Research Papers and Reports

Connecting Global Stocktake outcomes and COP28 workstreams

Every five years, the Global Stocktake (GST) assesses collective progress towards the Paris Agreement’s long-term goals. Examining mitigation, adaptation, means of implementation and support, response measures, and loss and damage, the GST takes stock of actions and support to inform greater ambition towards an equitable global climate response. The outcome of the first GST forms the core of the broader UAE Consensus, significantly overlapping with many COP28 workstreams. This paper analyses the complex GST decision, exploring how it connects to other COP28 workstreams. However, the litmus test of the GST’s ambition is in its implementation. The paper argues that effective implementation needs to be inter-connected, within the UNFCCC, in national-level action and across the broader landscape. Three kinds of connections emerge from this analysis: connections inherent to all climate action, those that help understand the decisions made and those that guide the implementation of more ambitious and equitable climate action. In light of these connections, an integrated approach is essential for turning outcomes into actions. By providing a more nuanced understanding of the intricate connections underpinning the GST and the UAE Consensus, the paper seeks to inform urgent action and support to achieve the goals of the Paris Agreement, and address the climate crisis. Specifically, the report finds:

• Equity, science and ambition form an interconnected triad that must guide implementation.
• Less mitigation action increases the need for adaptation and addressing loss and damage, entailing higher costs.
• The GST calls for transitioning away from fossil fuels, an important mitigation measure.
• The GST decision was strengthened by the Global Goal on Adaptation with 11 agreed global targets.
• Indicators to track progress on adaptation targets will improve the information base over the next two years.
• The GST highlighted the adaptation finance gap but did little to fill it, signalling its importance to future negotiations.
• The GST took an integrated look at finance obligations and broader flows, but decisions lack concrete steps.
• Delivering balanced finance for mitigation, adaptation, and loss and damage at scale is crucial in 2024.
• Capitalising the new loss and damage fund must provide hundreds of billions to meet developing country needs.
• Developing countries need support for capacity to report progress, access technologies and implement climate actions.
• International cooperation, including reforming financial architecture, is critical to implement the GST outcomes and broader UAE Consensus, adequately and effectively.

This year is a crucial moment to deliver on the provision and mobilisation of finance for mitigation, adaptation, loss and damage, and to keep the 1.5°C goal within our grasp. The outcome of the GST finds that despite progress under the Paris Agreement, we are far from on track to meet this goal. The findings of this analysis can guide future strategies to transform the decisions in the UAE Consensus into integrated and impactful climate action and support.

Climate policy in an era of polycrisis and opportunities in systems transformations

We wrote of a‘new era’for climate policy, in our opening editorial when we took on the role of editors-in-chiefof the journal Climate Policy seven years ago. With the Paris Agreement entering into force, we saw domesticimplementation of climate action as a new defining theme, along with‘pushing countries towards the progress-ively greater ambition that is needed’. We contrasted the unifying moment of Paris with a fragmentation of theinternational policy landscape. As we write our closing editorial, geopolitical tensions are even higher and col-lective progress has been more difficult than hoped. Yet opportunities for system transformations to low emis-sions and climate resilient development abound.At the start of our tenure, we also set out a rising need for academic thought leadership on a variety ofthemes. The community of authors and also reviewers has exceeded all reasonable expectations–thejournalClimate Policyhas gone from strength to strength.

Climate Change 2023 Synthesis Report

This Synthesis Report (SYR) of the IPCC Sixth Assessment Report (AR6) summarises the state of knowledge of climate change, its widespread impacts and risks, and climate change mitigation and adaptation, based on the peer-reviewed scientific, technical and socio-economic literature since the publication of the IPCC’s Fifth Assessment Report (AR5) in 2014. The assessment is undertaken within the context of the evolving international landscape, in particular, developments in the UN Framework Convention on Climate Change (UNFCCC) process, including the outcomes of the Kyoto Protocol and the adoption of the Paris Agreement. It reflects the increasing diversity of those involved in climate action.

*PRISM researcher Harald Winkler was involved in the drafting of this report.

Technical dialogue of the first global stocktake

This synthesis report on the technical dialogue of the first global stocktake is based on inputs received throughout the process and discussions held during each of the three meetings of the technical dialogue and serves as an overarching and factual resource that provides a comprehensive overview of discussions held during the technical dialogue, identifying key areas for further action to bridge gaps and addressing challenges and barriers in the implementation of the Paris Agreement. It provides an assessment of the collective progress towards achieving the purpose and long-term goals of the Paris Agreement and informs Parties about potential areas for updating and enhancing their action and support, as well as for enhancing international cooperation for climate action.

