Metals, Machinery, and Mining Equipment Industries in South Africa: The Relationship between Power, Governance, and Technological Capabilities

The metals, machinery, and mining equipment industries have been at the heart of South Africa’s industrial ecosystem. Their central position is associated with the long-term importance of mining, with which there are extensive demand- and supply-side linkages. This chapter reviews key turning points in the development and restructuring of these value chains in post-apartheid South Africa, from 1994 to 2019. The overall record is of a basic steel industry that performed better in terms of value added relative to the more diversified downstream industries, despite government industrial policy targeting more labour-intensive downstream industries. The downstream machinery and equipment industry struggled to compete with imports in the 2000s and 2010s and only partially engaged with digitalization. In explaining these developments the grand bargains struck by the state with the main company producing basic steel and the use of procurement as a demand-side industrial policy are critically examined. The chapter also provides micro-level evidence of the evolving relationships between mining houses; engineering, procurement, and construction management services companies; and input suppliers along the value chain. Overall, it is argued that the relatively poor performance of this industry grouping in South Africa has been due to power asymmetries along the value chains, upstream concentration, high levels of fragmentation in the domestic ecosystem, the lack of key institutional ingredients, and poor policy design. Lessons for resource-endowed middle-income countries are discussed, and policy challenges for upgrading and diversification are presented

Information and Communication Technology: Dynamics, Integration and Economic Stability

Information and Communication Technology (ICT) has become a major driver of investment and growth in OECD countries. The analysis puts the focus on key developments in the ICT sector and international outsourcing dynamics as well as the specific role of ICT in the financial sector. One can show that the expansion of ICT is not only contributing to national and international outsourcing but to insourcing as well. Furthermore, ICT affects regional integration. In the context of a modified Dornbusch model – including foreign direct investment – the impact of ICT on output and the exchange rate are discussed. The risk of overshooting in foreign exchange markets is likely to be reduced through the expansion of ICT which allows a more pro-active monetary policy.Integration, ICT, Growth, Foreign Exchange Markets, Stability

Pricing music using personal data: mutually advantageous first-degree price discrimination

In addition to customized products and services, personal data also enables personalized pricing. However, consumers are often unwilling to accept being price discriminated for fear that they would end up paying more for the same product or service. This article demonstrates that by rewarding consumers for disclosing personal information it is possible to achieve a situation where first-degree price discrimination is mutually advantageous and both buyers and sellers gain by adopting such a pricing model. The conditions required for this to happen are investigated and the impact on social welfare is discussed. Finally, the article considers the robustness of this model when consumers adopt an opportunistic behavior which consists in manipulating personal data in order to masquerade as a consumer with a lower willingness to pay

Consumer Co-creation of Digital Culture Products: Business Threat or New Opportunity?

New forms of implicit consumer collaborations in online communities and social networks influence demand preferences as consumers themselves increasingly participate in creating cultural products that both complements and competes with firm offerings. Although research findings on these issues vary, strong evidence from both theoretical and empirical work suggests that the increased technology affordance on the consumer side challenges the profitability of conventional producer strategies that are based on pushing product designs that serve large segments of consumers while ignoring the service of more nuanced consumer preferences. In this study, we present a market design in which producers create and sell original digital culture product and, examine the effect of consumer co-creation in the presence of consumer sharing (piracy) on market performance in terms of consumer and producer surplus and consumer choice. Using the methods of experimental economics, we find strong interaction effects between consumer sharing and co-creation, and, more specifically, we find that consumer sharing interacts with consumer-based co-creation and increases product variety and consumer surplus while reducing producer benefits from co-creation

A Market-Based Approach to Facilitate the Organizational Adoption of Software Component Reuse Strategies

Despite the theoretical benefits of software component reuse (and the abundance of component-based software development on the vendor side), the adoption of component reuse strategies at the organizational level (on the client side) remains low in practice. According to research, the main barrier to advancing component-based reuse strategies into a robust industrial process is coordination failures between software producers and their customers, which result in high acquisition costs for customers. We introduce a component reuse licensing model and combine it with a dynamic price discovery mechanism to better coordinate producers’ capabilities and customer needs. Using an economic experiment with 28 IT professionals, we investigate the extent to which organizations may be able to leverage component reuse for performance improvements. Our findings suggest that implementing component reuse can assist organizations in addressing the issue of coordination failure with software producers while also lowering acquisition costs. We argue that similar designs can be deployed in practice and deliver benefits to software development in organizations and the software industry

The U.S. Response to Foreign Industrial Targeting

macroeconomics, foreign industrial targeting