Department of Trade and Industry DRIVING COMPETITIVENESS: TOWARDS A NEW INTEGRATED INDUSTRIAL STRATEGY FOR SUSTAINABLE EMPLOYMENT AND GROWTH Dr David Kaplan Chief Economist, DTI May, 2001

1.Why an industrial strategy? 1.1A good manufacturing strategy promotes investment 1.2Global trends - the implications for SA manufacturing and the DTI

2The changing world - the growing importance of markets 2.1Exploding markets; new international trends u The expansion of market forces in the modern era u The limitations of the market u New markets, new role for the state: towards a rules-based domestic economy for the people u Market rules & market failure: industrial strategy in South Africa

2The changing world 2.2Balancing the rules for domestic and international markets u Domestic markets and the role of competition policy u A broader mandate: objectives for DTI industrial strategy: u BEE, SMMEs, Employment u The impact of new technologies is transforming the role of the state u Balancing acts: public interest and economic growth u Effective regulation requires cooperation across government

2The changing world 2.3Globalisation: Whom does it really benefit? u Levelling the playing fields? Multilateral economic institutions u The importance of bilaterals and multilaterals

3Current Industrial Policy 3.1The learning years: Policy logic and coherence: Policy design: best practice? 3.4Industrial performance: did our policies work?

Current Industrial Policy: An Assessment Table 1: Manufacturing - Exports

Table 2: Manufacturing - Labour Productivity

Table 3: Manufacturing - Investment

Table 4: Manufacturing - Value of Sales

Table 5: Manufacturing - Employment

4Towards an integrated industrial strategy framework z4.1Key factors affecting manufacturing: ICT, innovation and demanding customers z4.2Old modes of competitiveness count for much less z4.3SA manufacturing: what must be done? u Don’t rely on the old ways u Don’t bank on cheap labour u Forget protection u Do pay attention to innovation u Enhance knowledge capacities

5Continuities and new directions 5.1Continuities: preserving the best of the old 5.2New directions: towards a knowledge- intensive manufacturing sector 5.3An integrated industrial strategy for the region 5.4Phasing in policy changes 5.5Our history, our special concerns

6Making the change to a knowledge-based economy 6.1Constraints u Human resources u Infrastructure 6.2Tensions u Breaking down departmental barriers u Employment levels

7Making it work: indicative policies 7.1Skills development 7.2Acquiring and creating knowledge 7.3Information and communication technologies 7.4Networks and best practice 7.5Consultative policy making

8Government implementation of the new industrial strategy framework 8.1Extending industrial policy across departments 8.2Business and consumer regulation, competitiveness 8.3Joined-up government: working with other state departments

9Government as a learning organisation - the importance of monitoring and evaluation