Download What can you expect from the dti?

Accelerating Growth
and Development:
The Contribution of an
Integrated
Manufacturing Strategy
OUTLINE
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Process issues
A vision for the economy
Extending a policy tradition
Analysis informing the strategy
The challenge
Government’s response
The role of the Integrated Manufacturing
Strategy
The platform of Microeconomic Reform
What can you expect from the dti?
A challenge to stakeholders
Measuring our performance
The way forward
Process issues
May 2001
First draft of
discussion document
released
Extensive consultations
and dialogue
April 2002:
Revised
IMS draft
released
Parliament,
Nedlac,
other
dialogues
3rd quarter 2002
Reworked version
submitted to
Cabinet
A Vision for the economy by 2014
• We need an economy that can meet the
needs of our economic citizens in a
sustainable way:
– Access to quality work and enterprise opportunities
& necessary capacities and skills
– Platform of economic efficiency, inputs,
infrastructure, government service etc.
– Adaptive, innovative & competitive enterprises
– Consumer access to quality goods & services;
effective protection legislation and recourse
mechanisms
– Built on the potential of all our people, resources
and geographic areas
Extending our policy tradition
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A vision beginning with the Freedom Charter
RDP objectives
GEAR programme
Geographic strategies
Integrated Economic Action Plan
Microeconomic Reform Strategy
Analysis:
Policy and manufacturing before 1994
• Resource-oriented, especially minerals,
energy and agriculture
• Industrial Policy – import-substitution,
resource-driven
• Apartheid policy legacy included:
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racial and geographic inequalities;
distorted demand;
restricted skills development;
Inefficiencies;
inward-orientation, with poor linkages to the
region and the world;
– restricted access to economic assets &
opportunities -> limited capacity for savings,
investment and enterprise development.
Analysis:
The challenge faced in 1994
• Interventions required to address both domestic
conditions and integration into the global
economy
• Trends in the domestic economy
– Diverse manufacturing base
– Continued inward-orientation
– Concentration of ownership & lack of equity
• Global trends:
– Liberalisation and acceleration of global
capital flows
– Selective trade liberalisation
– Systems of global governance with unfair
outcomes
– Dangers of marginalisation
Analysis:
Policy interventions since 1994
• Macroeconomic reform to address crises
• Initial set of microeconomic reform measures
• Trade reform: tariff simplification and trade
negotiations (multilateral & free trade agreements)
• Supply-side measures
• Small business
• Competition policy
• Regulatory reform
• Institutional transformation
• Some sector-specific programmes
• Geographic programmes –e.g. SDIs
• Some consumer protection reform
• Wider reforms
• Labour law dispensation and skills development
• Agriculture and land reform
• Development of a consultative approach
Analysis:
Manufacturing performance since 1994
• Some progress made:
– Slow growth, but avoided
deindustrialisation
– Increased export orientation and
integration into global markets
– Increased share of manufacturing in
exports
– Some sectors doing particularly well e.g.
auto
– Improved opportunities for market
access
– Diversification of markets reduced
vulnerability
– Increased productivity
Analysis:
Manufacturing performance since 1994
But:
– Declining share of global trade
– Trade balance: still net importer of manufactured
goods
– Continued job losses within manufacturing
– Casualisation, subcontracting & informalisation
– Particular decrease in demand for unskilled labour,
increase in skilled labour demand
– Productive investment too low
– Declining investment in technology & R&D
– Limited progress in relation to small business
development, BEE and geographic equity
– Poverty and inequality still severe
– Continued geographical inequality
– Underlying constraints to future competitiveness
and equity e.g. inputs, telecomms infrastructure &
requisite skills
Analysis:
Old ways of gaining competitiveness
will not work in future:
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Raw materials
Unskilled labour
Proprietary production technology
Privileged access to markets
Analysis:
New sources of competitiveness
• Information and Communication
Technologies
• Technology diffusion
• Time, efficiency and responsiveness
• Integration of value chains
• Economic participation and equity –
developing human and economic
potential
The challenge we face
• We face numerous constraints:
– distortions in our domestic economy
– our relationship to the global economy
– the changing basis of competitiveness
away from our previous areas of
advantage
• We need to develop our domestic potential
by strategically engaging with the global
economy
– Minimise marginalisation
– Maximise our use of opportunities to
achieve national objectives
Government’s response
to the challenge
Enable competitive,
adaptive
& job-creating
sectors & enterprises
Integrated Manufacturing
Strategy
Platform of efficiency &
reduced constraints to growth &
development across the economy
Microeconomic Reform Strategy
Sustainable Growth-oriented
Macroeconomic Framework
The foundation provided by the
Microeconomic Reform Strategy
• Coordinated action across government on
issues beyond the authority of any single
department
• Improve efficiency of the economy as a
whole and reduce barriers to entry
• Key performance areas:
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growth
competitiveness
employment
small business development
BEE
geographic equity
The foundation provided by the
Microeconomic Reform Strategy
(2)
• Key programmes:
– Input sectors (telecomms, energy,
transport) : efficiency and access
– Cross-cutters: infrastructure, HRD,
access to finance, technology &
innovation
– Priority sectors: agriculture, tourism,
ICTs, cultural, exports (auto, clothing &
textiles, metals & beneficiated minerals,
agro-processing, chemicals)
Objective of the Integrated
Manufacturing Strategy
• Accelerate growth, employment and equity
through developing high value adding,
knowledge-intensive integrated manufacturing
built on our full potential
HOW?
