1. SOUTH AFRICA’S EXPORTS OF HIGH TECHNOLOGY PRODUCTS: A Comparative Perspective And Some Policy Priorities. DAVID KAPLAN Professor Of Business Government Relations University Of Cape Town SCIENCE, TECHNOLOGY AND INNOVATION GLOBAL FORUM

2. High Technology Products SITC code PRODUCT GROUP DESCRIPTION High Technology 1: Electronic and Electrical 716 Rotating electric plant and parts 718 Other power generating machinery 751 Office machines 752 Automatic data processing machines 759 Parts of and accessories for ADP and office machines 761 Television receivers 764 Telecommunications equipment, parts and accessories 771 Electric power machinery and parts 774 Electric apparatus for medical purposes 776 Thermionic, cold & photo-cathode valves, tubes and parts 778 Electrical machinery and apparatus, n.e.s. High Technology 2: Other 524 Radio-active and associated materials 541 Medicinal and pharmaceutical products 712 Steam & other vapour power units, steam engines 792 Aircraft & associated equipment and parts 871 Optical instruments and apparatus 874 Measuring, checking, analysing, controlling instruments 881Photographic apparatus and equipment, n.e.s. Source: Lall (2000)

3. High Technology Growth Rates 1992-2005 (average annual %) South Africa WorldChinaDeveloping Countries High Income OECD Total HT exports 9.5311.0931.5520.868.74

4. South Africa’s Percentage Shares Of Global High Technology Exports, 1992-2005 199219941996199820002002200320042005Growth Total HT exports 9.530.040.070.090.06 0.07 -0.41

5. South Africa’s Balance Of Trade In High Technology Products, 1992-2005 (Current US dollars, millions) 199219941996199820002002200320042005 Total HT-2,799.8-3,908.0-4,120.1-5,188.5-4,805.0-4,422.7-5,923.0-8,167.1-9,265.9 Total HT1-1,670.4-2,754.1-2,976.2-3,997.6-3,337.7-2,868.0-3,565.3-4,972.1-6,147.2 Total HT2-1,129.4-1,153.9-1,144.0-1,190.9-1,467.3-1,554.6-2,357.7-3,195.0-3,118.7

6. Global Share Of High Technology Exports – China, Brazil, Argentina And South Africa, 1992-2005 (%S) 1992200320042005 CHINA HT11.6110.7112.9115.35 HT21.223.354.285.64 TOTAL1.499.2611.2113.43 BRAZIL HT10.26 0.230.35 HT20.370.841.131.03 TOTAL0.290.370.400.49 ARGENTINA HT10.050.01 0.02 HT20.050.110.060.07 TOTAL0.050.030.020.03 SOUTH AFRICA HT10.05 0.060.05 HT20.150.12 0.13 TOTAL0.070.06 0.07

7. Revealed Comparative Advantage in High Tech Exports: Brazil, Argentina and South Africa - 2002 BRAZILARGENTINASOUTH AFRICA HT1 + HT20.470.120.13 HT10.320.050.11 HT20.830.260.16 HT1 products >0.5310 HT2 products >0.5101 HT1 products >1110 HT2 products >1101

8. Patents of South African origin granted by the United States Patent and Trademark Office, 1994-2006 1994199519961997199819992000200120022003200420052006 UTILITY PATENTS 10112311110111511011112011311210087109 ALL PATENTS 109127116114132127125137123131115108127

9. Conclusions Weak performance in high-tech exports and patent activity. Share of Global Exports declined; growing adverse balance of trade High tech. low share of exports No emerging comparative advantage Contrast with Brazil. Similar to Argentina

10. Petrochemicals: Sasol World Technology Leader in area of Global Significance 10% of BERD in SA $100million per annum + Large recent K investments 350FTE Researchers (100+ post-doc.) Global Footprint – Qatar; Iran; China; US; India.

11. Petrochemicals: Sasol Technology development locally based JV internationalization (Chevron) Key role of the State

12. Nuclear Energy: PBMR German technology – further developed locally Largest locus of development skills > 550 persons Very significant state support Significant future export potential - $3billion per annum

13. Software : Small Companies Innovative – reliant on a single innovative product Some exporters have foreign connections Product complexity protects in the home market IPR required in global market Sell via web portals Often to other African countries IPR and marketing the key constraints

14. Software: Medium/Large Companies; Thawte Global leader in encrypted digital certificates Largely web based sales Sale to US Company

15. The Paradox Poor macro performance. Simultaneously, well performing innovative firms over a wide range of product areas.

16. The Constraints Institutional – IPRs; Standards; Regulation Early stage venture K Marketing Most importantly – limited supply of high level skills

17. Policy Priorities Limit new programmes and financial support for Innovation Principal focus – improve the supply of highly skilled Education and training Relax immigration restrictions – actively recruit

18. Policy Priorities Incentives for foreign investors to train Question state support for highly skill-intensive projects Support growth of private early stage capital Support for global marketing and IP registration for innovative exports