Framing structural transformation in South Africa and beyond

Structural transformation is a complex, long-term historical process entailing both structural change in the sectoral composition of an economy, as well as broader societal changes in the productive organizations, institutions, and political economy of a country. With a focus on South Africa as a middle-income country, this chapter advances a holistic and integrated perspective on the nature and dynamics of structural transformation and highlights a specific set of interlocking critical factors and dimensions. These are: the processes of learning and productive capabilities development and accumulation; technological change—digitalization, specifically—and its relationship with sustainability; power dynamics along global value chains (GVCs) and their relation to inequality; and finally, the political economy of development and the role of the state. Over the course of its democratic history, since 1994, South Africa has not undergone sustained and thoroughgoing structural transformation. Despite some areas of partial success, there has been premature deindustrialization, lack of sufficient development of the local production system alongside integration into GVCs, and persistent cross-cutting challenges of inclusiveness and sustainability. Here it is argued that the holistic and integrated framework developed by the authors can help in developing a policy approach towards effective and feasible packages of industrial policies for structural transformation