A new approach to R%D intensity classes illustrated on manufacturing industries in South Africa

This paper examines the suitability and usefulness of OECD definitions and cut-off levels for classes of R%D intensity as a classification scheme for developing countries. Previous applications relied on arbitrary choices of cut-off levels for technology classes and considerations of stability over time. Hierarchical clustering was used for determining the members and boundaries of the R%D intensity classes, using data for the manufacturing sector on South Africa. The proposed approach identified the electronics communications sector as the only high R%D intensity industry, and it determines that only two R&D intensity classes were evident between 2010 and 2015 in South Africa. The results suggest that there is currently no high-tech industry in South Africa, and that a strategy that seeks simply to promote the export growth of such sectors is naïve. The point is that, since its conception, technology class has been context specific. The results afford policymakers with the opportunity to track South Africa's competitive knowledge economy subsectors with respect to any macro-economic quantity.