Fostering Technology Absorption in Southern African Enterprises

Abstract

This book seeks to understand how firms in southern Africa absorb technology and how policy makers can hurry the process along. It identifies channels of technology transfer and absorption through trade and foreign direct investment (FDI) and constraints to greater technology absorption, and it discusses policy options open to the government and the private sector in light of relevant international experience. The book is based on case studies of sectors and enterprises selected in four countries: Lesotho, Mauritius, Namibia, and South Africa. The relationship between technology absorption and catch-up growth is particularly relevant to southern Africa because those countries are facing tremendous competitiveness challenges and must rely on greater technology absorption to raise productivity and strengthen competitiveness to gain ground in the global market. An increased market share can then generate faster growth and create more jobs. Therefore, catch-up growth sustained by technological progress and productivity growth is the fundamental solution to unemployment and poverty alleviation. Southern African firms use multiple channels for technology absorption. For example, South African auto component firms entered technology agreements with global players to meet the demanding product standards required for export. Even after the global crisis in 2009, those who licensed technologies still spent 2.23 percent of their sales revenue on royalties. In Namibia, the meat-processing industry has made continuous efforts to upgrade technology, including the recent investment in radio frequency identification technology to trace cattle. In fish processing, companies use state-of-the-art production technologies, including electronic software to record and monitor production processes, intelligent portioning equipment, and sophisticated freezer systems. In the breweries sector, state-of-the-art technology is used at every stage of production and in the marketing and distribution processes.