*PRISM researcher Harald Winkler was involved in the drafting of this report as one of the two co-facilitators on the technical dialogue.

German Institute of Development and Sustainability (IDOS) Discussion Paper 18/2023

This paper focuses on analysing how Chinese firms operate in Latin America, Asia and Africa in regard to ESG (environmental, social and governance) standards and sustainability issues. How do they respond to the increasing global value chain requirement to incorporate and maintain ESG standards? Is their space for an alignment between Western development cooperation ESG policies, frameworks, strategies and practices and Chinese political and economic stakeholders in the developing world? The paper uses a variety of case studies covering Chinese firms (disaggregated into SOEs (state-owned enterprises) and large, medium and small private sector firms) operating in various sectors in countries across the developing world. It uses a three dimensional framework to analyse different types of Chinese firms in terms of value chain operations covering many of the ESG standards they are required to meet:

1. Supply chain relations (i.e. approach to supporting upgrading of local suppliers);
2. Internal firm processes (i.e. approach to local labour, training and upskilling);
3. Social licence to operate (i.e. approach to meaningfully engaging with local communities taking account of their social and economic needs).

There are examples of Chinese firms behaving according to the negative type casting that has dominated much of the literature. However, Chinese firms in developing countries are fairly flexible and more willing to adapt to ESG standards than conventionally assumed. There are sufficient instances of Chinese firms in host developing countries showing significant movement to alignment on ESG dimensions. Unlike the industrialised world, these firms are not driven by civil society socio-political pressure within China. China’s relationship to ESG has instead been driven by a) geo-political considerations involving the Chinese government’s global presence, and b) primarily economic risk considerations of Chinese lead firms operating internationally – risk relating to raising finance and ensuring that business operations in developing countries can avoid major disruption. For many Chinese lead firms operating in the developing world, ESG is increasingly being perceived as a fundamental risk mitigation tool assisting them to ensure that they are able to maintain continuous, consistent, and predictable economic operations. These tendencies can only be expected to grow much stronger as the Chinese government adopts more ESG standards within guidelines and regulatory frameworks and enforces compliance on Chinese firms operating abroad. As Chinese firms become more open to ESG compliance, this creates a foundation for potential development cooperation alignment with the Chinese government and Chinese lead firms operating in the developing world.

South African Science, Technology and Innovation Indicators Report 2023

The 2019 White Paper on Science, Technology and Innovation empowers the National Advisory of Innovation (NACI) to monitor and evaluate South Africa’s national system of innovation (NSI). Consequently, NACI has produced the 2023 STI Indicators Report based on NACI’s NSI monitoring and evaluation (M&E) framework. The report serves to provide “isibuko” or “mirror” the NSI.

The report offers an opportunity for NSI actors to pause and reflect about the state of and knowledge about the NSI through the data and information it provides. It deliberately offers little or no interpretation and recommendations. Complementary studies are being encouraged to deepen understanding and interpretation of the evidence contained in the report.

*PRISM researcher David Kaplan was responsible for the Business Sector and the Bioeconomy sections of the report.

The African Continental Free Trade Area and the Automotive Value Chain

Key Messages:

Africa plays a very limited role in the global automotive industry and many of its small national markets are mainly supplied by imports of used cars. However, with a rapidly expanding middle class, the market is growing rapidly. Closer integration could expand the market and attract both regional and foreign investment.

The automotive industry in the African continent in 2021 was valued at US$30.44 billion and predicted to grow to US$42.06 billion by 2027. South Africa and Morocco were the two largest exporters accounting for over 80% of exports. But the continent as a whole is a major net importer of vehicles and parts.

The AfCFTA Rules of Origin (RoO) aim to deepen market integration at both regional and continental levels, boost intra-African trade while promoting regional and continent-wide value chains.

