DEBATE PRODUCTIVITY, TRADE AND EMPLOYMENT: A CONTRIBUTION TO THE BELL-ISP DEBATE

'If the only tool you have is a hammer, everything begins to look like a nail. ' (Abraham Maslow) Trevor Bell's (1995) incisive critique of the report of the Industrial Strategy Project (Joffe et al, 1995, hereinafter ISP), raises a number of issues about the analysis and conclusions reached by the ISP. Bell questions the ISP's contention that productivity growth in South Africa has been unusually low, showing instead that low (and negative) productivity growth has not been an unusual occurrence in a number of developed and developing countries since the 1950s. Bell argues that macroeconomic factors, rather than productivity, explain much of manufacturing's poor performance in the 1980s. Bell questions both the ISP's contention that much of the manufacturing sector's poor performance is the result of past import-substituting strategies, and their recommendation that South African trade and industrial policies should seek to promote manufactured exports. Instead, he makes the case for further import substitution. In response to Bell, Kaplan and Lewis (1996), defend the ISP's focus on, and analysis of, South Africa's productivity performance. Further, they are critical of Bell's argument that import-substituting trade strategies offer a possible path for manufacturing growth, arguing instead that 'we have to increase our penetration of international markets ' (1996:122). Kaplan and Lewis ' (1996) defence of the ISP's focus on exports is based, to a large extent, on the ability of exports to foster productivity growth. Based on a growing international literature, my contribution questions the ISP's assumptions about the relationship between exports and productivity growth, and reports on the limited empirical literature analysing this issue in the South African manufacturing sector. I also analyse the possible employment effects of productivity growth in the South African context, an area which I believe the ISP has not explored sufficiently. In short, my contribution to this debate is focused on issues related to productivity, trade policy and employment.