Between Gatekeeper and Gateway : Taking Advantage of Regional and Global Value Chains by Addressing Barriers to South Africa’s Trade Competitiveness
South Africa's weak post-apartheid trade performance has been a significant factor in its inability to create more jobs and achieve higher growth and productivity. Exports and inbound foreign direct investment as a share of gross domestic prod...
| Main Authors: | , , , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/649161539793087628/Between-Gatekeeper-and-Gateway-Taking-advantage-of-Regional-and-Global-Value-Chains-by-Addressing-Barriers-to-South-Africa-s-Trade-Competitiveness http://hdl.handle.net/10986/30915 |
| Summary: | South Africa's weak post-apartheid
trade performance has been a significant factor in its
inability to create more jobs and achieve higher growth and
productivity. Exports and inbound foreign direct investment
as a share of gross domestic product have lagged other
middle-income countries and both have declined in absolute
terms in the past five years. South Africa is losing market
share in many of its core export products, both because it
is being outcompeted by more dynamic economies in East Asia
and owing to its own supply-side and institutional
constraints. This loss of global competitiveness in
manufacturing has meant that more South African firms have
turned to the domestic economy and to less demanding export
markets in the rest of sub-Saharan Africa. While South
Africa can continue growing through a primarily regionally
focused strategy, these markets are small, and defaulting to
the lower levels of productivity required to compete in the
rest of Africa could undermine South Africa's
competitiveness in the long term. This paper provides an
overview of South Africa’s recent trade outcomes, as well as
its trade policy framework, and assesses the causes of its
disappointing performance. In turn, it suggests changes to
trade-related policies as well as the governance and
management of these policies. The paper focuses in depth on
three specific trade-related constraints: transport costs,
the institutional governance of trade tariffs and export
promotion, and overall economic policy uncertainty. The
paper proceeds to argue that the South African government
would benefit from aligning its trade strategy, commercial
and economic diplomacy and industrial policy with the dual
objective of providing both the engine for a "Factory
Southern Africa" that encompasses the rest of the SADC
region, and of being the region's gateway to the rest
of the world. Since South African firms will not be able to
drive this approach on their own, this necessarily means
forging policies and institutions that encourage investments
into South Africa and the SADC region, and working with
neighbors to maximize the development of regional value
chains that result from such investments. |
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