A Developmental Regionalism Approach to the AfCFTA and Rules of Origin for the Cottom, Textiles and Apparel Regional Value Chain

Trade and Industrial Policy Strategies Discussion Paper - February 2022

From Pathogens to People: Enhancing Reporting and Surveillance for more Effective Control of Disease Outbreaks

Abstract:
Infectious disease outbreaks are a threat to global health and security. Current systems for early and effective reporting and monitoring of pathogens and other health threats, and high-quality surveillance of human diseases, face a number of challenges including incomplete and fragmented early warning and governance systems that are under-incentivised and under-resourced. We propose a number of opportunities for the G20 leaders to address these challenges, including: (1) establishing an ‘Emerging Health Threat Data Platform’ as a public good for independent, co-ordinated and scientist-led reporting and surveillance of pathogens; (2) supporting the development of a framework to incentivise scientists to participate in the platform and; (3) enhancing population health surveillance and vital registration systems through technical and financial investments in both the short and longer term.

Creating employment and reducing emissions: Options for South Africa

SARChI Industrial Development Working Paper Series WP2021-06

Abstract:
Apart from having amongst the highest rates of unemployment and inequality in the world, South Africa is also a highly emissions-intensive economy. This paper examines the key drivers of the historical growth path that led to an economy based heavily on mining, mineral processing and heavy industry, subsidised by cheap electricity. It then considers how South Africa could shift to a more employment-intensive and low-emissions development path. An integrated employment and mitigation strategy is required. This means aligning the two objectives, seeking synergies across industrial, energy and climate policy, while at the same time managing trade-offs.

Towards a Safer, More Equitable Opening of the Economy

Institute for Economic Justice Research Policy Advocacy: COVID-19 Response Policy Brief #2

Summary:
• South Africa needs a safer and more equitable reopening of the economy complemented by an upscaling of state support mechanisms to workers, the unemployed, and vulnerable businesses.

• Securing health and expanding economic activity must be viewed as a single objective aimed at the realisation of rights in order to maximise the well-being of all.

• Social comorbidities rooted in South Africa’s vast levels of inequality, must be accounted for in the return to work and reopening of the economy.

• COVID 19 is a social problem demanding ambitious social interventions. It is not a personal responsibility issue.

• The immediate burdens of reopening the economy, without mitigation measures, will be disproportionally felt by workers.

Bouncing Forward Sustainably: Pathways to a post-COVID-19 world Strengthening Science Systems

Abstract:
This Background Paper was prepared to frame the discussion in the 1st Consultation on Strengthening Science Systems within the IIASA-ISC Consultative Science Platform “Bouncing Forward Sustainably: Pathways to a post-COVID-19 world”. The paper briefly discusses the response of science and scientists to the COVID-19 crisis, the dissemination of research results and the input of the science community into public policy. While science responded fairly rapidly with appropriate research and the communication of research to the public and to policy makers, there is clear room for improvement. Drawing from the experience of the COVID-19 crisis, three axes of improvement are identified, namely increased agility, enhanced reliability, and a more effective science-policy-society interface. The paper identifies barriers that constrain and inhibit the effectiveness and efficiency of the science system in terms of these three axes. The barriers include misinformation and pseudoscience; the lack of access to data and to mathematical models; the slow pace of peer review; funding challenges both overall and in efficient allocation to critical issues; public trust in, and understanding of, science. Finally, in relation to science for policy, there are issues of transparency, contestation between scientists proffering advice, the need to widen the disciplinary base of science advice and the importance of adopting an interdisciplinary and systemic approach.

The political economy of automotive industry development policy in middle income countries: A comparative analysis of Egypt, India, South Africa and Turkey

ESID Working Paper No. 143
 

Abstract:
This paper examines the political economy of development policy through the prism of four country case studies (Egypt, India, South Africa and Turkey) of the automotive industry. The objective is not simply to examine the developmental impact of automotive policy, but to illustrate how the policy regime has been the outcome of a contested process. Early growth in the auto sector in the four case countries was enabled by rents from protected markets. The emergence of competitive firms is critically dependent on the nature of state–business relationships and the net outcome of the rent-seeking process in the sector. This hinges on the bargaining power of business, foreign or domestic, vis à vis the government. If firms capture subsidies in return for support to weak and vulnerable ruling coalitions, the auto sector in that country can become the classic case of an infant industry remaining stunted. Where the distribution of power is such that ruling coalitions are able to discipline firms in the auto sector, so that they become globally competitive, developmental outcomes have been positive.

