Creativity, growth and development - where does SA rank?

We all know that South Africa faces significant challenges in low economic growth rates and high levels of unemployment, poverty and inequality. Recently the National Planning Commission produced a comprehensive diagnostic overview of the challenges and possible solutions (check out their cool Vision 2030 video here). In the Budget speech the Minister of Finance proposed large increases in infrastructure spending and industrial development measures.

Recently I have come across a different view of the possible drivers of economic growth and development in the form of the Global Creativity Index (GCI), compiled by the Martin Prosperity Institute in the U.S. It builds on Richard Florida’s work about the creative class and they argue that the GCI is a different way to look at issues of jobs, wages, inequality and sustainable prosperity: “What you measure affects what you do. If we have the wrong metrics, we will strive for the wrong things”.

The Global Creativity Index evaluates and ranks 82 nations on Technology, Talent, and Tolerance. The technology index is broad assessment of the technological and innovative capabilities and from Schumpeter to the growth theorists economists have emphasised the importance of technology for growth. The CGI uses the standard educational attainment measure of human capital, but also includes the share of a country’s workforce in high-skill, high wage Creative Class jobs. That is the share of workers in the fields of science, technology, and engineering; business, management and finance; design and architecture; arts, culture, entertainment, and media; law, healthcare, and education. The argument is that these occupations, rather than university degrees, provide a more accurate measure of the key skills that comprise human capital. Finally, the ability to attract both talent and technology depends on openness to new ideas and openness to people. The tolerance index is as a combination of two variables, based on Gallup surveys of openness to ethnic and racial minorities and openness to gays and lesbians.

The full report is available here, so I just want to focus on South Africa’s scores. The table shows the measures and South Africa’s index rank.

Technology		Talent		Tolerance
R&D spending to GDP	34	Educational attainment	65	Openness to minorities	7
STEM researchers per capita	46	Creative class occupations	48	Open to gay community	21
Patents per capita	32
Technology index ranking	45/75	Talent index ranking	68/82	Tolerance index ranking	15/81

The above numbers clearly show that human capital challenges facing South Africa. We rank low in terms of the educational attainment and proportion of researchers. The creative class share 21.71 of employment is 21 per cent. Overall, South Africa has a Global Creativity Index score of 0.459 and ranks 45th of 82. This is below the emerging economies of central and eastern Europe, but above, Brazil, Chile and India (50th). China ranks 58th on the index.

The following graphs show the relationship between the GCI scores and other metrics of growth and development. The GCI score is a good predictor of South Africa’s economic output and Global Competitiveness Index score. However, in terms of entrepreneurship, HDI, happiness and inequality South Africa performs worse than the GCI score would predict.

  

Overall, I thinks this tells a familiar study from a different perspective: education and training matters if a country aims to pursue high-skilled, high-wage growth in a globalised economy. Maybe we need more private schools for the poor? Maybe we need more bad jobs? I would be interested to see how different places in South Africa would stack up in a Local Creativity Index.