CAPITAL INTENSITY IN SOUTH-AFRICAN MANUFACTURING AND UNEMPLOYMENT, 1972-90

This paper explores the changing structure of investment and employmen t in South Africa's manufacturing sector during 1972-90. It considers the hypotheses that poor employment performance and high levels of cap ital intensity have arisen as a consequence of the overexpansion of ca pital-intensive sectors and distorted factor prices. In the main, thes e hypotheses are rejected. Instead it is argued that poor employment p erformance arises largely from political factors which have dulled me private sector's investment in labor-intensive sectors, have stifled t he development of the informal sector, have held back productivity gro wth in manufacturing, and have reduce the inflow of foreign direct inv estment. Although the paper is not primarily focused on the emerging p olicy agenda in the postapartheid era, the data contained in this anal ysis would not appear to support the beliefs either that wages should be reduced or that the state should refrain from actively affecting al locative decisions.