Abstract:
The South African economy has an enormous task of addressing the triple challenges
of high unemployment, poverty and inequality. There is a growing concern that sluggish
economic performance and these challenges are putting the countryÕs young democracy
at risk. There is a belief that manufacturing sector growth spurs economic growth and
employment. Re-industrialization is an important policy to promote economic growth and
the government has adopted a National Industrial Policy Framework to promote and
facilitate re-industrialization. This study is an attempt to enhance and inform the
robustness of the industrial policy design and implementation in South Africa.
The study utilized a Vector Error Correction model to evaluate the impact of reindustrialization
on economic growth and employment in South Africa. The sectoral
output and employment data series were obtained from Statistics South Africa. The
output and employment data covered the periods 1993 first quarter to 2016 fourth quarter
and 2012 third quarter to 2017 first quarter respectively. The results revealed that the
manufacturing sector output growth had a significant impact on trade, transport and
mining sectors while the manufacturing sectorÕs employment growth does not
necessarily guarantee employment growth in other sectors of the economy with the
exception of the transport sector.
