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Presentation to Prem Conference 2006

SOUTH AFRICA TECHNOLOGY BASED EXPORTS: AN AGGREGATE ASSESSMENT AND SOME CASE STUDIES. Presentation to Prem Conference 2006. Professor David Kaplan Department of Economics and Graduate School of Business, University of Cape Town.

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Presentation to Prem Conference 2006

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  1. SOUTH AFRICA TECHNOLOGY BASED EXPORTS: AN AGGREGATE ASSESSMENT AND SOME CASE STUDIES Presentation to Prem Conference 2006 Professor David KaplanDepartment of Economics and Graduate School of Business, University of Cape Town

  2. Global Export Shares, 1992-2002: South Africa, Australia, Brazil and Argentina (%)

  3. South Africa Share of Global High Technology Exports1992 – 2002 %

  4. South Africa Share of Global High Technology Exports1992 – 2002 %

  5. SA Share of High Tech Exports • SA share of global high tech exports very low and well below total global share • SA share of global high tech exports has been declining • One exception – radio-active materials (524). RCA >1: Positive balance of trade

  6. Radio Active Materials • Only 4.4% of total HT exports • Very slow growing in global trade • Strong negative growth rate of SA exports

  7. High Tech. Competitiveness • Other commodity exporters are highly competitive in certain globally fast growing high tech areas • Brazil – aircraft and parts (RCA 2.42). 50% of high tech exports • Australia – medicinal and pharmaceutical prods. (RCA 0.6 – 1.1). 25% of high tech • South Africa – only uranium ores. 4% of high tech exports. Slow growing global exports

  8. Explaining this weak overall Manufacturing Export Performance? • Not a lack of market demand or access • Changes in demand impact on export supply through changes in international prices • Responsive to real currency depreciations (and post 2002 appreciations) but response tempered by volatility • Constraints are on the supply side – infrastructure and availability of skills

  9. Technology based Exports – Some suggestive Case Studies • Energy / Chemicals • Pharmaceuticals • Software – small, medium • Fine Wines

  10. SASOL • World technology leader in a fast growing area • 10% of business R&D in SA • $100 million per annum + Large recent K investments • Growing • 350 FTE Researchers (100 post-doc.) • Global Footprint • Importance to the region

  11. SASOL • Role of the state • HO based technology • JV internationalization (Chevron)

  12. PEBBLE BED MODULATOR NUCLEAR REACTOR • Indigenous technology linked to nuclear programme • Massive state support • Uncertain success

  13. PHARMACEUTICAL • Appetite suppressant • Estimated US market >$3 billion • San-CSIR-Phytofarm-Unilever • San to receive 8% milestone payments and 8% of global sales • Sui generis rights

  14. PHARMACEUTICAL • Unique arrangement • Manage the process in Africa • In the North, market size and regulation require a partner • Significant share goes to the “North”

  15. SOFTWARE - Small • Many small companies <20 employees • Reliance on one innovative product • Exporting cos. Have some foreign connection • In home market, protected by product complexity • In global market, require IPR

  16. SOFTWARE - Small • Many sell via web portals • Require no marketing cost • Often export to other African countries • Growth constraints appear in marketing / support

  17. SOFTWARE - Small • Government support confined to skill provision

  18. SOFTWARE – Medium/Large • Transaction processing systems • Early internationalization strategy • Local development • Marketing constraints • Locate HO abroad • No state support

  19. SOFTWARE – Large • Thawte – digital certificates • Largely web based sales • Sale to US Company • No state support

  20. FINE WINES • Main problem is markets • Aligning operations to consumer need • Main problem is not technology • State support for technology • Need for collective marketing • Buyers are the main drivers of technological change

  21. POLICY PRIORITIES FOR AFRICA • Develop modern engineering faculties that articulate with infrastructure provision (ICT, power, transport and logistics) • Grow specialized technical and engineering services related to main raw material outputs • Public R&D – build institutions and practices incl., competition in the system; fiscal certainty; long-term planning; budgeting linked to goals • Dedicated ministry/agency with oversight and responsibility for the system

  22. POLICY PRIORITIES FOR SOUTH AFRICA • Expand engineering and technical skills significantly • Do more to promote Higher Education – Business linkages especially for SMMEs • Explicit policies to attract knowledge intensive FDI – especially to serve the continent • Coordinate industrial and technology policies

  23. THANKS • Mike Kahn – Human Sciences Research Council • Erika Kraemermbula – University of Oxford • Gatsha Mazithulela – CSIR • Adi Patterson – DDG Department of Science and Technology

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