TRADE and Industry Minister Rob Davies believes a global survey that gives South Africa a very low ranking for international competitiveness is of limited value.
South Africa’s rank fell from 54 in 2010-11 to 50 in 2011-12 before rising again to 52 in the 2012-13 index.
Mr Davies said on Friday that the limitation of the Global Competitiveness Index was that it was "inherently subjective" in the way it collected data. This rendered South Africa’s ranking of "modest importance".
But the minister’s view has been strongly contested by the Manufacturing Circle, which believes the survey findings actually endorse the work of the minister’s department in trying to improve the competitiveness of South African industry.
Mr Davies said in reply to a parliamentary question by Inkatha Freedom Party MP Narend Singh that the index, an initiative of the World Economic Forum, aggregated data and survey responses across 12 pillars and more than 100 individual indicators from various sources.
Elements of the data were collected by surveying business people operating in the country under assessment and obtaining their perceptions of a particular factor.
Additional limitations of the survey which Mr Davies pointed out were the difficulty in interpreting cross-country comparisons based on the data, and the untested policy prescriptions implied by the index.
He noted that while there had been little change in South Africa’s ranking in the index over the past three years, it remained the highest-ranked sub-Saharan African country and scored above both India and Russia in the Brics (Brazil, Russia, India, China, South Africa) grouping.
South Africa scored poorly in terms of health, primary and higher education, areas which the government had already identified as in need of improvement, Mr Davies said.
Manufacturing Circle executive director Coenraad Bezuidenhout disagreed with Mr Davies’s view.
"The index is significant precisely because it surveys both hard data, as well as private sector opinion quite rigidly. It should therefore enjoy at least the standing of any of a number of business confidence indices, such as the Kagiso purchasing managers index, with due acknowledgement for the important global comparisons that the WEF (World Economic Forum) index provides," Mr Bezuidenhout said.
"Numerous players in organised business would most probably suggest that the index is actually escalating in its importance. Unresolved debates around our internal competitiveness, set against the backdrop of the US rolling back its policy of quantitative easing, make improving our domestic efficiencies all the more important for our attractiveness to international investors," he said.
Mr Bezuidenhout said it was to Mr Davies’s credit that the Department of Trade and Industry was using industrial policy to address market inefficiencies.
He noted that relative to other Brics countries, South Africa scored well for the quality of its institutions, its transport infrastructure, the efficiency of its goods market, the quality of its management and the integrity of its financial markets.
"The index is particularly supportive of the case that Minister Davies should continue his department’s improving efforts to support manufacturing development in South Africa as it shows South Africa to be competitive on the quality of its suppliers, its international distribution networks and so on.
"We would also suggest that the index strengthens the minister’s hand on trade policy, as it illustrates very clearly that our market is much more open than (those of) our Brics’ competitors," he said.
"It therefore provides rational justification for the difficult task the minister’s department has to roll back the hollowing out of our domestic manufacturing sector due to the unreciprocated cheap access to our market enjoyed by our Brics counterparts."