Industrial Policy in Developing Economies: Developing Dynamic Comparative Advantage in the South African Automobile Sector

Abstract

Mainstream economics and the Washington Consensus caution against industrial policies that target sectors, firms and regions. At the most they favour crosssectoral policies which address generalized market failures. This paper analyses the success of an industry-specific policy, South Africa's Motor Industry Development Programme. It documents significant learning processes and shows the impact of the sector's growth on macroeconomic performance. It also addresses the 'costs' of industrial policy and shows how well-designed scale-enhancing selective policies can provide domestic consumers with global-quality products at global-price levels, without subsidy from the exchequer. The conclusion addresses the relevance of such selective policies to other developing economies, arguing the case for intelligent and appropriately crafted industrial policy.

Dynamics of Value Chain Governance: Increasing Supplier Competence and Changing Power Relations in the Periphery of Automotive Production—Evidence from Bursa, Turkey

“…This is especially so with suppliers in the periphery of automotive production, for whom differences from the 0.5 and first-tier suppliers which are typically located in the core of automotive production have become even larger. Over the last few decades, a fruitful approach, the GVC perspective, has emerged which focused on the asymmetrical power relationships between lead firms and suppliers in producer-driven chains (Barnes & Kaplinsky, 2000;Layan, 2000;Humphrey, 2003b;Humphrey & Memedovic, 2003;Barnes et al, 2004;Posthuma, 2005). In this context, "value chain governance" is defined as a concept which reflects power asymmetries that arise due to the power of lead firms to coordinate what is to be produced, how it is to be produced and how much will be produced (Dolan & Humphery, 2000;Humphrey & Schmitz, 2000).…”

“…The GVC perspective advocated the idea that they are taking control over the key high value-added activities (Gereffi, 2001) and attempted to enhance our knowledge on the nature of this control by directing attention to asymmetrical power relationships between TNCs and their suppliers (Barnes & Kaplinsky, 2000;Layan, 2000;Humphrey, 2003b;Humphrey & Memedovic, 2003;Barnes et al, 2004;Posthuma, 2005). On the ways in which TNC chains are coordinated in the automotive industry, Sturgeon (2003) observes that there is a move towards modular chains, but the subject has not received sufficient attention with regard to supply chain dynamics with suppliers in the periphery of automotive production, especially when compared with the recent attention given to the supply chain dynamics between assemblers and their direct suppliers and the changing inter-firm relations between them (Sturgeon & Florida, 2000;Dicken, 2003;Sturgeon & Lester, 2004;MacDuffie & Helper, 2005).…”

The Dynamics of Regional Economic Integration: A System Dynamics Analysis of Pathways to the Development of Value Chains in the Southern African Customs Union

“…This has given rise to the 'supplier parks' trend. This restriction implies that only commodity items can enter the regional value chains from distant locations 5 [19], [20].…”

Reducing Complexity in the Industrial Policy Debate

“…Such active industrial policy can take many forms but the common characteristic is the combination of high challenge and high support. While rarely presented in this way, researchers, advisers, and policymakers seem to gravitate increasingly towards this position (for example Altenburg et al 1998;Barnes et al 2004;Kaplinsky 2005;Lall 2003;Lall and Teubal 1998;Morris and Barnes 2005;Rodrik 2004;Westphal 2002;UNIDO 2002 Industrial policy is about influencing the decisions of entrepreneurs. These decisions can be influenced by challenging the entrepreneurs (for example increasing competitive pressure) and by supporting them (for example providing financial or technical assistance).…”