Factors Determining Industrial Competitiveness And The Role Of Spillovers

This article applied regressions and panel data analysis to determine how micro-economic spillovers enhance the competitiveness of firms and industries. What made this study unique was that it considered the interactions between various spillover factors working simultaneously and their effect on competitiveness and also investigated possible harmful effects of spillovers. Data from the Manufacturing Firm Survey of the World Bank was used, which covered the first decade of the third millennium, including world economic crises. The investigation on sales used cross-sectional regressions, following a survey conducted on sales and competitiveness. The general findings were that FDI and technological expenses offered little spillover advantages to firms, but that spillovers from research and development do enhance competitiveness. Managerial expertise and education of the workforce restrict spillovers and enhance competitiveness, while a larger and less educated workforce increases leakages of information and spillovers, suppressing competitiveness. The results further revealed that exports and spending on communication, machinery and equipment, a trained work force and innovation all enhanced sales, but the numbers of new firms and the number of privately owned businesses suppress competitiveness. Concerning the negative effects of spillovers, corruption, crime, theft and disorder increase spillovers and curb competitiveness. More spending on security decreases these negative spillovers, as does support from well-known suppliers. A larger workforce causes more negative spillovers, as do the number of new and temporary workers, more competitors and new suppliers. The findings of this study will be of special value to managers and project planners

The contribution of FDI, technology and R&D to spillovers in industrial development

This article studies the contribution of technological and knowledge spillovers towards the competitiveness of South African manufacturing firms. Literature often emphasizes the role of foreign direct investment (FDI), technology, and research and development (R&D) in spillovers, but seldom consider their effect simultaneously. This study focuses on the micro-economic production level and on the interaction of these factors. It determines their influence on the competitiveness, profits and eventual industrial development. The empirical study utilised data from the World Banks firm-level survey on South African manufacturers. The study reveals that direct foreign investments and ownership contribute little towards secondary spillovers, which probably depends on absorptive capacity. Technological advancement is not very significant, while research and development are dependent on absorptive capacity to enhance competitiveness, especially with regard to the investment in human capital. International quality certification, foreign licensing and capacity utilisation all contribute positively towards the ability to enhance productivity growth and the competitiveness of firms

Human capital constraints in South Africa

This paper examines human capital constraints in the South African economy, and the austerity of these constraints on firms in the country. The two key human capital constraints explored in this article are the inadequately educated workforce and labour market distortions. Regression analysis was applied to examine determinants of increased labour productivity in manufacturing firms. Education and labour market distortions were found to have a varying influence on output per worker. Principal Component Analysis (pca) of the explanatory variables achieved similar results. This study found that the highest percentage of the total variance is explained by latent variables that incorporate education, training, compensation, region and Sector Education Training Authority (seta) support and effectiveness

The Effect of Spatial Unemployment on the Neighbouring Regions’ Economies: A Regional Case Study of KwaZulu-Natal in South Africa

This article investigates the degree of spatial dependence of unemployment on neighbouring economies with possible implications for cross-border community development initiatives. The local municipalities within the KwaZulu-Natal province in South Africa are used as a case study. Spatial econometric techniques are employed that incorporate dependence between regions in close geographical proximity. Disaggregated data and knowledge about the dynamics at a sub-regional level are usually unavailable for designing employment policies, especially for regional economies in under-developed countries. The results suggest an absence of spatial unemployment clustering and autocorrelation between neighbouring economies. The absence of externalities implies that little mutual dependence exists between adjacent economies, and therefore municipal unemployment patterns can be viewed as spatially random. The economy of a region is therefore fundamentally heterogeneous in that its unemployment rates are determined and influenced by its unique and diverse factors rather than neighbouring unemployment trends or patterns

Economic Freedom and Economic Growth in South Africa

The economic growth and economic freedom nexus is studied in this article and applied to South Africa in an empirical study. Economic freedom is founded on the free or private market economy, based on competition, where voluntary exchange occurs and a legislative framework ensures the safety of market agents and private property. As part of the literature study, the Index of Economic Freedom, the Economic Freedom of the World Index and the Freedom in the World Index were studied and applied to South Africa. An empirical analysis was conducted, cross-correlation functions were estimated, and Granger causality functions, regression analysis and finally a vector auto-regression model (VAR) were constructed and estimated. The research findings from South Africa support the literature, suggesting that there are indeed some indications that greater levels of economic freedom support higher rates of economic growth in a country