽  
Public Sector ◽  
South African ◽  
Value Chain ◽  
Technological Advancement ◽  
Strategic Positioning ◽  
Geospatial Information ◽  
Social Growth ◽  
The World ◽  
The Government

This paper explores the transferability and application of business-driven strategic thinking to that of a public sector context, namely national mapping organisations. These organisations exist throughout the world because the economies of the world require geospatial information to support economic and social growth. As such their strategic positioning within government is of prime importance. In South Africa, however, there is a paucity of knowledge in this regard and consequently triggered the research which forms the basis of this paper.A macro-environmental analysis suggests significant growth opportunities for the South African geospatial industry, fuelled by a micro-industry borne out of the 2010 Soccer World Cup event. A profile description of the characteristics of consequence, boundaries between the private and public the industry and expected changes reflect a large industry which is expanding at a rapid rate but is fragmented and displays a complex network-system of inter and intra-industry relationships. As such it is attracting increasing numbers of competitors but, as an industry, appears to be slow to adjust to technological advancement. An internal analysis of the value chain of the National Mapping Organisation (NMO), the single most important player in the local public sector geospatial industry, reveals significant value creation in its inhouse activities. However, the external deconstructed operations, outbound logistics and procurement processes are not allowing the organisation to realise any benefits from efficiencies it may introduce. Key to achieving efficiencies lies in the human capital, which by all accounts, it is failing to retain.Future strategic thrusts for the NMO have been identified by constructing a SWOT model and by analysing its relative competitive strength. These thrusts were found to concentrate on actions and themes related to staff, communication, marketing, general management, production (cost and capacity) and product (quality and innovation). Interpreting and applying those themes on an interorganisational basis will enable the NMO to best position itself in the industry. In this regard sufficient related strategic fit is evident between the value chains of the NMO, The Satellite Application Centre (SAC) and Statistics South Africa (Stats SA), enabling the NMO to leverage on the sales, marketing and distribution activities of SAC and the financial leveraging capabilities of Stats SA.This paper has presented an example of how delivering an efficient and effective service delivery may be hampered through the inappropriate strategic configuration of South African public sector activities. It is therefore suggested that the government revisits the strategic positioning of public sector organisations engaged in the provision of geospatial information.

scholarly journals The fragmented nature of the titanium metal value chain

2020 ◽  
Vol 120 (11) ◽  
Author(s):  
R.N. Roux ◽  
E. Van der Lingen ◽  
A.P. Botha ◽  
A.E. Botes
Keyword(s):  
South Africa ◽  
Value Chain ◽  
Value Added ◽  
Production Costs ◽  
Value Chains ◽  
Titanium Metal ◽  
Technology Markets ◽  
The Usa ◽  
Titanium Industry ◽  
Titanium Processing

SYNOPSIS This study investigates the fragmented nature of the global and local titanium metal value chains. South Africa has the fourth most abundant titanium reserves in the world. However, South Africa mainly exports titanium ore and imports value-added titanium products, which impacts the potential to derive more economic benefit from this resource. For South Africa to benefit from its titanium reserves, an understanding of the current fragmented nature of the global titanium value chain would assist in entering the global titanium industry. Information on the global and South African titanium value chains was collected by means of a desktop study. It was found that the leading countries operating within both the upstream and the downstream titanium industry are the USA, China, Japan, Russia, and Kazakhstan. The key drivers that caused fragmentation were identified as technology, markets, production costs, and the availability of titanium mineral reserves. An important outcome of this study is the identification of the local need for a technological foundation in support of downstream titanium processing to market-competitive titanium mill and powder products. Keywords: fragmentation, titanium, titanium value chain.

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