Determinates of Industrial Competitiveness and the Role of Spillovers

This study examines the determinants that influence economic competitiveness of firms and industries, with special emphasis on the role of spillovers during the production process. Several studies investigate the factors that determine the international competitiveness of firms. There is the enhancement of the factors of production, the classical concepts of absolute advantage, the Malmquist index, the well-known Porter diamond, the nine-factor model, the generalised double diamond and the duel double diamond, to name a few. All these models convey important theoretical advances, but they also note the importance of spillovers – without defining the term or give much attention to this concept.

In the current study an attempt is made to define this term better and quantify it in practice, applying it to the South African manufacturing industry. The empirical work utilised regression analysis and considers the contribution of spillovers. It estimates effects of spillovers on research and development (R&D), foreign direct investment (FDI), globalisation, sales, and modern communication and technology, and how this can influence the international competitiveness of firms. The study considered the extent that various factors, like managerial efficiency, foreign ownership, cost of training and communication, influence competitiveness and investigated the interaction between the various factors determining efficiency and competitiveness. A unique feature of the study is that it also considers possible negative effects that spillovers might have in the production process and international competitiveness of firms and industries.   

Keywords: Production, Manufacturing, Spillovers, FDI, Technology, R&D, Industrial development, Clusters, Competitiveness, Information, Agglomeration, efficiency

JEL: D24, D83, L11, L30, L60, O30