– Address constraints in the domestic economy to
create a platform for competitiveness and
economic participation
– Integrate to our advantage into the global
economy
– Equip our enterprises to compete on the basis of
new drivers of competitiveness
– Integrate equity objectives into each aspect of
the strategy
– Build partnerships and cooperation between
economic stakeholders
What is the IMS? (1)
• A vision for the growth path of
manufacturing
• A series of interventions by
government to help achieve that
vision
• A call to action for all economic
stakeholders
What is the IMS? (2)
• A strategy for manufacturing in the
wider sense – including all activities
associated with the production of
goods
• Uses the conceptual tool of
integrated value matrices to
understand production and how best
to intervene effectively
Integrated Value Matrices: Leather
Value matrices interconnections:
Auto & Components
Chemicals/Plastics
e.g. bumpers, trim
ICT
Finance e.g
vehicle finance
Automotiv
e Sector
5% of GDP
Engineering
services
Textiles/Synthetics,
natural fibres e.g.
environmentally
sound interior trim
Metals/carbon steel,
aluminium, stainless,
magnesium
10% steel industry output
consumed by auto
Suppliers of
consumables
Agro /leather e.g.
leather seats
Design
Tool & Die Making
Leather seats = 16% of
component exports
Estimated impact on GDP 8%
What is the IMS? (3)
• Integrated action with regard to:
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Market access
Beneficiation and value addition
Equity and economic participation
Regional production
Knowledge intensity and services
integration
– Development of integrated value
matrices
What can you expect from the dti?
• Championing competitiveness within
government in a way that supports equity
• Packages of customised services and
products in prioritised sectors, developed in
partnership with stakeholders
• More accessible and efficient broad-based
services across the economy, to provide a
platform for efficiency and equity
What can you expect from the dti?
Championing Competitiveness
• Leadership role in the economic &
employment cluster
• Provision of valid and reliable information
on the economy to economic actors
What can you expect from the dti?
Customised Services
• Developed in partnership will stakeholders in high
potential sectors –cross-functional programmes,
initially for:
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clothing & textiles
agro-processing
metals & minerals
tourism
auto & transport
crafts
chemical & biotech
knowledge-intensive services & ICT
• For each sector, there will be a process of analysis,
strategy development and action
• Also customised programmes for value matrix
enablers: HRD, technology, infrastructure & logistics
What can you expect from the dti?
Broad-based services
• Services to address more generic issues
critical to the development of the economy
as a whole
• Increased relevance, accessibility and
efficiency
• In addition to high volume services
provided, will be specific programmes for:
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Market access
Regulatory environment
Investment
Access to finance
Policy coherence
A challenge for all stakeholders:
Partnerships for growth & development
• Necessary partnerships:
– within government both vertically
(national, provincial, local) & horizontally
(interdepartmental) & their agencies
– within the dti group of institutions
– between economic actors at all levels in
the economy
– bringing in previously excluded voices
– Parliament
– knowledge networks
A challenge for all stakeholders:
Partnerships for growth & development
• Purpose of partnerships
– Developing a common economic vision
– Information sharing within and between
stakeholder groups – developing a
common understanding of trends and
drivers in the economy
– Building partnerships for strategy
development and action at all levels in
the economy, including wider
stakeholder representation
– Developing new ways of thinking and
working
Measuring our performance
• Developing our understanding of the key drivers in
the economy
• Developing appropriate indicators to measure and
evaluate:
– efficiency
– outputs
– impact in relation to our objectives
• Benchmarking our relative performance and
competitiveness, and best-practice of other
DTI-equivalents
• Reviewing progress in partnership with stakeholders
The way forward
• Taking up the opportunity presented
to us
• Moving from dialogue to collective
action
• Securing the long-term sustainability
of growth, employment and equity in
our economy