The Rationale for Focusing on the Manufacturing Sector as an Important Driver of Growth, Missing Links and Existing Policy Gaps?

Abstract

Under various scenarios, the South African National Development Plan (NDP) projects that the manufacturing sector employment levels will range between 1.880 million and 2.289 million by 2030. In addition, the NDP targets to increase the labour participation rate to 65 per cent by 2030. Thus, the manufacturing sector has an important role to play towards the achievement of lifting the domestic GDP growth to sustained higher levels, increasing the employment intensities of output growth with the aim of lowering the unemployment rate and the re-industrialising of the South African economy. This chapter explains why the manufacturing sector is an important driver of economic growth and shows the missing links in academic and policy discussions. The policy interventions (policy mix) that can be adopted to stem the secular decline in the manufacturing sector adopted are derived from the perspectives of monetary policy, financial regulation policy, macroprudential policy, trade and industrial policy, competition policy, exchange rate developments, global and domestic macroeconomic uncertainties.