12. Is Export-Led Growth a Necessary but Insufficient Condition for Job Creation in the Mining Sector? Does This Mean That There Is a Strong Case for Beneficiation?

This chapter explored whether there is a prevalence of the “exports growth-led GDP growth” hypothesis over the “GDP growth-driven exports growth” hypothesis in South Africa. Evidence shows that at the aggregated level and commodity sector level, exports growth responds more to aggregate GDP growth compared to the responses of GDP growth to aggregate and commodity sector exports growth. Thus, we conclude that there is a prevalence of the “GDP growth-driven exports growth” hypothesis over the “exports growth-led GDP growth” hypothesis. On the other hand, evidence for the mining and specific commodity sectors confirms the validity of the dominance of the “exports growth-led GDP growth” hypothesis over the “GDP growth-driven exports growth” hypothesis. Evidence shows that mining exports growth is intensively associated with mining commodity employment growth and less so with mining commodity output growth. The mining sector is an export-driven sector with very limited value add.

Furthermore, we reject the “export growth-led jobless growth” hypothesis. Positive shocks to exports growth do induce positive effects on GDP growth and employment growth in the mining sector. But these positive effects are not persistent and do not result in intensive employment growth. Hence, the export-led strategy seems to be quite disappointing. Export-led growth is a necessary but insufficient condition for intensive job creation in the mining sector. Does this mean that there is a strong case for beneficiation? Yes, evidence leads us to arrive at a conclusion that there is a strong case for minerals beneficiation especially for the commodity sectors. By the very nature, minerals beneficiation implies an increase in value added and a bigger role for the manufacturing sector in GDP. The policy implication is that strategies aimed at investing in the value chains for these mining commodity sectors, developing of new export markets and cushioning the sector against the cyclicality and severe slumps in global demand and commodity prices will support the mining sector as a “sunrise industry”.