Industrial Development: Assessment of Economic Performance and Competitiveness, Johannesburg in 2015

Abstract

Following the financial crisis in 2008 and the drop in commodity prices, the performance of firms in the manufacturing industry continues to worsen. The data released by Statistics South Africa in 2016 alludes to poor performance by firms and the manufacturing sector’s continual decline to contribution to economic growth. This decline has been coupled with increasing unemployment, inequality and poverty levels. Notwithstanding this, one of the key objectives of South Africa’s Department of Trade and Industry’s Industrial Policy Action Plan is to stimulate greater economic growth and develop labour-absorbing sectors, particularly in the manufacturing sector. The sustainability of the manufacturing sector is key, however, there is limited information on the factors that drive it. Recognising and appreciating the nature of manufacturing and the challenges faced by firms can assist policymakers to devise interventions which can stimulate inclusive growth and job-creation in Johannesburg. The Centre for Competition, Regulation, and Economic Development (CCRED) at the University of Johannesburg undertook a firm-level survey to understand the nature of economic activity in Johannesburg’s 26 industrial nodes. Based on this survey, this paper analyses responses on economic performance, competitiveness and the challenges faced submitted by over 300 firms. In-depth interviews with 45 firms were also conducted to deepen the insights from the survey. Changes in growth; exporting patterns; investments and level of skills were assessed as an indication of economic performance and competitiveness. Despite the consensus that economic performance is weak, this study offers a different perspective. A significant proportion of firms exhibited growth in the past 3 years due to their sector grouping, access to the export market and investment in machinery and equipment, among other factors. The paper offers recommendations to address ways to stimulate economic performance and competitiveness in Johannesburg.