Intellectual capital of South Africa: a comparison with Poland and Romania
| DOI | https://doi.org/10.1108/JIC-12-2016-0146 |
| Pages | 498-518 |
| Published date | 14 May 2018 |
| Date | 14 May 2018 |
| Author | Carol Y.Y. Lin |
| Subject Matter | Information & knowledge management,Knowledge management,HR & organizational behaviour,Organizational structure/dynamics,Accounting & Finance,Accounting/accountancy,Behavioural accounting |
Intellectual capital of
South Africa: a comparison with
Poland and Romania
Carol Y.Y. Lin
Department of Business Administration, National Chengchi University,
Taipei, Taiwan
Abstract
Purpose –The purpose of this paper is to uncover the national intellectual capital (NIC) of South Africa by
making comparisons with Poland and Romania.
Design/methodology/approach –Based on a database of an NIC measurement model spanning 2001-2015,
this study plotted the development trend of the NIC and its component capitals –human, market, process and
renewal capitals. Their correlations with GDP per capita (ppp) (GDP hereinafter) were also presented.
Findings –The NIC of South Africa is lower than that of both Poland and Romania. Except for the increase
of its human capital together with its GDP, the other capitals have lower relevance. Poland experienced
highly correlated growth for its NIC and GDP, shedding light for South Africa. The qualitative findings are
also reported.
Research limitations/implications –The IMD database carries South African data only for the African
continent. Therefore, this paper cannot cover other countries from the continent.
Practical implications –There are three implications from both the quantitative and qualitative analyses:
initiate national transformation from the two core issues of education and health; invite and provideattractive
incentives for South African returnees from abroad and members of local private sectors to take part in the
national transformation efforts; and learn from the NIC development pattern of Poland and Romania by
investing in market capital and process capital as soon as possible for faster results.
Social implications –The research findings of this paper unveil the root of the social problems in
South Africa, including education, health, high unemployment and so on. Suggestions are provided for mid-
term and long-term potential solutions.
Originality/value –This paper demonstrates the value of an NIC in the economically successful Poland
whose growth and GDP growth occurred at a similar pace.
Keywords South Africa, Poland, Emerging markets, Economic development, Intellectual capital, Romania
Paper type Research paper
Introduction
In 2016, reports on South Africa were dismal. Real GDP growth declined from 1.5 percent in
2014 to 1.3 percent in 2015 and was estimated to decline further to 0.7 percent in 2016
(Kumo et al., 2016).Unemployment remained high at 25.3percent, with unemployment among
youth at 52.5 percent in 2015. The legacies of apartheid,poor service delivery and widespread
poverty characterized sociopolitical discourse throughout 2015 (Kumo et al., 2016).
South Africa wascolonized by Dutch and English settlers over severalcenturies, followed
by more thanfour decades (1948-1991) of apartheid (West, 2006).In 1994, South Africa heldits
first universalelections and became a democraticnation. Afterwards, thecountry experienced
good economic growth until it was severely affected by the 2008 global financial crisis.
Its GDP contractedby 18 percent in 2009 as the internationaldemand for mining commodities
receded and investors shied away from emerging markets (Neil, 2010).
Not long after the end of apartheid, Crouch (1997) warned that South Africa had less
human capital (HC) than physical capital relative to its competitors. Scholars advocated for
greater investment in education, health and services improvement for capacity-building and
growth (Booysen, 2007). However, until 2007, a large number of professionals continued to
leave the country for better jobs in advanced economies, and the basic needs were still
unfulfilled for substantial proportions of the black majority that make up approximately
Journal of Intellectual Capital
Vol. 19 No. 3, 2018
pp. 498-518
© Emerald PublishingLimited
1469-1930
DOI 10.1108/JIC-12-2016-0146
The current issue and full text archive of this journal is available on Emerald Insight at:
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498
JIC
19,3
78 percent of the total population (Moller, 2007b). Moreover, the HIV/AIDS pandemic, which
had infected an estimated 5 million individuals, undid the development gains achieved
(Moller, 2007b).
What happened? Why did other emerging economies have a successful economic
transformation and recover from the global financial crisis, but not South Africa?
Do intangible assets play a role in facilitating economic growth? Can other emerging
economies provide some guidelines for South Africa to emulate?
Different from past studies focusing more on physical assets for economic development,
this paper takes the intangible intellectual capital viewpoint to examine the national
performance of South Africa. In addition, we comparetwo East European countries –Poland
and Romania –with a rationale. These two countries were under the control of the Soviet
Union for more than four decades (1946-1989) within the similar time frame as the apartheid
(1948-1991)in South Africa. A majority of citizensin all three countries did not enjoy fullcivil
rights and economic development was stagnant within those four decades. Right after the
time of oppression,their starting points weresomewhat similar, yet their developmentbecame
quite disparate over the last 25 years.
Assuming that intangible intellectual capital plays a role in explaining their differences,
this paper aims to compare the national intellectual capital (NIC) of the three countries using
a panel data spanning the years from 2001 to 2015. Potential contributions of this research
are threefold. First, it unveils the increasingly important intangible assets in three emerging
economies. Second, it identifies specific areas of improvement for South Africa. Third, it
offers some guidelines for South Africa’s economic development by making comparisons
with two compatible emerging economies.
This paper first reviews the national profile of the three countries, then introduces NIC,
afterwards compares the NIC of the three countries, and finalizes with suggestions and
implications of the study.
National profiles
Since South Africa became a genuine democracy in 1994 and the African National Congress
came to power, there has been a clear encouragement of “Africanness,”a determination to
build the country on Afro-centric rather than Euro-centric principles (West, 2006). Although
its economy showed improvement, the pace of transformation was not fast enough and
South Africa continues to lag behind other emerging economies in various aspects.
Table I shows the general profile of South Africa, Poland and Romania. History tells that
during the period from 1946/1948 to 1989/1991, South Africa was under apartheid and the
other two countrieswere dominated by the SovietUnion. In terms of total area, South Africais
about four times/five times that of Poland and Romania. In terms of population, South Africa
is about 1.4 times/2.5 times that of Poland and Romania, respectively. With a median age of
only 26.8 years, South Africa has a human resources advantage overthe other two countries.
Very likely due to the HIV/AIDS prevalence rate of about 1/5 of the adult population, the life
expectancy of South Africa is only a little bit over 60 years. The health expenditure of 8.8
percent GDP is higherthan for the other two countries, yet its life expectancy is more than 10
years lower.The education expenditure of 6.1percent GDP is higher than that of the othertwo
countries, yet the unemployment rate is much higher than that of the other two countries.
Population belowthe poverty line is over 1/3 and GDP ofSouth Africa is only about half that
of Poland and thevolume of exports/imports is alsoabout half that of Poland. The Giniindex
is the second highest in the world. In addition, a total of 7.7 million people are without
electricity, whereas the other two countries have 100 percent electricity access.
Figure 1 shows the trend of Global Competitiveness published by the World Economic
Forum from 2001 to 2015. In 2001, South Africa’s global competitiveness ranking was
34th, aheadof both Poland and Romania, yet it droppedto 49th in 2015 and was surpassedby
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Intellectual
capital of
South Africa
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