Industrial Policy in South Africa: Targets, Constraints and Challenges

This paper examines industrial policy in Africa’s most developed and industrialized economy – South Africa. In the current discussions and deliberations as to how South Africa could significantly raise its rate of growth, industrial policy has moved to center stage. The Accelerated and Shared Growth Initiative for South Africa (ASGISA) outlines a number of key targeted sectors that will receive government support and the National Industrial Strategy (NIS) proposes a new approach and a considerable expansion of industrial policy supports. While focused on South Africa, this paper raises number of issues concerning the role of industrial policy generally and it questions a number of issues that were central to Sanjaya Lall’s views on industrial policy. It also addresses a number of additional issues that were not dealt with by Sanjaya, especially the significant institutional capacity constraints facing even the most developed African country, in effecting industrial policy. The paper argues that the institutional requirements for designing and implementing an effective industrial policy are very demanding. The paper then briefly propose a way forward for industrial policy that takes account of and works within these constraints and institutional limitations.