Agro-processing, value chains, and regional integration in Southern Africa

UNU-Wider Working Paper 36
 

Abstract:
Regional integration in Africa is underway but ongoing progress requires that the gains are widely spread. South Africa’s huge regional trade surplus in manufactured goods is already leading to protectionist pressures in neighbouring countries. Agro-processing is a large sector, which is widely regarded as having significant potential, but the export performance of the region has been quite poor if South Africa is excluded. Intra-regional trade is dominated by South Africa’s exports to the region. The share of processed goods in agricultural trade has increased but only modestly. Regional value chains are failing to include the small economies of Southern Africa. Constraints include tariff and non-tariff barriers, weak infrastructure, demanding quality standards as well as weakly developed local suppliers. Policies to promote the development of suppliers outside of South Africa are required along with more generic measures such as improvements in the regulatory and investment environment, and better infrastructure.

A call for a developmental regionalism approach to the African Continental Free Trade Area (AfCFTA)

ECDPM Great Insights, Volume 9, Issue 1

Spreading the gains? Prospects and policies for the development of regional value chains in Southern Africa

SA-TIED Working Paper 38

Abstract:

Regional integration is making steady progress in Africa and a key objective is to improve the prospects for industrialization by expanding the regional market. This paper draws on a combination of trade data analysis and industry case studies to better understand the links and synergies between regional value chains and regional integration. The trade data and case studies of three diverse sectors (apparel, food retailing, and automotive) demonstrate the expansion and diversity of regional trade and regional value chains in Southern Africa. This diverse composition of regional exports is suggestive of an opportunity to further enhance industrial development through intra-regional trade. The long-term sustainability of Southern African regionalism depends on the recognition of the importance of regional industrial policy that takes account of the dynamics driving global and regional value chains and facilitates regional linkages across all these sectors.

South Africa's Industrial Policy: Time for a review and a rethink

Center for development and Enterprise (CDE). Viewpoints No. 8

Towards a Digital Industrial Policy for South Africa: A Review of the Issues

Industrial Development Think Tank, Department of Trade and Industry

Small-scale embedded generation in South Africa

SA-TIED Working Paper 13.

Abstract:

The falling cost of renewable energy technologies globally is a key driver of the implementation of small- scale embedded generation in South Africa as an alternative to electricity from the national grid. The technology has disruptive potential for the vertically integrated and centralised electricity value chain, dominated by Eskom. It challenges the structure and governance of the value chain from the local level up, creating conflicts and potential benefits for key stakeholders. A coherent policy approach, rooted in the understanding of the co-benefits, is key in managing and planning the scale-up of this technology at the local government level.

Global Value Chains and Sustainable Development Goals: What Role for Trade and Industrial Policies?

International Centre for Trade and Sustainable Development, Geneva. Policy Initiative: Sustainable Value Chains.

Africa’s Automotive Industry: Potential and Challenges

Working Paper Series N° 282, African Development Bank, Abidjan, Côte d’Ivoire

Abstract:

The low level of industrialisation is a major problem in Africa. Many analysts have argued that lack of structural change during the phase of economic expansion since 2000 will impede future growth prospects due to the ongoing reliance on commodities. This in turn has serious consequences for the ability to expand employment. This paper outlines the limitations of industrial development in Africa in recent decades and briefly explores the various industrialisation options. It then goes on to use the example of the automotive industry to examine both the possibilities and pitfalls facing the development of this important sector. The automotive industry is a relatively sophisticated industry, but with sub-Saharan Africa’s rapidly expanding market and automotive trade deficit of $16.3 billion, it is important that ways are found to efficiently attract investment especially into parts of the sector, which are more appropriate for lower- income countries. A number of larger countries such as Nigeria and Kenya are now embarking on plans to develop domestic automotive production. Some of these plans run the risk of encouraging low- volume, inefficient production which provides little value added or employment. What is required is the broadening of the market through regional integration to allow for large-scale, productive investment. These issues are explored using Kenya as a case study.

Conflict Determinants in Africa

African Development Bank Group Working Paper 274

Abstract:

This paper considers the determinants of conflict in Africa. It revisits the greed– grievance debate to consider the specific regional context and changing nature of conflict in sub-Saharan Africa. This is a literature that has grown rapidly in economics and political science, but some recent developments in modeling and conceptualization are providing important new contributions. It proposes and uses modeling techniques that deal with the problem of excess zeros, revisits the definition of conflict, and improves upon some proxy measures. Understanding the nature of conflict in Africa is vital to designing post-conflict economic policies and interventions, to ensure policies can prevent conflict-affected states from returning to conflict or remaining fragile.

How Regulation and Standards can Support Social and Environmental Dynamics in Global Value Chains

International Centre for Trade and Sustainable Development, Geneva.

