Technology-shy
But any such decline should be of concern. And it is the reasons for this that are particularly worrying because of their implications for long-term economic growth. Apart from perceptions about crime and corruption, based on surveys rather than hard data, the other substantial reason for SA’s drop in the rankings is that it is not making sufficient progress in a category the forum calls “technological readiness”.
The forum defines competitiveness as the factors that determine productivity and therefore prosperity. With an economic growth rate that is still not high enough to dent unemployment, SA desperately needs to boost its competitiveness. Sound economic policies and reasonable governance should help. But without an environment that allows for easier adoption of new technologies, it is unlikely that we will be able to do so, and will fast be losing ground.
Robert Solow won a Nobel prize in economics for contributing to a theory of economic growth that suggested growth came not only from new investments, but also from technical developments, better education, research and development, and methods that allowed for a rise in productivity.
Government is placing much of its hopes for higher economic growth on the massive investment push by parastatals Eskom and Transnet. SA needs to expand power supply and upgrade ports and railways. However, the contribution of these investments to SA’s long-run economic growth could be much lower than it should be if SA does not pay more attention to its “technological readiness”.
This is a catch-all category that the forum says is one of the key pillars of competitiveness.
According to hard data assessed by the forum, SA is being pulled back in this area by the relatively low percentage of the population with access to tertiary educational institutions, telephone lines, the low quality of competition among internet service providers, the low number of internet users and low penetration rates of personal computers, the internet and cellphones. It is not that SA is not making progress in these areas. Rather, the problem is that progress is not fast enough, especially compared with a number of countries in Asia.
There are other signs that indicate SA isn’t doing too badly in its ability to adopt technology. The forum’s report indicates SA’s competitive position is being boosted by the large number of foreign technology licences, university-industry research collaboration, and firm level technology absorption.
But overall, we are slipping. The causes are a combination of a poor education system and lack of access to telecommunications. SA needs a massive push to improve maths and science education, grounded on improving teaching standards.
However, most of the technology indicators the forum identifies as “notable competitive disadvantages” have to do with access to computers and telecommunications services. This is something that must be addressed, and urgently. The telecommunications market is a good place to start.
That Telkom has what is effectively a monopoly position and controls access to the undersea cable, the main route to the outside world, gives it pricing power. SA’s telecommunications costs are much higher than those of comparable countries.
The severity of Telkom’s stultifying grip on our economic growth and prospects is all the more serious given that access to broadband services is an important way of improving education.
INet-Bridge
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