ISSUES%20FOR%20DISCUSSION

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Science and Technology - Nourishing Growth
and Development in South Africa
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HOME SLIDE
NSTF/NACI Study on Growth Innovation in the
South African Economy
DACST/NSTF Review of the National System of
Innovation - key findings
Key Findings and Recommendations
Overview of the NSTF
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Growth and Innovation in South Africa.The
relationship between economic growth, employment,
human development and science and technology
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Scope of the Study

• Examine the impact of science technology on
  economic development in a variety of countries
• Examination of international evidence
• Examination of South African evidence
• Identification of key science and technology
  drivers for the South African economy
• Identification of policy options for South Africa

Undertaken by- Prof JW Fedderke Econometric
Research Southern Africa (ERSA) Wits University
Reviewed by- M Molewa Ikemeleng
Molewa Consolidated Investments (Pty) Ltd
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Why does South Africa need growth?

• Growth, Employment and Redistribution (GEAR)
  Macroeconomic strategy mandates growth for
  development
• Competitive, fast growing economy which creates
  jobs
• Redistribution of income and opportunities
• Sound health, education and other services for
  all
• Secure homes and places of work

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Why does South Africa need growth?

• Growth, Employment and Redistribution (GEAR)
  Macroeconomic strategy mandates growth for
  development
• Competitive, fast growing economy which creates
  jobs
• Redistribution of income and opportunities
• Sound health, education and other services for
  all
• Secure homes and places of work
• African Renaissance

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THE AFRICAN RENAISSANCE

• Rediscovery and new understanding of our
  pre-colonial, colonial and postcolonial heritage
  and an appreciation of the value of age-old
  indigenous knowledge
• The exercising of the right to define what it
  means to be African, and to find unique African
  solutions for African problems, whilst developing
  a pride of all things African

For Africa to realise this potential and
take our rightful role in the world economy, we
must grow our economies and develop our societies
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Why does South Africa need growth?

• Growth, Employment and Redistribution (GEAR)
  Macroeconomic strategy mandates growth for
  development
• Competitive, fast growing economy which creates
  jobs
• Redistribution of income and opportunities
• Sound health, education and other services for
  all
• Secure homes and places of work
• African Renaissance
• There exists a long term structural decline in
  South Africas growth performance

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SA Growth History
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Why does South Africa need growth?

• Growth, Employment and Redistribution (GEAR)
  Macroeconomic strategy mandates growth for
  development
• Competitive, fast growing economy which creates
  jobs
• Redistribution of income and opportunities
• Sound health, education and other services for
  all
• Secure homes and places of work
• African Renaissance
• There exists a long term structural decline in
  South Africas growth performance
• There exists a long term structural decline in
  South Africas employment creating potential

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Total Formal Sector Employment
8500000
8000000
7500000
Employment
7000000
6500000
6000000
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
Year
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Why does South Africa need growth?

• Growth, Employment and Redistribution (GEAR)
  Macroeconomic strategy mandates growth for
  development
• Competitive, fast growing economy which creates
  jobs
• Redistribution of income and opportunities
• Sound health, education and other services for
  all
• Secure homes and places of work
• African Renaissance
• There exists a long term structural decline in
  South Africas growth performance
• There exists a long term structural decline in
  South Africas employment creating potential
• We have insufficient capacity to improve quality
  of life in South Africa

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Quality of Life
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RSA
The Intimate Link between Real per Capita GDP
Quality of Life
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The Intimate Link between Real per Capita GDP
Quality of Life
RSA
Growth in Real GDP is a precondition of improved
quality of life
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South Africa needs to grow how do we achieve
this?

