Can Investing in Information Systems Boost Economic Complexity in South Africa: Movement Towards the Fourth Industrial Revolution?

Abstract

Countries need to accelerate the growth and development of their economies by increasing the productive capacity for better living conditions of their citizens. For countries to improve their economies, they need to boost their economic complexity by producing and exporting commodities that embody sophisticated characteristics. The economic complexity index measures how diverse products are and include their ubiquity when they are exported. Economic complexity provides reasons why some countries progress very slowly by studying the characteristics of countries export baskets. This study seeks to find out if the investment in information systems can influence the South African economic complexity. The set objective employs the autoregressive distributive lag (ARDL) methodology. Results of the ARDL bounds test gave an F-statistic of 7.17 greater than the upper bound and this indicated a long run relationship in the series. Furthermore, investment in information systems had a significant positive relationship to economic complexity with a speed of adjustment of 87%. Investing in information system has proved to be innovative and contribute to firm output and labour productivity. Furthermore, information technology improves organizational performance, reduce production cost and improve the production of all personnel and ultimately increase the efficiency of human capital. The positive relationship between information systems and economic complexity is a good indicator that South Africa can enhance its complexity through information systems activities. It is therefore, recommended that the government of South African invest in information systems as this could yield a faster route towards the fourth industrial revolution.