South Africa has been grappling with a persistent electricity crisis that has placed the country on an uncertain and turbulent economic trajectory. Based on a two-stage empirical approach, this paper unpacks the extent to which the country's manufacturing sector has been affected by this crisis. Notably, we first use South Africa's domestic input–output matrices to develop an index of manufacturing sub-sector energy vulnerability. The index reveals significant degree of heterogeneity across manufacturing sub-sectors, highlighting cross-sector differences in the level of exposure and susceptibility to the energy-related crises. Second, we employ the self-constructed energy vulnerability index in a flexible empirical framework to examine the effect of the electricity crisis on manufacturing sector jobs in the country. The empirical analysis results indicate that the electricity crisis is associated with significant job destruction, with this adverse effect severe for sectors with higher energy vulnerability intensity. The severity of this adverse effect holds irrespective of the nature of jobs, whether formal or informal. We discuss the implication of these findings in line with South Africa's economic recovery, resilience and development.

Firm-level innovation in developing countries is mostly incremental and depends on non-R&D activities. Integration into global production networks is one such activity that could help firms in developing countries innovate, particularly since new technologies and foreign knowledge diffuse through inter-firm linkages. Accordingly, this paper examines the relationship between Global Value Chain (GVC) participation and firm-level innovation in Africa, using data from the World Bank's Enterprise Survey (WBES). Employing different estimation strategies that enable us to address various empirical challenges, we find strong evidence suggesting that African GVC firms are highly innovative. They are not just more likely to introduce new products and processes but also more likely to jointly introduce both types of innovation as well as radical innovations. In an extended analysis, we found that integrating small and medium enterprises and younger firms into GVC enables them to overcome resource constraints, resulting in higher innovativeness. Finally, we document that the innovation gains from GVC trickle down to non-GVC firms in the same industry and region, implying that firms engaged in GVC activities generate positive spillovers to other firms in the economy. A proposed framework rationalizes our findings. The framework sheds light on the mechanisms that make firm-level innovation possible across African firms in an era where GVC is an important conduit for inter-firm learning, knowledge exchange, and technology transfer.

Using the South African Revenue Service and National Treasury firm-level panel data for 2009–2017, this paper investigates how trade related to the global value chain (GVC) affects the performance of manufacturing firms in South Africa. The paper uses extant classifications of internationally traded products to identify different categories of GVC-related products and compares the productivity premium of international traders for these different categories. Also, the paper investigates possible differences in learning-by-exporting effects across the identified categories of GVC-related products by estimating the effect of exporting before and after entry into foreign markets. The results confirm that GVC-related trade is associated with a higher productivity premium compared with traditional trade. However, within the categories of exporters, only the firms that trade in GVC-related products and simultaneously engage in research and development in the post-entry periods appear to learn from exporting. Our results underscore the gains of GVC integration in terms of the associated productivity premia and highlight the need for GVC-integrated firms to invest in building technological capacity.