• Globally, economic growth is essentially due to
  three distinct sources -
• Growth in physical capital inputs into production
  - investment, whether local or foreign.
• Growth in labour inputs to production - more
  workers producing more.
• Improvements in technology - improved efficiency
  and new products into new markets - innovation

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Has Technology Played a Role in the Economic
Development of OECD Nations?
THE ANSWER IS DEFINATELY "YES"!!
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Relative contributions - developed countries
versus developing countries
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The South African Situation
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Some conclusions on growth

• Technological innovation is key to the
  achievement of economic growth - in South Africa
  and globally
• In line with global developmental paths, South
  Africa has had an increasing proportion of growth
  explained by technological progress
• South Africa is moving from an extraordinary to a
  standard pattern of development

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The question is, how does one leverage
innovation so as to achieve this growth?
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The Relationship Between Innovation and Economic
Growth

• Direct influence through new business
• Knowledge spill-overs - technology transfer
• Intentional R D investment
• Creation of an enabling environment
• Development of the right sort of human capital

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Three Key Ingredients for leveraging Science,
Engineering and Technology to Achieve Economic
Growth
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1. RD Investment
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Evidence that RD contributes to economic growth

• Internationally well established that
  technologys contribution to economic growth is
  strongly reliant on the extent and scope of
  national RD programmes
• Internationally there is a direct and positive
  correlation between RD and output growth
• Spill over effects can be even more than the
  growth benefits (social returns exceed private
  rates of return)
• The USA case study
• Mirrored in SA
• Eskom results average 51 returns
• Agricultural research results gt1.21 returns

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Case Study - Why the USA succeeded

• Technological innovation through massive RD
  investment
• Natural resource base, and the scale of its
  markets
• Encouraging immigration from technologically more
  advanced countries
• Implementing a system of training institutions
  with a wide diversity of focus areas early on in
  its process of industrialisation
• The development of a national technology ethic
  national leadership in science-based fields
• Technology is advanced through community, rather
  than individual isolated effort.
• Developed the necessary RD infrastructure-
• absorption of a vast stock of technology into
  existing production facilities able to take
  advantage of economies of scale
• by the end of the 19th century the USA had a
  nation-wide university system,
• US industry has set up independent research
  centres

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Gross Expenditure on RD/GDP
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SAs Research Technology Competitiveness
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2. Investment in Human Capital
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Average Growth Rate in Real Per Capita GDP vs
Primary School Enrolment Rate
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Output vs Mathematics, Engineering and Science
degrees - SA Data
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Proportion of SA degrees in Mathematics and
Natural Sciences
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Proportion of Matriculants with Mathematics
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The Answer is not moneybut efficiency
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Opportunities for SA to catch up

• Declining transport costs and falling trade
  barriers - increased flow of world trade,
  therefore domestic markets are less important
• Technology has become increasingly accessible to
  those with the correct skills and training
• Development of multinational firms - production
  tends to be globally rather than nationally
  located
• Technologies have begun to resemble pure science
  - increased citation of scientific literature in
  patents, especially in chemical products,
  electronics, and bio technology. Anybody with the
  skills to interpret the scientific literature, is
  in a position to gain access to the technology.
• Proven impact of a workforce trained in science
  and engineering, and an increased proportion of
  GDP allocated to RD,
• Proven impact of governments support for
  technological innovation

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a well-educated labour force, with a strong
cadre of university trained engineers and
scientists at the top, is now a requirement for
membership in the convergence club. This is not
to denigrate the continued importance of hands-on
learning by doing and using, but in modern
technologies this is not sufficient. It is no
accident that countries like Korea and Taiwan,
which have been gaining so rapidly on the world
leaders, now have populations where secondary
education is close to universal for new entrants
to the work force, and where a significant
fraction of the secondary school graduates go on
to university training (Nelson and Wright).
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2. Investment in Physical Capital Stock
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Investment in Physical Capital Stock is still
important...

• Investment in physical capital stock - whether
  from local or foreign sources, is essential to
  ensure the transformation of innovative RD
  outputs into final products as well as to provide
  the opportunities for human capital to deliver
• This requires a well defined and stable policy
  environment and should focus in efficient and
  innovative production technologies

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The Role of Small Business in this equation
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The International Picture
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Employment Creation
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Income Improvement
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Key conclusions

• South Africas economy needs an injection of
  innovation
• Technology plays a substantial role in successful
  economies
• Technology has come to underpin growth in South
  Africa
• Investment in RD boosts economic growth
• Investment in human capital boosts economic
  growth
• Investment in physical capital stock is still
  essential
• Small business can be a key enabler in maximising
  the contribution of SET to the South African
  economy

