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Is manufacturing the silver bullet engine of growth for South Africa?
This research paper is inspired by the developing country trap of South Africa, evidenced by over a decade of high inequality, high unemployment and stagnating economic growth. At the peak of industrialisation developed countries sustained economic growth, while developing countries experienced path...
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| Format: | Thesis |
| Language: | English English |
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Graduate School of Business (GSB)
2026
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| _version_ | 1867613528261656577 |
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| access_status_str | Open Access |
| author | Nongalo, Philiswa |
| author2 | Alhassan, Abdul Latif |
| author_browse | Alhassan, Abdul Latif Nongalo, Philiswa |
| author_facet | Alhassan, Abdul Latif Nongalo, Philiswa |
| author_sort | Nongalo, Philiswa |
| collection | Thesis |
| description | This research paper is inspired by the developing country trap of South Africa, evidenced by over a decade of high inequality, high unemployment and stagnating economic growth. At the peak of industrialisation developed countries sustained economic growth, while developing countries experienced pathological premature de-industrialisation marked by economies that fail to realise their full potential resource utilisation, employment and growth. The Kaldorian framework established the manufacturing sector as serving a critical role in inducing sustainable growth of the economy. This framework articulated the manufacturing sector's dynamism and tradability, positioning it ahead of other sectors to drive their growth and facilitate intersectoral relationships. In addition, the success of the South Asian economy propelled by modern Information and Communication Technology (ICT) services-led growth has inspired a debate on the services sector as an alternative to manufacturing engine of growth. Within this context, this research examines re-industrialisation of the economy as a means to attain rapid growth. The research also examined value added and labour productivity (LP) growth per sector from 1991 to 2021, which are proxies of economic performance. Using the vector autoregression (VAR) multivariate ordinary least squares (OLS) model, the Granger causality was examined to test for intersectoral relationships amongst the sectors. Contrary to Kaldor's theory of the growth pulling effect of the manufacturing sector (Kaldor,1966,1968), the data analysis suggested that the manufacturing sector does not Granger cause growth of other sectors. Instead, a unidirectional relationship was observed wherein the growth in value of services and agriculture Granger cause manufacturing. Additionally, productivity in services, agriculture and the non-manufacturing Granger cause the LP of the manufacturing sector. The bidirectional relationship between the manufacturing sector and the services sector, confirmed by research on the export of intermediate goods, forms a strong evidence basis for the implementation of a targeted multi sub-sector investment policy. Moreover, long-term equilibrium was established for value added and LP growth per sector. The findings showed that manufacturing share of employment drives an increase in gross private savings (GPS) and TFP in the long term. Insignificant impact in the short term for total factor productivity (TFP) was observed. In the long term, periodic convergence to equilibrium for the GPS was observed, while a stable long-run relationship was established for TFP. |
| format | Thesis |
| id | oai:open.uct.ac.za:11427/42567 |
| institution | University of Cape Town (South Africa) |
| language | English eng |
| last_indexed | 2026-06-10T12:37:34.876Z |
| license_str | Not specified — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from UCTD — University of Cape Town Open Access Repository |
| publishDate | 2026 |
| publishDateRange | 2026 |
| publishDateSort | 2026 |
| publisher | Graduate School of Business (GSB) |
| publisherStr | Graduate School of Business (GSB) |
| record_format | dspace |
| source_str | UCTD — University of Cape Town Open Access Repository |
| spelling | oai:open.uct.ac.za:11427/42567 Is manufacturing the silver bullet engine of growth for South Africa? Nongalo, Philiswa Alhassan, Abdul Latif Silver bullet engine South Africa This research paper is inspired by the developing country trap of South Africa, evidenced by over a decade of high inequality, high unemployment and stagnating economic growth. At the peak of industrialisation developed countries sustained economic growth, while developing countries experienced pathological premature de-industrialisation marked by economies that fail to realise their full potential resource utilisation, employment and growth. The Kaldorian framework established the manufacturing sector as serving a critical role in inducing sustainable growth of the economy. This framework articulated the manufacturing sector's dynamism and tradability, positioning it ahead of other sectors to drive their growth and facilitate intersectoral relationships. In addition, the success of the South Asian economy propelled by modern Information and Communication Technology (ICT) services-led growth has inspired a debate on the services sector as an alternative to manufacturing engine of growth. Within this context, this research examines re-industrialisation of the economy as a means to attain rapid growth. The research also examined value added and labour productivity (LP) growth per sector from 1991 to 2021, which are proxies of economic performance. Using the vector autoregression (VAR) multivariate ordinary least squares (OLS) model, the Granger causality was examined to test for intersectoral relationships amongst the sectors. Contrary to Kaldor's theory of the growth pulling effect of the manufacturing sector (Kaldor,1966,1968), the data analysis suggested that the manufacturing sector does not Granger cause growth of other sectors. Instead, a unidirectional relationship was observed wherein the growth in value of services and agriculture Granger cause manufacturing. Additionally, productivity in services, agriculture and the non-manufacturing Granger cause the LP of the manufacturing sector. The bidirectional relationship between the manufacturing sector and the services sector, confirmed by research on the export of intermediate goods, forms a strong evidence basis for the implementation of a targeted multi sub-sector investment policy. Moreover, long-term equilibrium was established for value added and LP growth per sector. The findings showed that manufacturing share of employment drives an increase in gross private savings (GPS) and TFP in the long term. Insignificant impact in the short term for total factor productivity (TFP) was observed. In the long term, periodic convergence to equilibrium for the GPS was observed, while a stable long-run relationship was established for TFP. 2026-01-14T06:49:08Z 2026-01-14T06:49:08Z 2025 2026-01-14T06:35:45Z Thesis / Dissertation Masters Masters http://hdl.handle.net/11427/42567 en eng application/pdf Graduate School of Business (GSB) Faculty of Commerce University of Cape Town |
| spellingShingle | Silver bullet engine South Africa Nongalo, Philiswa Is manufacturing the silver bullet engine of growth for South Africa? |
| thesis_degree_str | Master's |
| title | Is manufacturing the silver bullet engine of growth for South Africa? |
| title_full | Is manufacturing the silver bullet engine of growth for South Africa? |
| title_fullStr | Is manufacturing the silver bullet engine of growth for South Africa? |
| title_full_unstemmed | Is manufacturing the silver bullet engine of growth for South Africa? |
| title_short | Is manufacturing the silver bullet engine of growth for South Africa? |
| title_sort | is manufacturing the silver bullet engine of growth for south africa |
| topic | Silver bullet engine South Africa |
| url | http://hdl.handle.net/11427/42567 |
| work_keys_str_mv | AT nongalophiliswa ismanufacturingthesilverbulletengineofgrowthforsouthafrica |