Achieving Asgi-SA's aspirations: the role of the national system of innovation

The ASGISA document identifies several binding constraints preventing South Africa from achieving elevated levels of economic growth (Republic of South Africa, 2006). This paper takes an evolutionary perspective to consider whether the proposed policy interventions will address what is, arguably, a fundamental growth constraint: the current inability of the economic system to generate and support sufficient innovation. A substantial body of literature has accumulated in mainstream and evolutionary economics that indicate the salience of new combinations and ideas in fuelling the 'creative destruction' driving growth in market economies. However, several economists and policymakers still, incorrectly, understand innovation as referring only to high-technology research and development (Lundvall, 2007). Instead, innovation should be broadly conceptualised as referring to a process of identifying new combinations of production factors, product characteristics and functions and service features and also new forms of organising human activity. This implies that innovation is not an aspect of economic activity limited to 'high tech activities in laboratories. Rather, it is the very driving force of economic activity in all sectors and locations, from agriculture to engineering, from Gauteng to the Eastern Cape.

Based on this broader perspective of innovation, the paper employs the analytical concept of the 'national innovation system to analyse the identity of and relationships between various actors and institutions contributing to innovation. Based on this systemic analysis, the paper will identify problem areas inhibiting innovation in the South African economy. Thereafter, the paper considers whether the ASGISA policy proposals adequately address these 'binding constraints on innovation. One general finding in the paper concerns the importance of understanding innovation as a multi-scalar process, involving both the micro-activities and decisions of individual firms and larger institutional structures (Afuah, 2003). Such a complex system requires a coherent policy framework, where policymakers carefully consider the links between various policies. However, the paper shows that policymaking generally do not appear to follow such a systemic approach, with policies all too often developed in 'silos, resulting in frequently contradicting aims. While South Africa has adopted a policy framework for the national innovation system, other government policies are not consistent with the goal of that framework. By highlighting the problem of policy coherence, the paper contributes to further discussion on how to foster an effective national system of innovation that will make a significant contribution towards accelerated economic growth.