Expansion and Diversification in the MER Sector: Results from an Enterprise Survey

Caitlin Allen Whitehead, Haroon Bhorat, Robert Hill, Timothy Köhler () and Francois Steenkamp

Working Papers from University of Cape Town, Development Policy Research Unit

Abstract: This paper details the constraints to overcome, and the capabilities required, to realise frontier product industrial diversification opportunities – as identified in Allen-Whitehead and Bhorat (2021) – in the Manufacturing, Engineering and Related Services (MER) sector (a core component of South Africa’s broader manufacturing sector). Specific focus is placed on the extent to which the skills of the MER sector workforce constrain, and/or enable, the realisation of these industrial diversification opportunities. These research objectives are addressed by conducting statistical analysis on representative establishment-level data obtained from the 2021 MER Sector Enterprise Survey. The paper offers an analysis of the MER Sector Enterprise Survey dataset by describing the distribution and characteristics of MER sector establishments, the employment and skill structure of these establishments, and their productive structure. We examine the constraints these establishments face in realising frontier product growth and diversification, with specific focus on skills constraints, and the extent to which these establishments face skill shortages and skill mismatches. Drawing on these findings, the paper offers a policy discussion that provides critical input into industrial, innovation and education policy specific to the MER sector, and the manufacturing sector more broadly.

Keywords: Economic complexity; manufacturing; industrial relatedness; product space; structural transformation; expansion; intensification; diversification; skills constraints (search for similar items in EconPapers)
JEL-codes: O13 O14 O25 (search for similar items in EconPapers)
Pages: 99 pages
Date: 2022-11
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Published in Working Paper Series by the Development Policy Research Unit, November 2022, pages 1-99

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