The impact of trade facilitation factors on South Africa's exports to a selection of African countries

Economic growth can be enhanced through increased trade among countries, provided the correct institutional structures are in place. A country's trade is dependent not only on its own trade facilitation reforms but also on those of the trading partners. This paper, using an augmented gravity model, examines trade facilitation factors that impact on South Africa's exports to other selected African countries. The results of the estimation reveal the following. An improvement in the customs environment within the importing country provides the largest gain in terms of increasing trade flows, followed by the regulatory environment and domestic infrastructure. Furthermore, adjacency and common language impact positively on South African exports, while distance between countries impacts negatively on it. Being part of the Southern African Development Community is also enhancing exports from South Africa, compared with being part of the East African Community.     

Sudden Stops and Current Account Reversals: Potential Macroeconomic Consequences for South Africa

South Africa is one of the emerging market countries that have received a relatively large amount of foreign capital since the mid‐2000s. In South Africa's case, these inflows were partly used to build the country's foreign exchange reserves, but more particularly to finance continued large current account deficits. During the course of the past two years, however, adverse domestic political developments, combined with the potential negative impacts of the unwinding of quantitative easing policies and the normalising of monetary policy in the United States on emerging markets in general, has raised the spectre of a sharp slowdown in foreign capital flows to South Africa and an associated reversal of the current deficit. This paper explores the potential impact of such a development on macroeconomic conditions in South Africa. The analysis consists of macroeconometric model‐based alternative scenarios backed up by both the international evidence on the impact of such events and South Africa's own history.     

Review of the South African Agricultural Legislative Framework: Food security implications

Although South Africa has reported national food security for decades, current production patterns, land uncertainty and consumer preferences put future national household food insecurity in question. Household food insecurity in South Africa is at unacceptable levels. This paper reviews the country's agricultural legislative framework in terms of food security and the right to food. The review found that South African agricultural policies do not actively promote food security and the lack of enforceable food security policy makes it difficult to coordinate existing policies. The lack of food security legislation means that the right to food has no enforceable framework. A comprehensive food security policy, legislative framework and implementation strategy are urgently needed to address hunger poverty to progressively achieve the targets set out for national growth and development and realise the right to food enshrined in the Constitution.     

Asia's contribution to global rebalancing

Developing Asia remains at the core of global payment imbalances. While the geographical concentration of current account imbalances is significant—with the People's Republic of China accounting for the lion's share of the region's current account surplus—how Asia contributes to global rebalancing also depends critically on the newly industrialising economies and larger Association of Southeast Asian Nations economies. Given the region's huge diversity, the necessary national macroeconomic and structural policies will vary significantly across Asia's emerging economies. Whereas near‐term rebalancing efforts will be driven primarily by macroeconomic and exchange rate policies, structural reforms are essential for boosting domestic and regional demand as sources of economic growth over medium to long‐term. We argue that regional rebalancing will depend critically on the adoption of deeper and more comprehensive structural reforms and further trade liberalisation to unlock the potential of strong domestic and regional spending—thus reducing Asia's high dependence on extra‐regional demand. Priority policies should include infrastructure spending, competition, trade, financial development, investment, immigration, and other social policies to reduce national savings.     

Reviewing South Africa's marketing and trade policies for genetically modified products

South Africa is unique in that it has commercialised genetically modified (GM) crops and has a functional biosafety system, which allows for trade in both GM and non-GM crops, despite being surrounded by countries banning the use of GM products. This paper analyses the past achievements and evolving changes in marketing and trade policies for GM products in South Africa. A quantitative analysis of South Africa's GM imports and exports demonstrates the success of South Africa's flexible regulatory system. Yet a review of recent reforms indicates a trend towards more rigid trade and marketing regulations of GM products. This paper suggests five policy recommendations to improve rather than rigidify regulations and allow South Africa to adapt to global changes, manage risks and take advantage of potentially promising new GM technologies.     

