Title: Network Partners for Capacity Building and Knowledge Exchange in thre Telecommunications Sector
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2Innovation System and InequalityThe Experience
of South AfricaPresentation 29 January 2010
- Luci Abrahams, Wits LINK Centre Thomas Pogue,
IERI, TUT
3ONE TRENDS AND PATTERNS OF INEQUALITY
- Inequality has defined South Africas political
economy historically and continues to be an
intractable reality, with race, class, gender and
geographic dimensions. - This paper traces trends in interpersonal and
inter-regional inequality since the establishment
of a democratic state in 1994. - Reviews key aspects of the co-evolution of the
innovation system, side by side with current and
historical inequality in the SET workforce and
inequality in the benefits of innovation output. - Poverty and inequality can be examined from at
least five perspectives, namely income, assets,
services, infrastructure and knowledge income,
housing assets, health and education services and
in knowledge infrastructure.
4SA Gini Coefficient by District
(2001)
GINI Co-efficient measures level of
inequality. Darkest districts are poorest
- Source Craig Schwabe, HSRC, Census 2001
5Percentages of Households with Telephones (by
district, 2003)
Source HSRC, 2006
6 of Households with Mobile Telephony (by
district, 2003)
Source HSRC, 2006
Source Statistics South Africa
7NRD survey Table 1.4 Provincial split of RD 2005/06
Business enterprise Business enterprise Government Government Higher education Higher education Not-for-profit Not-for-profit Science councils Science councils Total Total
Province R 000 R 000 R 000 R 000 R 000 R 000
E Cape 242,692 2.9 84,071 10 214,701 7.9 6,589 2.9 123,956 5.9 672,008 4.7
Free State 476,346 5.8 41,856 5 146,823 5.4 3,687 1.6 50,197 2.4 718,908 5.1
Gauteng 4,643,864 56.3 291,639 34.5 1,030,801 37.7 104,002 45.9 1,103,284 52.5 7,173,590 50.7
KZN 843,499 10.2 72,131 8.5 379,681 13.9 35,036 15.5 201,811 9.6 1,532,158 10.8
Limpopo 84,187 1 15,917 1.9 43,564 1.6 5,329 2.4 48,058 2.3 197,054 1.4
Mpumalanga 187,934 2.3 36,001 4.3 58,549 2.1 10,238 4.5 48,051 2.3 340,773 2.4
North-West 180,227 2.2 20,857 2.5 73,457 2.7 3,547 1.6 45,751 2.2 323,838 2.3
N Cape 14,691 0.2 42,539 5 15,263 0.6 1,650 0.7 64,284 3.1 138,426 1
W Cape 1,570,336 19 239,630 28.4 769,378 28.2 56,436 24.9 416,702 19.8 3,052,483 21.6
Total 8,243,776 100 844,640 100 2,732,215 100 226,514 100 2,102,094 100 14,149,239 100
8Table 1 Magisterial Districts with the Largest
Population (2001) Source Provincial Profile of
the Free State, Development Bank of Southern
Africa, May 2003
District Population (2001) of Provincial Total
Sasolburg 114 450 3.85
Botshabelo 202 661 6.83
Welkom 264 781 8.92
Witsieshoek 348 781 11.75
Bloemfontein 377 968 12.73
Odendaalsrus 104 262 3.51
9Historical Patterns of Inequality
- 49.3 million people living in more than 12
million households, South Africas economic
production concentrated in six urban centres - South Africa 129/182 countries HDI of 0.683
(2007), lower country position for life
expectancy at birth and stronger positioning on
adult literacy, combined gross enrolment ratio
and GDP per capita (UNDP, 2009). HIV/AIDS
influencing population trends, est.5,2 million
people living with the virus. - Approximately 70 of South Africas population or
35 million people live outside the six
metropolitan areas predominant economic activity
is community services. Western Cape, Eastern
Cape and KwaZulu-Natal very large rural town and
village populations 6 million each KZN and
Eastern Cape, living from agriculture,
subsistence farming, informal tourism, social
grants (StatsSA, 2009).