Capital intensity, industrial policy and employment in the manufacturing sector

REDI3x3 Working paper 20

Abstract:

After 1994 and amidst global trade liberalisation, the manufacturing sector, already highly capital intensive, became more capital intensive. Manufacturing’s share of GDP declined rapidly and employment losses were significant. Industrial policy has become a central pillar of economic strategy, with significant sectoral interventions in industries such as autos and garments. The heavy industries making up the core of the mineral energy complex have generally grown rapidly since 1994 (until recently). Light manufacturing has fared poorly, with clothing and footwear sustaining severe damage. Manufactured exports have shown pedestrian performance and downstream manufacturing has progressed little. The historic bias of incentives towards heavy industry remains a key problem. The apartheid era legacy of limited skills development has not been decisively addressed since 1994. Government has clearly stated the case for a more labour-absorbing growth path. However, an economy cannot efficiently shift its growth path without shifting its comparative advantage. To move to a more labour absorbing growth path, South Africa will need to compete more effectively in labour-demanding economic activities. A central challenge for South African industrial policy, therefore, is to consciously tilt the playing field towards labour-absorbing growth in order to mobilise the potential of an under-employed and poorly skilled workforce. If this is not done, a continuing decline in labour absorption and manufacturing employment is to be expected.

Clothing Global Value Chains and Sub-Saharan Africa: Global Exports, Regional Dynamics and Industrial Development Outcomes

International Trade Working Paper 16

Abstract:

This paper assesses the export-oriented clothing industry in the ve main sub-Saharan African (SSA) clothing exporter countries (Mauritius, Madagascar, Kenya, Lesotho and Swaziland). The focus is on analysing the various characteristics driving rm and value-chain dynamics as well as upgrading and industrial development outcomes. This includes challenges related to global dynamics as well as unfavourable domestic conditions, such as limited skills and industrial capabilities and poor infrastructure. It gives a short overview of the global clothing industry, discussing the clothing global value chain (GVCs) and its main actors, the regulatory environment of the global clothing trade, and global trade patterns. The development of export clothing sectors in SSA is explored, with different types of clothing rms and value-chain channels and their implications on upgrading, skill development and sustainability identi ed and the main challenges assessed. It concludes by proposing policies to secure sustainability and foster upgrading and broader industrial development in SSA export-oriented clothing industries. It focuses on four broad policy issues: upgrading and skill development; market diversi cation and regional value chains; local rm development and locally embedded clothing industries; and trade policy and preferential market access.

An EPZ for Nelson Mandela Bay Metro

Center for development and Enterprise (CDE). Growth Series Report No. 7

Global value chains, industrial policy and sustainable development in Ethiopia’s textile and apparel export sector

International Centre for Trade and Sustainable Development, Geneva.

Global Value Chains, Sustainable Development, and the Apparel Industry in Lesotho’

International Centre for Trade and Sustainable Development, Geneva.

South Africa’s Trade and Investment Relationship with the United States Post-AGOA

Trade and Industrial Policy Strategies (TIPS) Report to NEDLAC

Political Economy of Climate-relevant Change Policies: the Case of Renewable Energy in South Africa

IDS Evidence Report 128, Brighton: IDS

Technology transfer and the development of the automobile industry in South Africa. In Studies in Technology Transfer: Selected Cases from Argentina, China, South Africa and Taiwan Province of China

UNCTAD Current Series on Science, Technology and Innovation No. 7

Local embeddedness and economic and social upgrading in Madagascar’s export apparel industry

Capturing the Gains Working Paper 21

Abstract:

Over the past decade, several Sub-Saharan African (SSA) countries have developed or expanded export-oriented apparel industries in the context of the Multi-Fibre Arrangement (MFA) quotas and preferential market access, most importantly under the African Growth and Opportunity Act (AGOA). Madagascar is different to the other main SSA low-income country (LIC) apparel exporters – Kenya, Lesotho and Swaziland – given its more diverse end markets and ownership structures and the political instability that led to the loss of AGOA status at the end of 2009. This paper assesses the development of Madagascar’s export-oriented apparel industry and economic and social upgrading dynamics in particular in the context of the AGOA loss. It identifies four types of firms and value chains that differ with regard to ownership patterns, end markets and, most importantly, ‘local embeddedness’, with important implications for both economic upgrading dynamics and possibilities and the sustainability of the industry. The paper concludes that, despite the contraction in the export-oriented apparel industry post-AGOA, Madagascar is still a more successful apparel producer in terms of economic upgrading than the other main apparel-exporting LICs in SSA. The key to this trajectory lies in the differentiation of global value chain (GVC) relationships, local embeddedness and export diversification.

