capital markets, mining companies were able to adjust to the volatility of commodity prices. when prices were high, they were able to accumulate cash on their balance sheets. they saved this money for times when prices would fall. more recently, shareholders penalised companies for keeping large piles of cash on their balance sheets. this resulted in large dividend payments. in turn, management took large bonuses when prices were high. workers too demanded higher salary increases when commodity prices were high. when prices fell, mining companies made losses and there was no cushion. it becomes much more difficult for a company to raise capital when they are making losses. similarly, management bonuses and workers ’ salaries are sticky. the necessity of taking a longer term perspective does not just apply to shareholders and fixed capital investment. it also applies to human resource management. south african firms spend a lower proportion of their revenue training their staff than comparable firms in other countries. for all firms globally, staff development is a win - win investment helping to raise productivity and make work more meaningful and interesting for individuals. in a country such as ours where so many were denied adequate education, firms play a crucial role in training their staff. we need to remember that lack of education, or poor education, is the greatest exclusion there can be. in many cases, it is not the absolute salary that workers feel aggrieved about. it is the lack of a career - path and opportunities to move up the ladder that is the source of frustration. peter drucker, one of the fathers of theories on management, wrote in the new realities ( 1989 ) : “ management ’ s fundamental task is to make people capable of joint performance through common goals, common values, the right structure, and the training and development they need to perform and to respond to change ”. to bring several strands of my talk together, i refer to two studies, one by the imf and the other by the oecd, into how countries can avoid the middle income trap, which is defined as a period of slower growth or even stagnation when countries reach a gdp per capita of between us $ 5, 000 and us $ 10, 000 ( in ppp terms ). these studies suggest that to break out of this middle income trap, countries need to move from being adapters of technology to being producers of technology. countries that move up the value chain to capture a larger share of the intellectual property or innovation succeed in breaking the trap. while south africa ’ s

gill marcus : celebrating what is good about south africa and its economy address by ms gill marcus, governor of the south african reserve bank, to the fm top companies awards function, johannesburg, 26 june 2013. * * * ladies and gentlemen, thank you for inviting me to address the fm top companies awards function. it is an honour to be part of a tribute to the best companies in our country. it is appropriate that, at a time when much of the economic news is gloomy, we hold our heads high and celebrate what is good about our country and our economy. south africa has a sound economic foundation and hundreds, if not thousands, of firms and business leaders that are outstanding in any context. it is a major source of strength that south africa has a large number of companies that continue to grow, innovate, employ people and generate revenue and export earnings for our country. it is even more impressive that in times of very difficult and uncertain economic conditions, both globally and locally, many firms are performing so well. you and your firms are a significant reason why we can proudly say that while our economy faces many challenges, it is also highly resilient. we are here today to recognise these firms and their achievements. the economic environment is a difficult one. the world is in its sixth year of crisis : a crisis that has repeatedly mutated, shifting its epicentre from a sub - prime crisis to systemic banking crisis ; a liquidity, fiscal deficit and sovereign debt crisis. measures taken to address each of these elements have had unintended consequences. austerity measures have contributed to an unemployment crisis of immense proportions, particularly for the young. there will probably be at least one or two more forms of the crisis before we can safely say that recovery is sustainable. and even then, as we can see in the united states where there are signs of recovery, the measures that are outlined to be taken very cautiously and with considerable conditionality, such as a tapering off of quantitative easing, have also had unintended consequences. as we have seen in recent days and weeks, the exchange rates of many emerging market economies have been impacted negatively by an outflow of capital. this development could well mark the start of a new mutation of the ongoing global crisis. if things do not get any worse it will probably still take a number of years before the world is back to more normal growth and output gaps are fully closed. even then, there is debate about whether that new normal