10Interpersonal Inequalities income and
consumption
- GDP ZAR2283.8bn GDP per capita ZAR46800
- Income inequality is extremely high at a ratio of
431 - Income inequality has risen in the period post
democracy, signalling the rise of a relatively
large black middle class and a continued rise in
unemployment arising from job losses in mining
and agriculture and by a shift in the sectoral
earnings shares from manufacturing and trade to
government, the FIRE and construction sectors, at
lower average wage rates. - Bhorat, van der Westhuizen Jacobs (2009, p.57)
increasing levels of wage inequality partly
attributable to skill premium paid to highly
skilled workers. - Of total employment 13.3 million (June 2009), SA
has a very small informal sector of around 2,1
million (excluding agriculture and domestic
employment) or less than 16 of the total
employed, significantly lower than either Brazil
or India
11Innovation-focused ST and RD activities and
outputs
- Services sector dominant, then manufacturing,
mining in decline - ..strengths and weaknesses of the provincial
economy are apparent. The economic profile of
Xhariep district is largely agricultural with
further tourism potential to be exploited around
the Gariep Dam and the Diamond and Wine Route.
The Lejweleputswa district relies on gold mining
with a contribution to GGP from agriculture and
trade and a small contribution from
manufacturing. Northern Free State has a largely
manufacturing base, with the petrochemical hub at
Sasolburg, a significant services sector and a
contribution from agriculture. Motheo district
relies largely on the services and government
sectors, while the Thabo Mafutsantyana district
has a high dependence on agriculture with a
contribution from tourism that could be further
exploited.
12Consumption patterns
- Most important asset class for SA majority is
housing. In 2008, 73.5 of households lived in a
formal dwelling, 10.5 in a traditional dwelling
and 1,8 million h/h or 13.4 in informal
settlements. (Government RSA, 2009, p.30).
Significant demand for rental housing by
individuals earning below R7500 per month (FFC,
2009 p. 59). - Middle class chooses private schooling and
healthcare, at a premium price, with innovation.
Public sector provides economic and social
infrastructure, as well as community and personal
services, with extremely limited innovation. - Demand for innovation in services visible across
income levels. Public sector most visible
demand in health services (HIV/AIDS,
tuberculosis, other), policing and crime
reduction, public transport, energy and
electronic communications with government.
Private sector, demand most visible in banking,
access to finance and mobile communications. -
13Interregional Inequalities
- SA economy dominated by Gauteng, consistent share
of 1/3 - of GDP 2002 2007 as compared to share of 1/5
of population - Decline in output inequality attributed in part
to relatively constant share of output relative
to increase or decrease in population size eg
Gauteng constant output share (34) with increase
in population share, Eastern Cape constant share
of output (8) but population share declined 1995
2007 - Absolute exclusion of small towns from meaningful
output, and innovation - Gauteng Western Cape consistently greater
contributors to economic output relative to their
population size. Five provinces North-West, Free
State, Limpopo, KZN, and Eastern Cape
consistently generating less output relative to
their population shares explanation partly
relatively higher concentration of urban
populations for the former and rural populations
for the latter provinces
14Class, Race, Gender and Inequality
- Inter-racial inequality historical and remains a
factor for a large proportion of the population.
However, decadal rates of change indicate that
intra-racial inequality is also an increasingly
important characteristic of income inequality
post-1994 intra-racial inequality increased for
all populations African, Indian, Coloured and
White. - Increases in class and gender inequality within
these historically racial groups, as new
opportunities in high-income jobs and business
ventures began to determine the shape of
inequality in South African society on a class
and gender basis.
15Summative Remarks
- Public policy seeks to increase per capita income
and to reduce unemployment. Requires innovation
in redistributive mechanisms, capacity of society
to move towards sustainable livelihoods through
distributive means over the next two to three
decades, productive capacities need to be geared
towards making the benefits of science and
technology more broadly available to society. A
greater proportion of the benefits of investment
in innovation must go to the 40 of the
population with the lowest income. -
- South African society requires political,
business and community leadership to build
sustained efforts to shift structural inequality
as the only means of increasing income for the
lowest quintile of the population and pushing the
African mean income levels strongly towards the
total mean income level.
16Summative Remarks
- Given the current shape and size of the South
African economy and its relative positioning in
the global economy, strategies to address
structural inequality will require major shifts
in economic policy, charting a direction away
from reliance on low wage-labour resource mining
towards medium-high technology production.
Changing the history of centuries of
dispossession and inequality will also require
strategies to increase sustainable subsistence
agriculture and to reposition South Africas
rural provinces with respect to participation in
the local and global knowledge economy. - For each province, some potential for structural
change exists. Though the change trajectory may
occur over more than two decades, agendas can be
set now eg Gauteng global city-region 2055 and
KZN knowledge economy focus and ICT and
electronics cluster. Comparative advantages of
Limpopo, Free State and Eastern Cape in terms of
their future positioning in the productive system
must be assessed, theorised and strategised. The
role of RD and innovation in this strategic
positioning must come under scrutiny.
