Industrial Centres of Competence: A South African Case Study

Centres of competence models for innovation capability development have been successfully implemented in various countries such as Finland and Estonia. These models promote targeted investment in well-defined areas of technology within a particular geographic region, aimed at gaining global competitiveness to support industrialisation. Such models have also been applied recently in certain regions within South Africa targeting technological innovation in areas such as biotechnology (2004 - Western Cape) and advanced manufacturing (2005 – Gauteng). These models depend on the existence of an inherent competitive advantage coupled to existing innovation capabilities within pubic research institutions and private sector. Although centres of competence may be geographically concentrated, they rely on networks that extend nationally or even globally. The Titanium Centre of Competence is a typical example, developed on the basis of exploiting the South African titanium reserves through value addition to access global aerospace and automotive supply chains. This study focuses on the phenomenon in which large companies that are highly innovative and globally competitive exist within marginalised regions. Such companies have evolved on the basis of access to natural resources and the ability to beneficiate these resources into intermediate products for global markets. The potential for industrialisation through downstream beneficiation is inhibited by the lack of institutionalisation of innovation capability, poor entrepreneurship support, long distances from end-user markets and poor logistics networks, among other factors. Industrial centres of competence offers a real opportunity to transform these marginalised economies into industrialised nodes through specialisation, using mechanisms such as leveraging localisation obligations within infrastructure build programmes. The study includes the assessment of innovation capabilities of regions, analysis of supportive government development frameworks, and identification of technology platforms to support entrepreneurial activity. Overall, the study provides a systems approach for the identification of industrial centres of competence and the design of their core elements, providing a structured innovation framework for industrialisation.