CAPITAL CONTROLS,TWO‐TIERED EXCHANGE RATE SYSTEMS AND EXCHANGE RATE POLICY: THE SOUTH AFRICAN EXPERIENCE

South Africa's 40 years of experience with capital controls on residents and non‐residents (1961‐2001) reads like a collection of examples of perverse unanticipated effects of legislation and regulation. We show that the presence of capital controls on residents and non‐residents enabled the South African Reserve Bank to target domestic interest rates (and or the exchange rate) via interventions in the (commercial) foreign exchange market. This provides an early rationale for anchoring SA monetary policy via the exchange rate, rather than via domestic interest rates. This suggests not only that the capital controls themselves exhibited substantial institutional inertia, but that this same institutional inertia also applied to the monetary policy regime. A plausible reason for this is that for most of the 20th century in South Africa. (partial) capital controls and exchange rate based monetary policies were like Siamese twins – almost impossible to separate.     

Anti-dumping Policies and International Portfolio Allocation: The View from the Global Funds

Anti-dumping policies, as one of the most important nontariff measures to protect a country's economic interests, can have an impact not only on a country's trade and social welfare, but also on capital flows. Anti-dumping measures can result in increased trade costs and alterations to exchange rate risk. This study investigates the impact of anti-dumping sanctions on the international portfolio allocations of global funds. Antidumping policies can decrease the proportion of a fund's investment portfolio allocated to recently-sanctioned countries. Closer trade ties between the sanctioned country and the country where a fund is domiciled exacerbate the divestiture, but stronger foreign direct investment links weaken the negative association. Some country and fund heterogeneities are also discussed. We find that more developed countries are less affected by the impact of anti-dumping measures on equity fund allocations; liberalization of the economy and stable government could also mitigate the negative impact of anti-dumping sanctions. High-risk funds, such as growth funds or funds that invest in leveraged buyouts, showed the greatest response to changes in anti-dumping regulations.     

A review of trade trends: South Africa and the Indian Ocean Rim

Since 1990, intense diplomatic efforts have taken place to secure and negotiate trade treaties with South Africa's traditional trading partners (the European Union, in particular) and those countries in close geographic proximity. This article examines South Africa's trade links with some of its ‘non‐traditional’ trading partners, in particular the countries of the Indian Ocean Rim (IOR), in an attempt to ascertain the nature of the trade and its importance vis‐a‐vis the rest of the world. An examination of trade data for the years 1992‐5 indicates that trade with the IOR consists mainly of the mutual exchange of natural resource products and that this trade is growing much faster than South Africa ‘s trade in general. Given this trade dynamism, South Africa should pay increasing attention to international relations with these countries. South African trade with the Rim was also found to differ from trade with the rest of the world in that it comprises the mutual exchange of natural resource‐based products. This research shows that our imports and exports are positively related to the gross domestic product of our trading partners, and negatively related to their population size and distance from South Africa. Also, more open economies have absorbed more exports from South Africa. There is some ambiguity as to the role that distance plays in determining the level of imports into this country. The intensity indices computed in this article have to be viewed in the light of this research.     

HOW EXPOSED IS THE SOUTH AFRICAN ECONOMY TO INTERNATIONAL TRADE?

Following the policies implemented during the 1990s, the South African economy has become more globalised. This is particularly the case as far as international trade is concerned. The implementation of trade reforms, in some cases faster than WTO commitments, has increased the exposure of the South African economy to international trade. Trade in intermediate inputs increases the external orientation of an industry and hence increases the economy's exposure to trade. This in effect means that the economy is more open to external trade shocks than is conveyed by the traditional openness measure which considers only the trade in final products. This paper uses a measure proposed by Campa and Goldberg (1997) to estimate the exposure to trade and finds that around 79 per cent of output in 2000 was accounted for by industries that became more exposed to international trade. Further, domestic production has become more reliant on imported inputs with around 60 per cent of South Africa's GDP being accounted for by industries with a negative external orientation (i.e. industries where imported input costs exceeded export revenue). In addition, it was also found that those sectors that became more externally oriented had lower inflation rates and higher growth rates than the other sectors in the economy for the period under analysis. The extent to which the increased exposure to international trade facilitated these developments remains topical for further research.     