17Summative Remarks
- Comparative advantages of Limpopo, Free State and
Eastern Cape in terms of their future positioning
in the productive system must be assessed,
theorised and strategised. - The role of RD and innovation in this strategic
positioning must come under scrutiny.
18 TWO CO-EVOLUTION OF INNOVATION SYSTEM AND
INEQUALITY
- Various elements of innovation in the production
system and inequality mutually reinforce each
other - private sector domination of RD and
unequal access to the global production network.
Market driven trade and investment under
globalization are briefly examined. - Public sector orientation towards supporting SET
innovation biased towards the production system
for increased global competitiveness, limited but
increasing ? support for research to support
social objectives.
19 TWO CO-EVOLUTION OF INNOVATION SYSTEM AND
INEQUALITY
- Dialectical relationship between relative
strength and focus of the innovation system, and
the state of inequality in South Africa Low
levels of RD investment and the selective focus
on innovation in manufactured goods over nearly
three decades has contributed little to SME
development, as the majority of SMEs operate in
the broad services sector economic development
amongst historically disenfranchised communities
has moved at a slow pace, despite the presence of
democratic government. - Policy emphasis (15 years), and also investment
focus BEE model based largely in asset
structuring and deal financing, rather than in
promoting innovation in black-owned business, in
small firms, in the informal sector or in social
ventures. Inhibitors in education and health
sectors poor progress towards fostering
successive generations of researchers, knowledge
workers and entrepreneurs.
20 National System of Innovation and Production
Dynamics
- Large services sector 65 of sectoral value-added
1999 - 2006. FIRE and business services 30 of
service sector value-added. Between 1999 and 2006
the sectoral value-added in services grew at a
compound annual growth rate of 5.8. - During this period, agriculture accounted for
three percent of value-added, the mining and
quarrying sector was a further eight percent and
manufacturing contributed 19. Secondary
industries which consist of manufacturing,
utilities, and the construction sector accounted
for 24 of national value-added during this
period. Secondary industries grew at an
annualized rate of 5.2, less than that of
services and the 5.5 annualized growth in the
primary sectors of agriculture and mining. - Does local manufacturing need a stronger
innovation push? - Does agriculture? And services is 5.8 good
enough for who?
21 Formalised RD and innovation
- CSIR, ARC, HSRC, AI - while a number of these
agencies have initiatives in social innovation,
there is no single agency focused on exploring
RD and innovation for social development for
services for the second economy - Six research-intensive universities have built a
strong knowledge base in a wide range of
disciplines and in multi-disciplinary areas
feeding competitiveness and societal development
what about the others? Not even social research
or local applications/ideas? - R16,5 billion total innovation expenditure
including RD around R27bn in 2004. - Formalised RD excludes the poor!
22 Formalised RD excludes the poor!
- 87 of expenditure to the natural sciences,
engineering and technology 12 to the social
sciences and humanities. - Engineering sciences, medical and health
sciences, and the ICT sector each receive
relatively high shares (between 13 and 20)
while the environmental, materials and marine
sciences (less than 2) of RD expenditure. - By socio-economic objective, 62 relates to
economic development objectives including
manufacturing, mineral resources and commercial
services (each receiving a share between 8 and
13) expenditure on RD in key areas such as
energy resources and supply, education and
training, and environmental knowledge receive
relatively low shares of total expenditure (5 or
less in each case) (DST, 2007). - The e-fields (energy, education, environment)
innovation in great demand yet investment
consistently low over a long period.
23 However
- The business sector is the dominant force in
funding and performing RD. This is a positive
factor from a business perspective, but it would
appear that research efforts have not yet
resulted in the increased development of medium-
to high-technology goods and knowledge-intensive
services (NACI, 2008) - The total number of researchers is 1,5 per
thousand employed persons, comparable to Brazil
and China, but low as compared to the Russian
Federation at 6.8 per thousand - Majority of research producing universities and
scientific performing/funding agencies in
Gauteng, historically due to science system
developing around the attractive forces of
economic demand and the seat of government, this
clustering may today play a part in stagnation in
the contribution of RD to the local economies
outside of Gauteng province.
24 However
- Provinces such as KZN and the Free State seeking
to reinvent their economies as knowledge-based
economies and are accordingly making the
requisite infrastructure investments or
considering new economic strategies Innovation
is not a quick fix, it needs sustained efforts
(Lan Xue, 2009) nor is it a trivial exercise. - South Africa is generally an importer of know-how
and technology - As regards technological innovation and original
manufacture or process development, the
contribution of innovation to economy and society
has remained at the level of adoption of complex
technologies by business and industry, as
compared to innovation in government or the
not-for-profit sector, according to National
Experimental Research and Development survey data
for 2006/7.
