South Africa and international competition : theory and evidence

D.Comm.The purpose of this study is to: Provide a framework to analyse the key drivers of competitiveness within a cluster2 of industries; Apply the framework to test the ability of the framework to inform policy and strategic choices; Utilise a number of sectoral studies, to draw general conclusions regarding South Africa's national competitive environment; and Highlight some policy recommendations that emerge from the analysis of the national competitive environment. The transformation of political power from the National Party (NP) to the African National Congress (ANC) involved a revision of priorities for the South African economy. Different political parties contributed in various formats to the pre-election economic debate. Among these, the ANC's "Reconstruction and Development Programme" (RDP) and the Government's "Normative Economic Model" initially received most attention. Although both of the above-mentioned policy documents emphasised the importance of higher economic growth, neither of them elaborated on specific action initiatives to attain greater economic prosperity. At that stage, the new Government of National Unity still had to provide the details regarding an economic programme for reconstruction and development. In view of the ANC's pre-election promises, it was expected that the development of the economy, to the benefit of all South Africans, would be one of the new government's highest priorities during the next two to five years. In this regard, it was anticipated that an analysis of the international competitiveness of the South African economy at a macro-economic as well as a more detailed sectoral level, will be of significant value. At the outset of this study, early in 1994, the then National Economic Forum launched the "Global Advantage of South Africa Project" to analyse the competitiveness of the domestic economy. This study was structured to follow the approach that was developed by professor Michael Porter in his competitive analysis of ten nations, as described in his book "The Competitive Advantage of Nations", as well as subsequent work in this field that had been done by "The Monitor Company" in a number of countries 3. The Competitive Advantage of Nations (CAON) approach provides a unique framework to develop a better understanding of the conditions that govern the competitive ability of firms within a nation. This thesis will attempt to explain and apply the CAON-thinking and frameworks in the South African context, in an effort to: provide a reference guide for institutions or individuals that will be involved in the industrial policy research on competitiveness that needs to be undertaken during the next few years; to develop a better understanding of South Africa's competitive platform; and to formulate recommendations to enhance the country's international competitiveness