Local embeddedness, upgrading and skill development: global value chains and foreign direct investment in Lesotho’s apparel industry

Capturing the Gains Working Paper 20

Abstract:

Many low-income countries (LICs) are integrated into apparel global value chains (GVCs) through foreign direct investment (FDI). This is also the case in Lesotho, which developed into the largest Sub-Sahara African (SSA) apparel exporter to the US under the African Growth and Opportunity Act (AGOA). More recently, a new apparel export market opportunity has emerged in Lesotho, that of the regional market of South Africa. The two export markets, the US and South Africa, are supplied by different types of FDI firms, affiliates of largely Taiwanese transnational producers and of South African manufacturers that are incorporated into distinct value chains. This paper assesses the implications for upgrading integration into these two value chains in Lesotho, the first value chain characterized by Taiwanese investment and feeding into the US market under AGOA and the second characterized by South African investment and feeding into the South African market. These value chains differ with regard to ownership patterns, end markets, export products, governance structures and firm set-up, investors’ motivations and perceptions on the main challenges. These different characteristics have crucial impacts on upgrading possibilities, including functional, process and ‘local’ upgrading. Thus, from the perspective of upgrading and sustainability, ownership patterns, local embeddedness and market diversification matter. The emergence of South Africa as an alternative end market and the different value chain dynamics operating in the South African retailer-governed value chain open up new opportunities away from those of the AGOA-/Taiwanese-dominated value chain.

Policy Gridlock: Comparing the proposals made in three economic policy documents

Center for development and Enterprise (CDE) Focus Paper

Rethinking South Africa’s Labour Market. Lessons from Brazil, India and Malaysia

Center for development and Enterprise (CDE) Roundtable 

Making the Most of Africa’s Commodities: Linkage Development, Value Addition and Industrialisation

United Nations Economic Commission on Africa, (This formed the substantive part of the ENECA 2013 Economic Report on Africa).

The Untold Story: Structural Change for Poverty Reduction – the Case of the BRICS. A Country Case Study: South Africa

United Nations Industrial Development Organisation (UNIDO), Vienna

Review of the Impact of the China Restraint Agreement on the Clothing and Textile Industry in South Africa

Abstract:

Following China’s accession to the WTO in 2001, cheap Chinese garments have flooded clothing markets worldwide bringing to fruition the prophecy of Chinese hegemony in a liberalised global clothing market (Kaplinsky 2005; Nordas 2004; and Kaplinsky et al 2006). South Africa’s domestic market has, unexceptionally, also been adversely affected by rising Chinese imports evidenced by i) a falling relative contribution of apparel to total manufacturing output and ii) persistent job loss in the sector (Kaplan 2003; Barnes 2004). China has significantly increased its footprint in the South African clothing market over the past decade.

Making the Most from Commodities Programme (MMCP)

Abstract:

The disruptive entry of China into the global economy, with its thirst for minerals and energy and its prowess in manufacturing, has had a major impact on the terms of trade. India’s impending entry is likely to exacerbate this shift in relative prices. This shift in relative prices poses both challenges and opportunities for SSA, including constraining the prospects of the manufacturing sector.The Making the Most of Commodities Programme (MMCP) addresses the opportunities opened for SSA minerals and energy producing economies. Its primary focus is on how to enhance these economic and social opportunities arising from the exploitation of primary commodities.

A Sectoral Analysis of Skills Gaps and Shortages in the Clothing and Textile Industry in South Africa

Abstract:

The SA clothing and textiles industries have undergone difficult restructuring over the past ten years due to the combined impact of domestic and international factors. The negative impact of this transformation is manifest in the declining contribution of the sector to total manufacturing output, its falling export share and significant contraction in sector employment. This outcome might have been different had this process of restructuring been pre-empted and accompanied by a concerted effort to up-skill remaining workers and promote innovation in the sector. This could have enabled the sector to pursue a skills-led competitiveness strategy and assist a move toward higher-cost, high quality items. Paradoxically, underinvestment in both human and physical capital in the South African clothing and textiles sector has deepened the crisis precipitated by globalisation and currency weakness and the sector has been incapable of dealing with rising import penetration. Government policy designed to address the effects of liberalisation on the sector has largely been regressive and reinforces the perception of global trade as a threat rather than opportunity.