Infant Industries and Industrial Policies: A Lesson from South Africa

As South Africa’s economy opens up, and the import regime becomes less restrictive, it will be necessary to meet new competitive challenges. With a few striking exceptions South African firms have not shown the capacity to meet these challenges. One such exception is Bell Equipment Ltd. This firm, located in Richards Bay in KwaZulu Natal, manufactures a range of earthmoving, forestry and cane cutting and moving equipment. Four factors explain Bell’s ability to compete effectively in an extremely competitive global sector: the firm’s sustained ability to innovate, the fortuitous timing of its expansion, particularly in external markets, governmental financial support, and low wages. Entrepreneurship alone is not an adequate explanation of the firm’s success. Factors in the domain of government policy have also played an important role in the past and will be necessary in the future, in particular with respect to external markets, antidumping legislation, the domestic capital market, supply chain development, sectoral specialization, the human resources fabric, trade unions, local government, and science and technology. Bibliogr., notes, ref.