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27And so
- Historical competitiveness in the low-tech and
medium-tech sectors slowly being enhanced by
competitiveness in the medium-high tech sector,
driven largely by a decade-long upward trend in
the export of automotive components and fully
built-up motor vehicles. - However, mining is still South Africas largest
export sector. - Participation in the global high-technology
production sector is minimal (3) and static. - Given the structure of the economy and employment
in low and medium-low technology intensive
sectors, the South African labour force has
witnessed limited adoption of medium-high and
high-technology tools and processes in the
workplace - But innovation funding focused in hi-tech and
knowledge-intensive areas is this the right
choice? Innovation also needed in lo-tech
medium-lo-tech (mining, agriculture, SME),
services, and society -
28Figure 2 Composition of exports 2003-2007
Source Calculations based on South African
Revenue Services Trade Data following OECD
guidelines (Hatzichronoglou, 1997).
29Access to Health and Education
- Quality of health and wellbeing of the general
population and the level of participation in
higher education are contributing factors to the
capacity of people to engage in RD and
productive innovation and to grow the countrys
knowledge base - Why? low participation rate in higher education
(15) (NACI 2008, p.6) and post-graduate studies,
creates a major barrier to the ability of the
current and future generations to participate in
the evolution of an innovative productive system
with the potential to increase household income
and per capita GDP - Same applies with childhood poverty, including
malnutrition and quality of education
30Table 5 Household amenities
2002 2003 2004 2005 2006
Water in house or on site 61 68 68 68 70
2002 2003 2004 2005 2006
Access to Electricity 76 79 80 81 81
2002 2003 2004 2005 2006
Toilet in dwelling 36 37 37 37 38
Source Table derived from Statistics SAs
General Household Surveys.
31Current and Future RD Capacity
- Major factors race and gender OR gender and
race - While the proportion of female academic staff in
universities increased for the period 1992 2001
and the proportion of female RD staff in science
councils increased in the period 1996 2001,
both groups tended to be less qualified than
their male counterparts, especially at the
Doctoral level (DST NACI 2004, pp. 20 - 23). - Furthermore, the upward trend in womens
participation was marred by the low proportion of
African, Coloured and Indian women in
universities (30) and science councils (33). - In particular, womens participation in the
natural sciences and engineering was very low,
from around 9 for instruction staff and 14 for
research staff in engineering and engineering
technology to around 35 and 29 respectively in
the mathematical sciences. Only computer science
and data processing showed reasonable levels of
participation at 46 and 40 respectively (ibid.,
p.26 - 27). -
32Current and Future RD Capacity
- Female students constituted the greater
proportion of all university enrolments and
graduations for the period 1992 2001, and while
the percentage of female postgraduate enrolments
increased in the same period, womens
participation at the upper postgraduate (Masters
and Doctoral) levels remained below the 50 mark
(NACI SET4W 2005, pp.8 - 19). - These observed trends appear to be changing with
respect to the future SET workforce. Data for
the period 2000 2005 (NACI SET4W, 2009)
indicates that women are approaching 50 of
enrolments and graduations at the upper
post-graduate level - When viewed by broad field of study the
proportion of female doctoral graduates increased
most substantially in the Engineering Sciences
and Applied Technologies (from 12 to 19) in
Humanities (from 30 to 38) and in the Social
Sciences (from 49 to 53). In the Health
Sciences, the female share of doctoral graduates
declined from 60 in 2001 to 57 in 2005 (ibid.,
2009, p.16). -
33Access to Financial Infrastructure
34Final thoughtsA few key features which
require the attention of policy-makers and
decision-makers in various spheres are
- Promoting stronger articulation between
innovation strategy on the one hand, and economic
and social strategy directions on the other hand
with respect to the services sector, in the
secondary and primary industries and with respect
to the SME and informal sectors. - Supporting current and future RD capacity in the
higher education sector and science councils as
far as the fiscus will reasonably stretch, while
encouraging business to increase RD and
innovation spend, as an investment in future
economic growth and competitiveness. -
35Final thoughtsA few key features which
require the attention of policy-makers and
decision-makers in various spheres are
- Enhancing access to educational resources and
improving the quality of the primary through
tertiary education experience, particularly with
respect to maths, science, technology and
language capabilities and with due attention to
closing the race, class and gender divides. - Promoting access to financial infrastructure and
reducing the costs of technology adoption,
particularly for promoting technology usage and
related innovation in the small business and the
informal sectors. -
-
36Thank you questions????
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