Innovation in services: The potential to contribute to structural economic transformation

Contrary to the view that diversification and structural change only result from industrialisation, there is growing consensus that the services sector can contribute to economic transformation in emerging economies. This is potentially good news for South Africa given the growth of the services sector to 65% of GDP by 2014, and the proliferation of Industry 4.0. This Research Brief uses data from the Business Innovation Survey 2010-2012 to illuminate the character of innovation activities* in two key services sub-sectors: wholesale and retail trade (WRT), and finance, real estate and business services (FI). These sub-sectors are now central to the South African economy in terms of their contribution to GDP growth, and their advancement is therefore a key consideration for economists, lobbyists, business leaders, and policy makers alike.

The Centre for Science, Technology and Innovation Indicators (CeSTII) is a statistical and policy research institute based at South Africa’s Human Sciences Research Council (HSRC).

CeSTII performs national surveys that underpin benchmarking, planning and reporting on R&D, innovation and technology transfer in South Africa, including the South African Business Innovation Survey 2014-2016.

Our Research Briefs are concise papers based our ongoing work. Their goal? To provide empirical evidence and informed opinion that policy- and decision-makers can use to strengthen the quality of their thinking and action.

Research Brief No. 3*

‘INNOVATION IN SERVICES: THE POTENTIAL TO CONTRIBUTE TO STRUCTURAL ECONOMIC TRANSFORMATION?’

Authors: Glenda Kruss, Moses Sithole, Cheryl Moses, Hlamulo Makelane and Precious Mudavanhu

*Data presented in this paper is drawn from the South African Business Innovation Survey 2010-2012. Research Brief No. 3 was first published in May 2018.

How South Africa’s services sector can help tackle poverty and inequality

Full Report: Innovation in the South African Manufacturing Sector, 2010-2012

Full Report: Innovation in Selected South African Services Sectors, 2010-2012

Some government mechanisms in support of innovation in South Africa

There is growing consensus that the services sector can contribute to economic transformation in emerging economies, contrary to the long-held orthodoxy that diversification and structural change only result from industrialisation. This is potentially good news for South Africa, given the growth of the services sector to 65% of GDP by 2014—growth that has occurred at the expense of the manufacturing and mining sectors. The risk is that growth in services may reflect new ways of increasing asset values through new types of speculative financial products that have a high GDP effect, but little effect on positive structural economic change. Bhorat et al (2016) therefore ask the core developmental question: Can South African exploit this shift to build globally competitive, employment-creating firms that can drive structural economic transformation? – Kruss, et al (2018)

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s