South Africa’s industrial policy rests on Michael Porter’s logic of raising
productivity to promote dynamic competitive advantage. Given high
unemployment, however, a more Arthur Lewis-like emphasis on labourintensive
development is also appropriate. Contrary to conventional
wisdom, evidence from sectors such as clothing shows that South African
producers remain sufficiently competitive as long as minimum wages are not
raised in pursuit of a Porterian strategy. The South African case suggests
that it is both desirable and feasible for an industrialised labour-surplus,
middle-income economy like South Africa to pursue a mix of strategies
including the promotion rather than destruction of labour-intensive jobs.