Industrial policy is back on the table. After decades in which it was dismissed as state interference, governments across the world – including South Africa among them – are once again planning, subsidising and building industries, this time under the banner of green industrialisation. But what is meant by green industrialisation, and does it meaningfully address the crises of unemployment and climate change?
This AIDC discussion paper argues that South Africa’s current approach is narrow. It is oriented towards protecting exports and supplying critical minerals and “green” products to wealthy states, in sectors that are too capital-intensive to make a dent in the world’s worst unemployment crisis. In a country that will be severely affected by climate change, the current strategy offers little on climate adaptation. Most critically, the current development pathway remains subordinate to the Treasury’s policy of fiscal constraints.
Against this, the paper sets out a radical, needs-based alternative: industrial policy tied to strategic procurement and large-scale public investment in housing, water, transport, energy, healthcare and climate adaptation technologies, coupled to the mobilisation of domestic resources through fiscal, monetary, and financial sector reforms. The intention of this paper is not to outline each and every concrete policy proposal that would comprise such an alternative, but instead to provoke discussion and debate on South Africa’s development policy framework, and what it would look like for economic policymaking to tackle our critical challenges more directly and effectively.