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Key Findings and Recommendations
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Key Issues for technological advancement in SA

• 1. Technology and innovation matter for long-term
  growth internationally and have become
  increasingly important for the SA economy
• 2. Technological advancement and innovation
  depend on the existence of appropriate enabling
  environments and policies
• 3. The appropriate enabling environment for
  technological advancement and innovation depends
  on sufficient resources being devoted to RD
• 4. A crucial resource for research and
  development is human capital
• 5. Maths and science are core to developing human
  capital for technological innovation and economic
  growth

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Key Issues for technological advancement in SA

• 6. Given the declining trends in both school and
  university training in maths and science in South
  Africa, identifying the means of attracting and
  retaining good teachers to these subjects is
  vital. Attracting good students to them follows
  as a close second.
• 7. The answers do not lie with more expenditure
  on education - but with better allocation of
  expenditure on education.
• 8. Public-private partnerships should be explored
  as a means of generating the sort of investment
  in innovation and human capital that South Africa
  needs.
• 9. Mechanisms to promote increased levels of
  investment in innovation, human capital and
  physical capital stock are essential for economic
  growth in South Africa - especially those
  mechanisms involving SMMEs. (See NSTF/DACST
  review of the NSI)

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NSTF/DACST Review of the National System of
Innovation (NSI)
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DACST/NSTF Review of the NSI

• White Paper was a major step forward
• Major progress in implementation - PUSET,
  Foresight, Audit, Public Science System reviews,
  Innovation fund
• NSTF discussion with Minister of Arts, Culture,
  Science and Technology - mid 2000
• We have achieved enormous progress in
  delivering on the White Paper, but what do we
  need to do now to move into a new era of
  innovation for South Africa
• NSTF Plenary - Sept 2000
• Input from various Government Departments
• Caucus discussions
• Plenary debate - major actions identified
• Synthesis document compiled and submitted to
  DACST
• Debated and actions developed with DACST

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Actions to Progress the National System of
Innovation

• PUSH FOR THE NSI AS A NATIONAL IMPERATIVE
• Develop a strategy to ensure adoption of the NSI
  as a key national imperative in all sectors
• Ensure all relevant government departments are
  involved
• Establish government body to co-ordinate and
  rationalise
• Consider establishing a cabinet committee to
  enhance the profile of SET at the highest levels
  (A Cabinet memo should be submitted in this
  regard)
• Use of relevant web sites to facilitate awareness
• Establish consolidated picture of the total SET
  investment in order to focus attention on the
  issue and to optimise expenditure and returns
• Use NSTF/NACI study on Growth and
  Innovation(amongst others) to sell the concept to
  key government and business stakeholders
• Showcase South African Technology at the World
  Summit on Sustainable Development (WSSD)
  scheduled for September 2002

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Actions to Progress the National System of
Innovation

• PUSH FOR THE NSI AS A NATIONAL IMPERATIVE
• Improve information availability and flow across
  sectors
• Enhance SET related communications through the
  use of the programme for Public Understanding of
  Science Engineering and Technology (PUSET) plus
  the DACST project to develop science journalists
• Establish a low number of specific Key
  Performance Indicators for the South African NSI
  to set targets and monitor performance (NSTF
  study currently underway to define indicators)
• Review the effectiveness of the NSI annually
  against these defined Key Performance Indicators
  (KPIs)
• Declared the statistical data required to develop
  and monitor these indicators to be official data
  to be accessed via Statistics SA

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Actions to Progress the National System of
Innovation

• SKILLS
• Quantify the extent and impact of the brain
  drain
• More flexibility wrt, and look after existing
  skills base
• Introduce flexibility wrt imported skills and
  change current policy
• Target key industries to input external skills
  and link these to a national Human Resource
  Development programme for development and
  sustainability of local capacity
• Implement differentiated pay packages for
  specialist educators and researchers
• Include a skills measure in the KPIs for the NSI
• More emphasis on primary school teachers by
  prioritising the STEAME recommendations
• More researchers required - HES, public and
  private sector
• Increase numbers of black South African
  postgraduates
• Reverse brain drain and retain existing
  critical skills
• Improve staffing ratios at universities
• Encourage post doctoral researchers

