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The wind energy global value chain localisation and industrial policy failure in South Africa

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Abstract

This article utilises a GVC analytic framework to analyse the wind energy value chain in South Africa and its impact on localisation of goods and services. Its theoretical contribution highlights governance as dependent on system integration dynamics, with lead firms operating as system integrators. The empirical analysis focuses on the interplay between energy and industrial policy showing how policy failure, driven by coal-based vested interests, disrupted system integration and undermined the renewable energy programme. The failure to ensure continuity and predictability of the auction bidding process within energy policy cascaded down the wind energy chain negatively impacting industrial policy attempts to localise domestic and foreign enterprises. This also derived from the South African government failing to prioritise, develop, and embed renewable energy as a green economy strategy within its industrial policy framework. We conclude with the following lessons: (a) GVC dynamics and lead firms cannot be ignored if localisation is to take root; (b) green strategies should be mainstreamed within industrial policy; (c) localisation starts with lead firms encouraging follower sourcing of first tier suppliers; (d) localising domestic value-added services is just as important as developing manufacturing enterprises.

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Acknowledgments

This article is a product of joint research undertaken by the TENTRANS project, funded by DANIDA. Our thanks to extremely useful comments from Anton Eberhard, Raphie Kaplinsky, Justin Barnes, Hubert Schmitz, Roberta Rabellotti, Ari van Assche, and three anonymous reviewers on previous versions.

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Authors and Affiliations

  1. PRISM, School of Economics, University of Cape Town, Cape Town, South Africa

    Mike Morris & Glen Robbins

  2. Danish Technical University, Kgs Lyngby, Denmark

    Ulrich Hansen & Ivan Nygard

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  1. Mike Morris
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Correspondence to Mike Morris.

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Accepted by Ari Van Assche, Deputy Editor, 24 September 2021. This article has been with the authors for four revisions.

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Morris, M., Robbins, G., Hansen, U. et al. The wind energy global value chain localisation and industrial policy failure in South Africa. J Int Bus Policy 5, 490–511 (2022). https://doi.org/10.1057/s42214-021-00123-8

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