Abstract
M.Comm.
The aim of this study was to determine the level of capital and labour productivity in the South African manufacturing industry and their impact on the industry's level of competitiveness on the international markets. It was established at the outset that there is an important link between productivity and competitiveness. Before a quantitative analysis of South African manufacturing and that of some of this country's major international competitors could be done, it was first necessary to examine the theoretical foundations behind the concepts of productivity and competitiveness. It was found that international competitiveness can be judged in terms of the ability of industries to generate wealth more rapidly than their international competitors. It was established that the main driving force for achieving these goals is growth in the productivity of input factors. This, in turn, is determined by growth in human capital, research and development, government policies and economies of scale. Various macroeconomic measurements of productivity and competitiveness were examined. At the domestic level these included growth in domestic investment as a necessary requirement for increasing the capital stock and capital-labour ratio, as well as measurements of the level of domestic education. In order to make international comparisons unit labour costs; terms of trade; the real effective exchange rates and growth in exports were examined. The level of efficiency of the utilisation of input factors, capital and labour, was found to be critical to productivity performance. In the context of the Cobb-Douglas production function marginal productivity and the marginal rate of technical substitution were examined. That the ultimate aim of a production process is the optimal combination of input factors was highlighted and the efficiency criterion as a technique was discussed. The optimal utilization of the budget outlay was established as a test of whether or not economic waste occurs, and the methodology for establishing whether economies of scale exist was examined.
The quantitative analysis of South Africa's international level of competitiveness at the macroeconomic level showed that South Africa's expenditure on research and development compares poorly with those of its competitors. Domestic savings as a percentage of GDP in South Africa is consistently below 20%, compared with 30 - 40% for Korea. In terms of growth in investment, South Africa did not fare too badly since the beginning of the 1990's compared to the industrialised countries. However, South Africa's investment level below 20% of GDP was far below that of Korea which was nearly 40% of GNP. It was found that South Africa's expenditure on education at about 20% of government expenditure was high in comparison to its competitors. However, the education level was shown to be inadequate, indicating that monies are not spent efficiently.