Innovation & R&D

In Hausmann–Rodrik–Velasco terms, South Africa's innovation capacity functions as a binding constraint because the social returns to new knowledge activity appear high and unrealised, while the private appropriability of those returns is systematically low. Gross expenditure on R&D has drifted around 0.6% of GDP — well below the National Development Plan target of 1.5% and roughly half the upper-middle-income average — even as the country retains the continent's deepest science base in the CSIR, the SKA, and a handful of research-intensive universities. The symptom pattern fits the diagnostic: productive firms complain less about capital cost than about the thinness of the pipeline from lab to market, while public research outputs accumulate as patents that never become products. The constraint is binding, not merely difficult, because the complementary institutions — a functional technology transfer regime, a capable intermediary, a credible long-horizon funding envelope — are each individually underpowered, so marginal effort in any one yields little.

The database's proposals cluster around fixing this institutional complementarity problem rather than simply spending more. STI Decadal Plan 2022–2032: From Aspiration to Funded Mandate addresses the macro-commitment problem, converting a cabinet-endorsed strategy into a multi-year fiscal envelope; IPR-PFRD Act Reform for Faster R&D Commercialisation targets the microeconomics of appropriability by loosening NIPMO's approval bottlenecks on publicly funded IP; and Technology Innovation Agency 2.0 Reform rebuilds the intermediary that is meant to carry ventures across the "valley of death." The Advanced Agri-Tech and Food Systems Cluster offers a sectoral test bed where these reforms could compound. The common thread is sequencing: the IPR and TIA reforms are near-term legislative and governance fixes under the DSTI, while the Decadal Plan funding and the cluster are structural bets that only pay off if the plumbing works.

Watch three signals over the next year: whether Treasury's MTEF actually ring-fences Decadal Plan allocations rather than absorbing them into baseline cuts; whether NIPMO's caseload times and university spin-out counts begin to move; and whether TIA's board and mandate reform produces visible deal flow rather than another strategic review.