Combating poverty in South Africa

The successful and peaceful political transition in South Africa is regarded as a great accomplishment for its people. Unfortunately, democracy was not accompanied by economic growth and policies that could lead to a meaningful quality of life and an acceptable standard of living for all the country's citizens. There is a need for South Africa to reconcile the expectations resulting from the achievement of democracy with the realities of both the problems and the potential of the economy. As South Africa attempts to alleviate poverty through development, it is essential to balance the ever-increasing and often competing demands against limited natural resources. This article formulates some policies and programmes designed to combat poverty at its source.     

The Mystery of Missing Real Spillovers in Southern Africa: Some Facts and Possible Explanations

Anecdotal evidence suggests that the economies of South Africa and its neighbours (Botswana, Lesotho, Mozambique, Namibia, Swaziland and Zimbabwe) are tightly integrated with each other. The multiple interconnections suggest that South Africa's GDP growth rate should affect positively its neighbours'. However, our review of the available econometric evidence and our panel growth regressions suggest that there is no strong evidence of real spillovers in the region after 1994, once global shocks are controlled for. More generally, we find no evidence of real spillovers from South Africa to the rest of the continent post‐1994. We investigate the possible reasons for this lack of spillovers. Most importantly, the economies of South Africa and the rest of Sub‐Saharan Africa might have decoupled in the mid‐1990s. That is when international sanctions on South Africa ended and the country re‐integrated with the global economy, while growth in the rest of the continent accelerated due to a combination of domestic and external factors.     

Reciprocity in trade relations between South Africa and Europe

This article sets out the arguments, from South Africa's perspective, for a free trade agreement (FTA) with Europe. It argues against signing the Lome Convention. These arguments have more force if the right kind of FTA can be negotiated, because the greater the benefit South Africa derives from such an agreement, the more the credibility of domestic economic policies will be enhanced. Some requirements for the ‘right’ type of FTA are discussed.     

Real Exchange Rate in China：A Long-run Perspective

This paper investigates the RMB exchange rate from a long‐run viewpoint. Whether China's rapid economic growth brought about real exchange rate appreciation between 1975 and 2002 is empirically examined, based on a supply‐side model, the Balassa—Semuelson Hypothesis (BSH). The same test is conducted on Japan, Hong Kong, Korea, Malaysia, Singapore, Thailand, the Philippines, Indonesia and India. Our result indicates that the BSH only exists where the industrial structure has been upgraded and the economy has been successfully transformed from an agricultural economy to a manufacturing economy. Interestingly, China, among those where the BSH does not present, appears to be upgrading its industrial and trade structure. We then try to answer the question of why past rapid growth has no significant relationship with the RMB real exchange rate and what factors are underlying the trend of the RMB real exchange rate. We expect an appreciating trend of RMB real exchange rate in the foreseeable future, presuming that China's industrial upgrading process continues and the factors pertaining to the BSH's prediction, such as rise of wage rates in both tradables and nontradables, become more significant. (Edited by Xiaoming Feng)     

The misalignments in Chinese real effective exchange rate from 1994 to 2020: A counterfactual analysis

Using a novel panel data method proposed by Hisao, Ching and Wan (2012), we empirically evaluate the misalignments between the actual and counterfactual values of Chinese real effective exchange rate (REER, CPI-based) from 1994 to 2020, where “counterfactual” refers to the counterfactual scenarios that some major economic events had not happened. These events include China's accession to WTO from December 2001, the reforms of exchange rate regime in July 2005, June 2010 and August 2015, China's economic stimulus package in November 2008, and the US-China trade dispute started from March 2018. We calculate the counterfactual values for both real and nominal effective exchange rates (REER and NEER) in order to examine the channels of the misalignments. We find that the reform of China's exchange rate policy in July 2005 and August 2015 increased Renminbi's trade competitiveness in real term compare to foreign currencies, while other events decreased it or had no effects. The misalignments in REER are caused by the changes in both NEER and China's CPI.     

