The role of services for manufacturing firm exports

Manufacturing firms have been increasingly focusing on services, a trend that is evident in their composition of bought-in input and in-house production. The services intensity of firms may affect their productivity and thereby their competitiveness abroad; services are also instrumental in connecting firms to foreign markets and can help them to differentiate their offerings from those of other firms. However, the relation between services and manufacturing exports has only been partially analysed in the previous literature. This study contributes to the field by discussing the role of services for firms and empirically testing a set of related conjectures. Export intensity is regressed on two services input parameters, applying a fractional model to a rich panel of firms in Sweden in the period 2001–2007. The microeconometric results suggest that, after controlling for covariates and heterogeneity, service inputs affect a firms’ export capabilities: raising the proportion of services in in-house production yields higher export intensity on average. Furthermore, buying-in more services is associated with higher export intensity for firms in some industries. Overall, the study provides new firm-level evidence of the role of services as inputs in manufacturing.     

Profiling emerging contractors for effective transformation in the South African construction sector

South Africa's construction industry is transforming. Its economy requires a wider base of contracting entities. Much of this growth is expected to be delivered by ‘emerging’ contractors. Yet these companies face significant obstacles. Targeted interventions that foster companies need a better picture of these firms and their core members. A survey of the civil engineering sector, targeting emerging contractors, showed that the owners of these companies lack training and experience, and that there are gender-related differences. Classifications according to company turnover, contract sizes or employee numbers alone do not reflect circumstances. Combining these data with the core members' backgrounds gives a clearer picture. Most companies hover between the ‘Existence’ and ‘Survival’ stages of business development. Development initiatives that assume companies require knowledge must accommodate large cognitive distances between sender and receiver. Initiatives thus need to focus on the owners, considering the status and background of their companies.     

The growth of exports and manufacturing in South Africa from 1947 to 1987

This paper establishes the direction of causality between export growth and manufacturing output growth in the period 1947 to 1987. Total exports and manufacturing output demonstrated bidirectional causality for the entire period, yet from 1947 to 1970 there was found to be no relationship between them. A test for the direction of causality between merchandise exports and manufacturing output found that causation ran from manufacturing output to exports from 1947 to 1970. In the period 1968 to 1987, bidirectional causation was established between merchandise exports and manufacturing output     

Pro-poor microcredit in South Africa: cost-efficiency and productivity of South African pro-poor microfinance institutions

This article compares the performance of selected South African microcredit non-governmental organisations (NGOs) that have a poverty-alleviation focus against various benchmarks drawn from the MicroBanking Bulletin. Donors, governments and many analysts regard sustainability as the benchmark of microfinance institutions' (MFIs) performance. However, the most relevant question is whether microcredit NGOs are doing as well as they can in their context. Of particular contextual importance is income inequality in a society. South Africa has the world's second worst income inequality, after neighbouring Botswana. This creates a situation in which microcredit NGOs must recover ‘First World’ costs, particularly salaries, from revenues based on clients who can only afford loans on a par with Third World countries. Compounding this situation are structural obstacles to microenterprise in South Africa, as well as obstacles to productivity in microcredit NGOs. Taken together, this creates a ‘salary burden’ for South African microcredit NGOs, which is the highest in the world according to relevant benchmarks. South African MFI managers face significant obstacles to improving productivity to compensate for the divergence between staff and client living levels. These include an inadequate skills base, the small scale of the market, rapid labour turnover, and limited resources for capacity development. South African MFIs face the options of moving upmarket (which many have done), adopting methodological innovation or new product development, or closure. Of these, there is a strong argument to be made for supported savings and credit approaches as an alternative to NGO-based microcredit. Such an approach has the advantages of greater voluntary input and social capital formation.     

Restless minds: South African students and the brain drain

This article reports the results of a 2002 survey of emigration potential among a representative sample of 4784 postgraduate and final-year undergraduate students at South Africa's tertiary educational institutions. The authors created a valid and reliable index of emigration potential and found slightly higher levels than those measured by identical questions in previous surveys of skilled adult South Africans. Multivariate regression analysis revealed that the factors that most increase emigration potential among South Africa's future skills base are logistical ones, including family encouragement and financial resources. Next in importance are students' prospects of a better life for themselves and their families in their target countries than in South Africa. Finally, the study showed that patriotism and strong national identity decrease emigration potential while previous travel abroad and access to information about life abroad increase it. It also found that a range of possible government attempts to make emigration more difficult would only increase students' probability of leaving the country.     

Contributing to the African Renaissance vision: The role of South African higher education institutions

President Mbeki is emphasising the vision of an African Renaissance in many of his public addresses. Many multifaceted inputs are required to realise this vision, and human resources development is one of the cornerstones of this ideal. South African higher education institutions could play a major role in this quest by sharing their expertise to upgrade the scientific, economic and educational competencies of all people in Africa. Data analysis shows considerable potential for attracting students from Africa, especially from the Southern African Development Community, to study at South African institutions. Current initiatives for facilitating intellectual mobility across the country's borders lack vision, however. Academic exchange programmes in other countries could serve as models to kick-start the contributions of higher education institutions in South Africa in realising Mr Mbeki's vision for an African Renaissance.     

Human resource development and growth: improving access to and equity in the provision of education and health services in South Africa

This paper demonstrates the importance of improving access to and equity in the provision of essential services such as education and health for enhancing human development. A major constraint to accelerating and sustaining economic growth in South Africa is the shortage of skilled human resources. Human capital formation (through appropriate education, training and health) is vital for growth. However, for sustained growth to reduce poverty and unemployment, human capital of a ‘higher order’ than the system is currently producing, in both quantitative and qualitative terms, must be generated. The paper reviews progress in the education and health sectors and identifies the challenges. It stresses the need for policy makers to recognise the link between education and health outcomes and the provision of clean water, adequate sanitation, cheap and accessible transport and effective nutrition programmes. Addressing only the education and health services is unlikely to lead to optimal outcomes in these sectors.     

Winners and losers: South African labour-market dynamics between 2008 and 2010

There is little empirical work in South Africa using panel data to describe employment and earnings dynamics. This paper contributes by describing labour-market transitions in South Africa between 2008 and 2010 for individuals aged 20 to 55 across two waves of nationally representative panel data. We find that women had more mobility than men into and out of the labour market and employment. However, women were less mobile between kinds of employment and across occupations. Casual employment was very unstable, with very few individuals remaining in this state. In contrast, there was little mobility out of regular employment into other kinds of employment. Average real earnings changes were positive for movements into regular employment and negative for movements into self-employment or casual employment. Strong movement out of semi-skilled occupations was striking, especially for males. In multivariate models, being the mother of young children was important in leaving regular employment.     

China's impact on South African trade and inflation

There has been much controversy about the impact of Chinese growth on the rest of the world. It is generally accepted that China has a dampening effect on global inflation through the supply of cheap products. On the other hand, imports from China could displace domestic production and hence have adverse effects on economic growth and employment. Thus, the question of whether a country benefits from trading with China is a country-specific issue. The results in this paper indicate that limited short-term costs have resulted from the strengthening of trade relations between South Africa and China. As far as inflation is concerned, the paper does not find convincing empirical evidence at the aggregate level for inflation in China leading to domestic price changes. At the disaggregate level, however, there appear to be stronger sector-specific linkages between prices in China and South Africa.