Linking R&D and Productivity in South Africa: The Moderating Role of Human Skills

Brian Tavonga Mazorodze (), Darlington Chizema and Phetole Emanuel Ramatsoma
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Brian Tavonga Mazorodze: Department of Accounting and Economics, Faculty of Economic and Management Sciences, Sol Plaatje University, Kimberley 8301, South Africa
Darlington Chizema: Department of Accounting and Economics, Faculty of Economic and Management Sciences, Sol Plaatje University, Kimberley 8301, South Africa
Phetole Emanuel Ramatsoma: Department of Accounting and Economics, Faculty of Economic and Management Sciences, Sol Plaatje University, Kimberley 8301, South Africa

Economies, 2025, vol. 13, issue 6, 1-22

Abstract: This study examines the impact of research and development (R&D) on productivity outcomes across South African industries. Drawing on an industry-level panel dataset covering 66 industries (6 mining, 37 manufacturing, and 23 services) stretching from 1993 to 2023, the study estimates how a change in the initial R&D stock affects labor and capital productivity over a five-year horizon using the Feasible Generalized Least Squares (FGLS) method. The results reveal a positive but weak elasticity of labor productivity to R&D stock (0.01–0.02%), consistent with existing literature. The effects on capital productivity are even lower (0.003–0.005%), suggesting that R&D more directly enhances labor productivity than capital. Sectoral estimations indicate that R&D has no significant effect on labor productivity in mining but a strong productivity effect in manufacturing and services—twice as large in the latter. In contrast, capital productivity gains are only evident in mining. Additionally, the study finds that R&D effects are larger in technology-intensive industries, and the productivity benefits increase with the share of skilled workers, underscoring the importance of absorptive capacity. Overall, the findings suggest that while R&D matters for productivity, its returns are stronger in human capital- and technology-intensive industries.

Keywords: R&D; labor productivity; capital productivity (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2025
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