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Should and can labour-surplus, middle-income economies pursue labour-intensive growth? The South African Challenge

Year: 2015
Working paper number: 351
Author: Nattrass, Nicoli
Unit: SSU
Abstract:
South Africa's industrial policy rests on Michael Porter's logic of raising productivity to promote dynamic competitive advantage. Given high unemployment, however, a more Arthur Lewis-like emphasis on labour-intensive development is also appropriate. Contrary to conventional wisdom, evidence from sectors such as clothing shows that South African producers remain sufficiently competitive as long as minimum wages are not raised in pursuit of a Porterian strategy. The South African case suggests that it is both desirable and feasible for an industrialised labour-surplus, middle-income economy like South Africa to pursue a mix of strategies including the promotion rather than destruction of labour-intensive jobs.
Publication file: WP 351.pdf
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