Economical Waves10 March 2011 Presented by Syndicate 4 during Rabelani Dagada’s Technology & Information Management Course, Wits Business School,17 March 2011

The Four Economical Waves

Agricultural and mining based

economies

Industrially based

economies

Knowledge and Information

based economies

Broadcom

1st Wave 2nd Wave 3rd Wave 4th Wave

First Wave

• During the first wave economies were mining and agriculturally based, these economies are now known as the primary sector.

Second Wave• The second wave was brought on by the Industrial Revolution from the 18th to the

19th century in the United Kingdom and subsequently spread to other parts of the world.

• It was a period where major changes in agriculture, manufacturing, mining, transportation, and technology.

• The second wave involves a shift in the way that production took place, in which the manufacturing of goods began to involve automated processes.

• During the industrial wave there was a fundamental shift in the way that people thought about the whole production process.

• The industrial revolution was important in that it increased productivity by introducing large scale manufacturing.

• The importance of the second wave is that it created physical infrastructure in the countries that took part in it. The infrastructural development has facilitated and made it possible for these countries move into the fourth economical wave.

• The manufacturing of goods is now referred to as the secondary sector of the economy.

Third Wave• This economical wave arose from the development of Information and

Communications technology, as the basis for conducting business. • While the second wave is defined by geography, bricks and mortar, the third

wave is defined by information and knowledge which transcends physical boundaries.

• During the third wave countries began to make use of technology and information to enhance their production and remain constantly innovative and ahead of other economies.

• During this wave the economies became driven by a tertiary sector that is known as the ‘service industry’.

• The service sector is characterised by the production of services instead of products or ‘goods’, examples of this include; transportation services, the telecoms industry, banking industry, and services offered in IT industry. In developed countries the tertiary sector now contributes the most to the GDP.

Fourth Wave• Rabelani Dagada (2009) refers to the fourth wave as ‘Broadcom’. Broadcom

involves broadcasting, telecommunications (especially the use of Broadband), and computing.

• It involves a shift from physical to intellectual resources. • This economy is driven by information and communication technology, and the

globalisation of economic activities. • The fourth wave is a period when there will be a convergence of all technologies

impacting every aspect of life.

Characteristics of the fourth economical wave

• The expansion and development of more knowledge based organisations (such as KPMG, Accenture, Multichoice, and Dimension Data.

• The extensive use of cloud computing and mobile commerce. • Access to extensive cheap broadband networks. • Access to cheap telecommunications networks, and a decrease in the

costs of telephone calls. • Extensive use of mobile devices. • Communication will be accessible to the whole population, and will be

cheap. • There will be an advanced convergence of technologies. Data networks

will converge, and multiple devices will converge into single devices. • High speed wireless connections.

Which wave is SA currently in

The South African economy is largely still stuck in the first wave, but has adopted aspects of the third wave (such as communications innovations).

• Large percentage of the population is still rurally based• SA has become a net importer of agricultural produce. The local farmers are

not subsidised by government, hence import from the EU, which drives up local produce prices

• Raw materials are exported from SA, manufactured and then re-imported back into SA. 71% of exports to china constituted base metals and minerals however in the same year 64% of china’s export to SA constituted manufactured goods.

• Our GDP is largely based on the production and export of agricultural and mining raw material

• SA has not become a fully industrialised economy. • No integrated industrial policy and this is what’s required to move into the 4th

economical wave

Which wave is SA currently in

• Since 1994 our economy has become more open being able to adopt aspects of the 3rd economical wave.

• Developments in financial Institutions• Developments in the banking industry• Growth and innovation in the telecommunications industry

However SA has been largely unable to embrace the knowledge economy, and much remains a new concept

Short term Benefits• The SA economy that is based on the export of raw materials, has benefits such

as an immediate reduction in the unemployment levels, however this is not sustainable in the long run

Steps that South Africa can take in order fast-track our economy into the fourth economical

wave • Become a knowledge based economy.• Develop the infrastructure that is necessary to support a knowledge

based economy• Information and communication technology (ICT)

Challenges in moving South Africa into the fourth economical wave

• High unemployment levels and unskilled labour• Brain-drain and the HIV&AIDS pandemic• A lack of infrastructure• Insufficient legal and regulatory frameworks and government strategy• Others: corruption and lack of access

The End?