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Actions to Progress the National System of
Innovation

• RESEARCH FUNDING IN THE HES
• Develop innovative funding formula to encourage
  innovation and more students in the HES
• Develop the infrastructure in the HES -
  especially technikons
• Focus and balance the allocation of funds -
  advised by focused technology roadmaps and
  generic priorities for other ST areas
• Post doc programmes must be put in place to a
  much greater extent
• More support for research staff
• Incentive structures should be reviewed to align
  with national and industrial priorities
• HES to commercialise IPR which is developed with
  government funds
• Expand the role of NACI to advise DoE on RD in
  the HES - inform via technology roadmaps
• NSTF and NACI develop a strategy to assist DoE in
  resource allocation
• Enable HES to do more contract research

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Actions to Progress the National System of
Innovation

• SET FUNDING LEVELS
• Regularly quantify full extent of SET spend in
  South Africa - (Historical studies indicate level
  of national funding is too low)
• Look at a fully consolidated science vote with
  macro allocation via the recommended Cabinet
  committee
• Establish government RD and technology
  (innovation) funding mechanisms/taxation regime
  to encourage greater levels of private sector
  funding
• Taxation benefits (preferred by industry)
• Direct funding from the fiscus
• Partnerships - look at more use of Innovation
  Fund for access by Science Councils for
  partnerships in foresight aligned areas
• Develop strategies to avoid negative impacts of
  restructuring of state assets on RD levels and
  skills
• Resolve contract/state funding confusion in
  science councils
• Innovation fund
• align to national policies
• Report on added value and efficacy
• Provide guidelines on IPR related matters
• Benchmark funding as part of SET KPIs

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Actions to Progress the National System of
Innovation

• FORESIGHT
• Roll out NSTF action plan to define priorities
• Biotechnology
• Digital economy
• Advanced materials
• DACST roadshows to look at cross pollination
  across sectors
• Innovation strategy - concept to commercial
  product with mentorship to develop capacity
• Incentives for beneficiation of raw materials and
  minerals
• Edited version to be promoted in the public
  domain

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CONCLUSION

• Where to now??
• Use this information to promote support for SET
  in South Africa
• Policy makers
• Business
• etc
• Work with Minister Ngubane and DACST in
  implementing review recommendations
• Implementation of STEAME strategy with DoE
• Continue activities of NSTF

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THANK YOU
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NATIONAL SCIENCE AND TECHNOLOGY FORUM (NSTF)

• A multi stakeholder forum aimed at encouraging
  and promoting the restructuring, transformation
  and advancement of the South African National
  System of Innovation

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NSTF

• Background
• Created out of the ANC/SANCO/COSATU Science and
  Technology Initiative (STI) (1995) and the DACST
  response
• Independent Stakeholder based consultative forum
• Policy sounding board, partnership facilitator
• Self funding from membership subscriptions
• Operational and admin support from a secretariat
  and CEO
• Executive Committee and two plenary meetings per
  annum
• Chairperson - Dr SJ Lennon
• CEO - Dr J Hlongwane

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NSTF

• Membership 100 umbrella bodies
• Higher Education Sector
• Science Councils
• Business and industry
• NGOs and CBOs
• State Corporations
• Professional Societies
• Government
• (Labour)

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NSTF CURRENT FOCUS AREAS

• Policy input - proactive and reactive - DACST.
  DoE, DTI, DoL
• Science, Technology, Engineering and Mathematics
  education
• National strategy with DoE
• Public understanding
• PUSET programme with DACST
• NSTF/NACI study on Growth and Innovation
• Ethics in Science Technology in SA
• National committee?
• Consultative process underway
• Foresight implementation
• African Renaissance - SET agenda
• Development of NSI Key Performance Indicators
• Recognition of excellence and creation of role
  models
• Ad hoc response to requests for support
• International liaison including World Conference
  on Science
• Presidents AIDS advisory panel (Observer)
• SET in the Johannesburg World Summit