Costed Action Plan for SADC Industrialization Strategy and Roadmap V. CAPABILITIES AND CAPACITIES FOR INDUSTRIAL DEVELOPMENT 5.1 Introduction Capabilities development requires massive investments especially in education and institution building as well as in the tangibles such as physical equipment. This, in turn, requires the mobilization of adequate financial resources and their transfer to industry. Knowledge and capability development are crucial levers of productivity and competitiveness of firms and sectors as well as for more effective functioning of the overall economic system. The knowledge-based economy is becoming a key pillar of competitive advantage, i.e. created advantage. 5.2 Productivity Productivity for both capital and labour is low and often declining in the SADC region and to sustain economic growth and enhance competitiveness, Member States must invest in infrastructure, education and technology to raise productivity levels to global standards. 5.3 Competitiveness SADC countries rank poorly in the World Economic Forum’s Global Competitiveness Index (GCI), with only South Africa and Mauritius listed in the top half of the 144 countries covered in the 2014-2015 index. While there is considerable heterogeneity among the 15 countries the performance gap between SADC countries performance and comparators in Asia and Latin America is significant, pointing to the need for major efforts to raise competitiveness across the board. Competitiveness is weak partly because the productivity of both capital and labour is low and often declining in the SADC region, especially in agriculture. To sustain economic growth and enhance competitiveness, Member States must invest in infrastructure, education and technology to raise productivity levels to global standards. With the development of cross-border value chains, competitiveness is no longer a function only of domestic clusters of manufacturing firms, but is increasingly reliant upon successful integration of other tasks in the chain, both domestic and foreign. In the 21st century what a country exports matters less than what tasks it undertakes within a value chain. Competitiveness in components and tasks, as distinct from comparative advantage in final products, is the key to initial value chain participation whether at regional or global level. 43