Inclusive innovation and inequality in South Africa: a case for transformative social policy

Abstract

South Africa's quest for inclusive innovation is encumbered by the triple challenges of poverty, inequality and unemployment. Although the present African National Congress government has made strides to promote inclusive innovation, structural inequalities inherited from apartheid hinder the creation of a new social contract. Social policy is today receiving greater attention in the field of innovation and development. Much emphasis is placed on the important issues of reproduction, redistribution and social production. However, in the South African context the vital concern of production needs to be considered. This article argues that transformative social policy in South Africa enhances innovation through its effects on human capital and skill formation and its capacity to alleviate risk. This paper uses a transformative social policy approach in contributing to discourse around inclusive innovation in South Africa and the Global South.

Keywords:

• South Africa
• innovation
• transformation
• social policy
• inequality
• poverty

Acknowledgements

This publication was made possible by support from the Social Science Research Council's Next Generation Social Sciences in Africa Fellowship, with funds provided by Carnegie Corporation of New York. We would also like to thank Ms Irma Booyen for comments and funds provided to present the paper at the Micro Evidence of Innovation in Developing Economies (MEIDE), Santiago, Chile, November 2013, and Prof Fred Gault, Prof Mario Scerri and anonymous reviewers for commenting on the draft document. The usual caveats about authorial responsibility hold. The authors would also like to thank the World Bank under the Young African Scholars Programme for funding provided to present the ideas of the paper at the 17th World Congress, International Economic Association (IEA), Dead Sea, Jordan, June 2014.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. This figure is slightly higher because it includes both innovative firms and innovation-active firms. Innovative firms are those firms that had successful innovations, whereas innovation-active firms are those that had innovation activities during the period under review, including those with ongoing and abandoned activities.

2. The unemployment rate in South Africa is reported by Statistics South Africa. From 2000 until 2013, South Africa's unemployment rate averaged 25.5% reaching an all-time high of 31.2% in March 2003 and a record low of 21.9% in December of 2008. In South Africa, the unemployment rate measures the number of people actively looking for a job as a percentage of the labour force (Statistics South Africa).

3. According to OECD figures, member states with universal social frameworks – the Nordic countries, France, Belgium and Slovenia – have managed to attain relatively high levels of equality, with Gini coefficients ranging from 0.27 to 0.32. The strong tendency towards reciprocity and redistribution in these societies allowed them better to compensate for market inequalities. The USA, by contrast, lacks an integrated, comprehensive social protection system and has the fourth highest income inequality of the 28 countries studied (OECD 2011b).

4. iGDP is defined as all the activities linked to the creation and use of Internet networks and services in four major categories: private consumption, public expenditure, private investment and trade balance. The iGDP approach makes comparisons across countries using national accounts data and the directly measurable parts of economies (McKinsey 2013, 4).

5. In South Africa, stokvels are invitation-only clubs of twelve or more people serving as a rotating credit union or saving scheme where members contribute fixed sums of money to a central fund on a weekly, fortnightly or monthly basis. The name ‘stokvel’ originated from the term ‘stock fairs’, as the rotating cattle auctions of English settlers in the Eastern Cape during the early nineteenth century were known (Wits Business School 2009).