Project 1: The Economic Opportunities of Plant Biomass
This CoP is being led by Haroon Bhorat, Professor of Economics in the School of Economics and Director of the Development Policy Research Unit (DPRU), at the University of Cape Town, South Africa. Prof Bhorat is the SARChI Chair for Developmental Economics.
Prof Bhorat and the DPRU team were tasked with researching The Economic Opportunities of Plant Biomass. Our aim was to provide an analytical contribution to creating employment and reducing poverty, using fibrous plants as the product category. The team focused on economic complexity and economic development, through concepts such as product space(s) for fibrous plants, and opportunities for diversification. Economic dynamism and complexity play a key role in generating sustainable inclusive growth and poverty reduction. The shift to higher levels of economic complexity is about diversifying an economy’s productive structure; achieved by harnessing and building on existing productive capabilities: a need especially apparent in mining-based economies. The development of fibrous plant production and linked downstream manufacturing activity offers a unique path to building complexity.
We proposed a 6 step approach to answering our main research question:
An analysis of the global and domestic market for fibrous plants (bamboo):
Analysis of industry level data at most disaggregated level available (e.g. size of furniture industry in terms of employment and GDP).
Identification and analysis of product-level trade data pertaining to bamboo and bamboo related products (e.g. global market shares).
Locate fibrous plants (bamboo) related products in the Product Space:
Examine varying product complexity levels,
Position bamboo products within South African context,
Examine linkages with other products in Product Space and identify potential diversification pathways.
Engagement with other CoP team members to understand product linkages to fibrous plants (bamboo).
Move to firm interviews and stakeholder engagement:
Stakeholder surveys and firm surveys (identify capabilities),
Stakeholder workshop (identify capabilities).
Build a Product Space for fibrous plants (bamboo) for South Africa.
Identify economic opportunities, capabilities, constraints and policy requirements for the growth of the fibrous plants (bamboo) industry in South Africa.
The DPRU has a strong social welfare focus and a lens through which economic inequality reduction can be attained. We offer an interdisciplinary synthesis of ideas through a unified framework and an ability to connect the ground work – Economics lies at the intersection of disciplines: it is where the value add comes from. We use a quantitative evidence base to compile research reports that have a strong policy focus. We work with a variety of clients: Government departments and multilateral agencies such as the World Bank, IDRC,etc.
We applied the following tools and methods:
The Atlas of Economic Complexity analytical framework developed by Hausmann et al. (2011) poses an alternative way of thinking about economic development. It is a shift in thinking and approaches development along the following lines: A shift away from the aggregate (e.g. GDP) toward the granular (e.g. products); a shift away from thinking about production being about the combining of factors of production, toward production being about the combining of knowledge/know-how/capabilities; and a modern reinterpretation of Adam Smith's division of labour toward the division of knowledge or know-how.
Three key concepts are:
1. Economic Complexity
2. Opportunity Cost
3. Product Space Analysis
March 2019 Update
1) Desktop research regarding the markets of the three proposed fibrous plants – kenaf, hemp and bamboo – is well underway. The fibrous plant choice was determined in discussion with the engineering teams, which identified fibrous plants with the greatest potential for development.
2) Identification of value chains linked to the fibrous plants, including the various types of products that can be manufactured using the fibrous plants as inputs into their production.
3) The complexity methodology has been applied to identify frontier products or products for which SA firms have the capabilities to shift production toward. These frontier products are being mapped to the potential fibrous plant products. A key element of this research is to discuss these products with the engineering and law teams in order to gain further insight into these products. For example, the engineering team are able to determine what processes are needed to manufacture insulation using kenaf and whether South Africa currently has this capability. The law team would be able to provide information on whether hemp can be processed in South Africa from a legal standpoint.
4) The team has begun to construct a database of firms that may use fibrous plant products to manufacture other products. These firms are to be interviewed in the coming months.
Towards Resilient Futures CoP
c/o Development Policy Research Unit (DPRU)
University of Cape Town
Private Bag X3
Tel: +27 (0)21 650 5701 ResilientFutures@uct.ac.za