This week we had some interesting meetings about economic policy with provincial government and a local investment promotion agency. We all agreed that growth and job creation happens in specific places and there is a need to consider the provincial or local implications of, for example, the IPAP2. What is amazing is how little we all know about which firms are producing WHAT, HOW and WHERE. Data on sub-national economic activity is limited to official annual estimates at provincial level or the databases build by private sector consultants. Almost no-one has any reliable firm-level information. Yet policymakers want suggestions for programmes that they can implement.
This brings me to the point that Johan Fourie raised on his blog today: the typical textbook/ foreign-expert recommendations for such programmes would be to build infrastructure, encourage on-the-job training or ensure a business-friendly environment for firms to grow. Ideas like wage subsidies and arguments for a weaker Rand exchange rate and import substitution strategies are also out there. However, to develop sensible interventions will require more work by academic researchers and an opportunity to make themselves heard.
As in the case of education research, there are a number of people who are doing excellent work. At firm-level Neil Rankin and his AMERU team at Wits are busy with a Youth Unemployment Intervention Evaluation project. Volker Schoër has examined the importance of social networks in finding employment, but considering the scope of the challenges, they need co-workers, collaborators, support. We don’t really know what the barriers that prevent firms to export are, how important links with the suppliers of intermediate goods are, how thick local labour markets are, or how firms are innovating.
Consider this something of a call for more research at the micro-level. We are making plans in the School of Economics, but if you want to join my project mayhem, give me a shout.