The contribution of international competitiveness to the economic development of South Africa

Phafane, Matsuna P. (2002-12)

Theses (MBA)--Stellenbosch University, 2002.

Thesis

ENGLISH ABSTRACT: The concept of international competitiveness has become increasingly important due to globalisation and increased integration between nations and has been referred to as a "new type of warfare" in modern economies. With the advent of globalisation, countries have become more integrated not only through trade but also in financial markets. Consequently, the question of attaining sustainable development through international competitiveness has become very significant. As globalisation proceeds, it would appear that a combination of factors are raising the demand for skilled labour and lowering the demand for unskilled and semi-skilled labour. In South Africa, at least over the short term, the predictions are for declining demand for unskilled and semi-skilled labour and rising demand for skilled and professional occupations. South African manufacturing firms are generally characterised by low spending on innovation. Today there is a shift in the pattern of world trade away from commodity production and raw material intensive simple manufactured goods and towards increasingly knowledge-intensive goods and services. As the more traditional bases of securing a competitive advantage decline for South African manufacturing firms, the ability to compete will increasingly turn on their capacities to master information technology. Technological infrastructure is becoming a key asset for the future competitiveness of a nation. Technology also impacts on education. Therefore, the priority of a competitive nation is to develop the people who will operate the new technological infrastructure and strive to be on the leading edge of future developments. This is one of the reasons why South Africa has to improve on its technology in order to be attractive to foreign investment. It is clear ,that South Africa's current education and training system is not adequate to address the future challenges of the country. An integrated, restructured education and training system that is geared to supplying the necessary manpower to ensure high productivity and international competitiveness is needed if South Africa is to become globally competitive. Therefore the importance of education and training to upgrade people to enable them to earn more cannot be overemphasised. Much more emphasis must be put on technical training in South Africa. After some difficult years of isolation, South Africa has increased its rating on international competitiveness by three positions from 42nd in 2001 to 39th in 2002. It is hoped that South Africa's economic growth rate improves as a result of its pursuit of privatisation; reform of the state sector; and liberalisation of trade and tariffs. The social inequalities inherited from the past, high unemployment and a relatively high inflation rate may constrain the government's economic policy. The development priorities of developing countries such as South Africa include achieving sustained income growth for their economies by raising investment rates, strengthening technological capacities and skills and improving the competitiveness of their exports in world markets, distributing the benefits of growth equitably by creating more and better employment opportunities and protecting and conserving the physical environment for future generations. The new and more competitive context of liberalising and globalising the world economy in which economic activity take place imposes considerable pressures on developing countries to upgrade their resources and capabilities if they are to achieve these objectives. This study seeks to investigate the extent to which international competitiveness contributes to the economic development of South Africa, by studying the theory of comparative advantage and its implications to the modern theory of trade. The study explores and identifies key factors of international competitiveness and globalisation and the success of the application of international competitiveness into practice. The study concludes with possible areas of further research.

AFRIKAANSE OPSOMMING: Die konsep van internasionale mededingendheid word toenemend belangrik weens globalisering en groter integrasie tussen nasies en daar word in hedendaagse ekonomieë daarna verwys as 'n "nuwe soort oorlog". Met die koms van globalisering het lande nie net deur handel nie maar ook in finansiële markte meer geïntegreerd geraak. Die kwessie van die bewerkstelliging van volgehoue ontwikkeling deur internasionale mededingendheid het gevolglik baie belangrik geword. Namate globalisering voortgaan wil dit voorkom asof 'n kombinasie van faktore die vraag na geskoolde arbeid verhoog en die vraag na ongeskoolde en halfgeskoolde arbeid laat daal. In Suid-Afrika word 'n kleiner vraag na ongeskoolde en halfgeskoolde arbeid en 'n groter vraag na geskoolde en professionele beroepe oor ten minste die kort termyn voorspel. Suid-Afrikaanse vervaardigingsmaatskappye word oor die algemeen deur lae besteding aan innovasie gekenmerk. Daar is tans 'n verskuiwing in die patroon van wêreldhandel weg van kommoditeitsproduksie en grondstof-intensiewe eenvoudige vervaardigde goedere na toenemend kennis-intensiewe goedere en dienste. Namate die meer tradisionele grondslae waarop Suid-Afrikaanse vervaardigingsmaatskappye 'n mededingende voordeel verkry het, verdwyn, sal die vermoë om mee te ding toenemend afhang van hul vermoë om inligtingstegnologie te bemeester. Tegnologiese infrastruktuur word 'n baie belangrike bate vir die toekomstige mededingendheid van 'n land. Tegnologie het ook 'n impak op onderwys. Die prioriteit van 'n mededingende land is dus die ontwikkeling van die mense wat die nuwe tegnologiese infrastruktuur sal bestuur en wat daarna strewe om aan die spits van toekomstige ontwikkelings te wees. Dit is een van die redes waarom Suid-Afrika sy tegnologie moet verbeter ten einde aantreklik te wees vir buiteland,sebelegging. Dit is duidelik dat Suid-Afrika se huidige onderwys- en opleidingstelsel nie voldoende is om die toekomstige uitdagings vir die land die hoof te bied nie. 'n Geïntegreerde herstruktureerde onderwys- en opleidingstelsel wat daarop gemik is om die nodiqe mannekrag te voorsien om hoë produktiwiteit en internasionale mededingendheid te verseker, word vereis indien Suid-Afrika mededingend wil wees in die internasionale arena. Die belangrikheid van onderwys en opleiding om mense op te gradeer ten einde hulle in staat te stel om meer te verdien, kan nie oorbeklemtoon word nie. Groter klem moet op tegniese opleiding in Suid-Afrika gelê word. Na moeilike jare van isolasie het Suid-Afrika sy gradering ten opsigte van internasionale mededingendheid met drie posisies verbeter vanaf 42ste in 2001 tot 39ste in 2002. Suid-Afrika se ekonomiese groeikoers sal hopelik verbeter as gevolg van sy strewe na privatisering, hervorming van die staatsektor, en liberalisering van handel en tariewe. Die maatskaplike ongelykhede van die verlede, hoë werkloosheid en 'n betreklik hoë inflasiekoers kan moontlik die regering se ekonomiese beleid aan bande lê. Die ontwikkelingsprioriteite van ontwikkelende lande soos Suid-Afrika sluit die volgende in: volgehou inkomstegroei vir hul ekonomieë deur beleggingskoersverhogings, verbetering van tegnologiese kapasiteite en vaardighede, die verbetering van die mededingendheid van hul uitvoere in wêreldmarkte, die billiker verdeling van die voordele van groei deur meer en beter werkgeleenthede te skep, en die beskerming en bewaring van die fisiese omgewing vir toekomstige geslagte. Die nuwe en meer mededingende konteks van die liberalisering en globalisering van die wêreldekonomie waarin ekonomiese aktiwiteit plaasvind, plaas- groot druk op ontwikkelende lande om hul hulpbronne en kapasiteite te opgradeer indien hulle hierdie doelwitte wil bereik. Hierdie studie poog om die mate waarin internasionale mededingendheid tot die ekonomiese ontwikkeling van Suid-Afrika bydra, te ondersoek deur die teorie van mededingende voordeel en die implikasies daarvan vir die moderne handelsteorie te bestudeer. Die studie ondersoek en identifiseer die hooffaktore van internasionale mededingendheid en globalisering en die sukses van die toepassing van internasionale mededingendheid in die praktyk. Die studie word afgesluit met voorstelle vir moontlike verdere navorsing.

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