Rethinking Fast Growth in China＇s Foreign Exchange Reserves

I. Introduction Since 2000, China’s foreign exchange reserves have been growing fast. By the end of 2001, China’s foreign exchange reserves had exceeded US$200bn and by the end of 2002 had reached US$286.4bn. By the end of 2003, it had reached US$403.3bn and in 2004 it reached US$609.9bn. In 1999, China’s foreign exchange reserves accounted for 15.6 percent of its GDP. The ratio has been growing continually and was 36.88 percent of GDP by 2004 (see Table 1), making China the second…     

Openness,Regional Trade Agreements and Growth: Evidence from Asia*

This paper assesses the relationship between regional trade agreements, trade integration and economic growth in 21 South and South‐East Asian countries over the period from 1980 to 2004. We aim to answer the following questions. First, how does the trade policy of a given country (and countries within the same region) affect a nation's domestic growth? Second, should developing economies in South and South‐East Asia engage in regional trade agreements (RTA) or move towards broad liberalization? Our results show that openness of either a single country or of its neighbors does not affect a nation's growth and that the impacts of RTA are unclear (if not detrimental to growth in some cases, once endogeneity is accounted for). Panel Granger‐causality tests running from openness to growth yield mixed results and some conclusions depend on the particular subsample under scrutiny.     

Implications for Indonesia of Asia’s Rise in the Global Economy

This article projects Indonesia's production and trade patterns to 2020 and 2030 in the course of global economic development under various growth and policy scenarios. We support our projections of the global economy by employing the Global Trade Analysis Project (GTAP) model and version 8.1 of the GTAP database, along with supplementary data from a range of sources. Our baseline projection assumes that trade-related policies do not change in each region, but that endowments and real GDP do change, at exogenously selected rates. We use this baseline and its assumptions to analyse how potential global changes may affect the Indonesian economy over this and the next decade. We then consider the potential impacts of three policy reforms by 2020: an increase in global rice exports, associated with the opening of Myanmar; the recently imposed export taxes in Indonesia on unprocessed primary products; and the implementation of Indonesia's new food law.     

Evaluating South Africa's Open Economy

The competing theories of the macroeconomic trilemma and dilemma are empirically tested for South Africa. The empirical findings show evidence of the trilemma theory being applicable to South Africa, supporting the country's ability to maintain monetary independence (MI). An empirical puzzle, however, emerged as South Africa's MI index decreased during the country's 2000–2014 inflation‐targeting period. A possible explanation, and subject for further research, is that the increasing opening of South Africa to international flows since 1995 may have caused South Africa to be more exposed to international business cycles and shocks, resulting in a reduction in measured MI.     

The Structure of Protection in Indonesia in 1989 1

Around the mid-1980s, Indonesia's protectionist regime supported an industrial structure in which industries were mainly oriented towards producing for the domestic market. Since then, trade policies have shifted to a more outward-looking strategy, stimulating the growth and diversification of non-oil manufactured exports. This paper attempts to quantify the nominal and effective rates of protection resulting from trade policies at the end of the 1980s. After an introduction in which the 1989 trade policies are discussed, estimates of nominal and effective rates of protection are presented. It is shown that though the level of protection has declined since 1987, it still varies widely across economic sectors. Furthermore, despite the more open trade strategy, the paper's findings show that the trade regime remains biased against exports. Finally, by examining some trade policy issues, the paper presents further ways of rationalising the structure of protection in Indonesia's industrial sector.     

DEMAND FOR MONEY AND EXPENDITURE COMPONENTS IN SOUTH AFRICA: ASSESSMENT FROM UNRESTRICTED ERROR-CORRECTION MODELS

The main aim of this study is to examine empirically the long‐run relationship of money demand and its determinants in South Africa. In contrast with existing studies on the subject, the present study considers various components of real income as determinants. The disaggregated components are final consumption expenditure, expenditure on investment goods and exports. The other determinants are domestic interest rate, yield on government bonds and the exchange rate. The results confirm that the different components of real income have different impacts on the demand for money in South Africa. The presence of long‐run equilibrium relationships between the demand for real M1, M2 and M3 and their determinants is confirmed based on the results of bounds testing.