This paper examines the nature and sources of productivity growth in South African manufacturing sectors, in international comparative perspective. On panel data estimations, we find that the evidence tends to support Schumpeterian explanations of productivity growth for a panel of countries including both developed and developing countries, and a panel of the South African manufacturing sectors. By contrast, for a panel of OECD manufacturing sectors, semi-endogenous productivity growth is supported. However, we also report evidence that suggests that sectors are not homogeneous. For this reason time series evidence may be more reliable than panel data. Time series evidence for South Africa suggests that prospects for the sustained productivity growth associated with Schumpeterian innovation processes, is restricted to a narrow set of sectors, strongly associated with the chemicals and related sectors, machinery and transport equipment, and basic iron and steel sectors. Semi-endogenous growth finds much weaker support. For the OECD manufacturing sectors, both semi-endogenous and Schumpeterian growth finds support, with semi-endogenous growth more prevalent than for South African manufacturing. The sustained productivity growth associated with Schumpeterian growth frameworks is relatively rare everywhere.
Working paper 554
Economics of Transition