Comparison With Other Emerging Markets
South Africa compares well to other emerging markets on affordability and availability of capital, financial market sophistication, business tax rates and infrastructure, but fares poorly on the cost and availability of labour, education, and the use of technology and innovation.
In a 2010 survey, South Africa was found to have the second most sophisticated financial market and the second-lowest effective business tax rate (business taxes as a percentage of company profits), out of 14 surveyed countries. The country was also ranked fourth for ease of accessing capital, fourth for cost of capital, sixth for its transport infrastructure (considered better than that of China, India, Mexico, Brazil and Poland, but behind that of Korea and Chile), and seventh for foreign direct investment as a percentage of GDP: in 2008 it was over 3% of the GDP.
However, for availability of manual labour, South Africa is ranked last, and is also the only country of the 14 whose labour force shrunk in 2008 (by over 3%, compared to India, where the workforce grew by almost 3%). The cost of manual labour is ranked fifth out of 11 countries, at about the same level as South Korea, but more expensive than Brazil, India and China. South African factory workers are also better paid than those of Brazil, China, India, Poland and Mexico. South African workers are more productive than workers in Russia, Colombia, Brazil, China and India, but less productive than workers in Korea, Chile and Mexico.
South Africa ranks poorly when it comes to education; only India fares worse when it comes to the percentage of matriculants moving onto higher education in 2007: in Brazil, 30% of matriculants graduated to tertiary institutions in 2007, and the figure was over 50% in Chile and over 90% in Korea, compared to just 15% in South Africa. This is despite the report ranking South Africa fourth for the percentage of GDP it spends on education (over 4% in 2007). The report ranks South Africa 11th out of 14 countries when it comes to the country's use of technology and innovation, putting the African country behind Korea as well as the BRIC countries, but ahead of Colombia, Mexico and Argentina.
Nevertheless, South Africa is falling behind other emerging markets, such as India and China, owing to several factors: the country is relatively small, without the advantage of a huge domestic customer base; it has had for decades an unusually low rate of saving and investment, partly because of political uncertainties; an inadequate education system results in an acute shortage of skilled manpower; a strong and volatile currency deters investors and makes its exports less competitive; the infrastructure, though far better than in the rest of Africa, suffers from severe bottlenecks, including power shortages, and urgently needs upgrading.
In 2011, after a year of observer status, South Africa officially joined the BRICS group of now-five emerging-market nations at the summit held in Sanya, Hainan, China.
Read more about this topic: Economy Of South Africa
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