The world economy is undergoing a period of structural and technological transformation, sometimes described as the ‘Fourth Industrial Revolution’. At the centre of this is the digitalisation of economic activity, which is being experienced differentially across the globe.
At the same time, with persistent mass unemployment and very high inequality, South Africa represents an extreme case of a set of challenges faced by middle-income countries. In South Africa digitalisation is occurring in an economy that has prematurely de-industrialised and is performing poorly. The country is, therefore, at an important juncture and there is an urgent need to develop policy responses to these challenges and opportunities that are promotive of the broader objective of inclusive growth.
This paper sets out key policy issues for a digital industrial policy. It builds on detailed industry level research, dialogues with industry stakeholders, and a colloquium held in November 2018.
Notwithstanding overall poor industrial performance, South Africa has areas of excellence in which firms are embracing the opportunities provided by digitalisation for efficiencies and supply chain integration. These examples point to what is possible and at the same time reveal gaps and shortcomings in the local institutional environment, especially with regard to the formation of appropriate workforce skills. Without a major increase in skills in essential crosscutting fields such as data science and software engineering, along with much higher rates of investment, the examples of excellence will remain islands of industrial success.
