Panel 3: Opportunities and Constraints in Labour-Intensive Sectors

Summary: South Africa could be doing a lot better with labour intensive (or light) manufacturing. Special Economic Zones (SEZs) can be used to establish industry competitiveness and to experiment with reform, a famous example being the case of the Shenzhen SEZ in China. Using the example of Coega SEZ in the Eastern Cape, this commentary explores how industrial policy support should be used to stimulate labour intensive light manufacturing, mobilising the unemployed as a leading sector.

Summary: The relationship between increasing growth,reducing unemployment and prioritising employment intensive sectors is a nuanced and complicated one. This complexity is unpacked, and the tension between needing to increase both labour productivity and the absorption of labour in developing economies with high unemployment, is presented as a critical consideration in South Africa. The suggestion is that in choosing which sectors and activities to prioritise for support, we need both those that have strong growth pulling properties and those that are strongly labour absorbing.

Summary: The South African clothing and textile manufacturing sectors are critical for economic development and job creation efforts. Over the last few decades these sectors have been negatively impacted by an increase in imports as well as customs fraud. Several key opportunities as well as significant constraints associated with prioritising the growth of these sectors, are explored in this commentary.Some of the opportunities that operate in favour of the industry include revived efforts to deal with customs fraud and new initiatives such as the Clothing and Textiles Competitiveness Programme. Challenges include those related to a weak economy and limited leadership and technical skills in the sector to drive growth.

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Summary: AfCFTA has the potential to increase growth,raise welfare and stimulate industrial development on the continent. It also has the potential to negatively affect some of the smaller, more vulnerable countries. Adopting a “developmental regionalism” approach to trade integration, the writer proposes, will give AfCFTA the best chance to catalyse the process of transformative industrial development, cross-border investment,and democratic governance in Africa. The writer explains how the pillars of this approach are gaining traction across Africa, and need to be engaged by policy makers, both conceptually and in practice.