Measuring the export capability of South African regions

Recent research has identified what determines local exports and what policies might make them grow. Regions with higher Gross Domestic Product per capita, faster population growth, higher levels of skills, greater export diversification and shorter distances to ports have experienced faster export growth. However, the results of regression models apply to a theoretical representative region and do not allow one to establish where policy interventions will be most effective. This article constructs an index to identify the regions in South Africa that can export manufactured goods. It draws on the literature of the determinants of exports for indicators of the capability (or potential) to export across 354 magisterial districts in 1996 and 2001. The results show a positive relationship between export capability and export performance. The article identifies a number of front-runner magisterial districts along with those of high capability but low performance that stand to benefit most from industrial policy interventions.     

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.     

Reconstructing rural education: Planning for equal access to rural schools in the North West Province

The eighteen former apartheid education departments in South Africa now fall under the authority of a single ministry. However, the full integration of various education authorities at the district and local levels within a unified delivery system that maximises non‐racial access to rural schools, has yet to be accomplished. A study was initiated in the rural Marico and Lehurutshe regions of the North West Province to investigate how equitable access to rural schools on a non‐racial basis could be achieved, and to identify practical constraints on systems of delivery. Over 100 schools in the study area were mapped using Geographical Information Systems technology. It is clear that the characteristics of the education system inherited from the apartheid past will impede the reconstruction of rural education. In order to plan accurately for compulsory schooling, planners will need more detailed population data on out‐of‐school students. They will also have to take into account local geographical features and economic growth nodes near which schools may be placed in order to maximise efficiency and accessibility.     

The Location of Manufacturing Exporters in Africa: Empirical Evidence

Abstract: The costs of accessing and using a port/export hub should be high on the list of priorities for export promotion agencies in Africa. This conclusion emanates from this paper focusing on the geographical location of manufacturing export industries in South Africa. Here manufacturing export firms tend to be spatially concentrated with about 84 per cent of total manufacturing exports produced in only 6 per cent of magisterial districts. Distance from an export hub is negatively related to the density of manufactured exports. The largest volumes of manufactured exports are generated within 100 km of an export hub. For electronics, about 98 per cent of manufacturing takes place within 100 km of an export hub. Comparison over time showed that the number of locations from which manufacturing exports occur increased by 15 per cent over 1996–2004 and that manufacturing exports increased in the band between 200 and 400 km from the nearest hub.     

Distance to Growing Markets and Sub‐Saharan African Exports*

Abstract: A typical person in sub‐Saharan Africa is a long way from world markets and is further from world markets now than in 1980. This partly reflects slower growth within Africa than for the world as a whole. Despite slower growth in Africa, African exports have become increasingly regionalized. By 2005, a country in Africa typically exported more than twice as much to a country in its own region as would be expected based on economic size and bilateral distance. This regionalization was not present in the early 1980s and has become stronger over time. We find evidence of positive neighborhood effects through exports, but sub‐Saharan countries benefit less from growth in their own region than this typical relationship indicates. Given the small share of exports destined to their neighbors, low‐income countries in sub‐Saharan Africa experience relatively modest export growth from growth in the region. These factors imply that African countries are unlikely to pull each other out of poverty and a regional focus may be less effective than a focus on countries outside of the region.     

Measuring the Carbon Intensity of the South African Economy

We estimate the carbon intensity of industries, products and households in South Africa using data from a high resolution supply‐use table. Direct and indirect carbon usage is measured using multiplier methods that capture inter‐industry linkages and multi‐product supply chains. Carbon intensity is found to be high for exports but low for major employing sectors. Middle‐income households are the most carbon‐intensive consumers. These results suggest that carbon pricing policies (without border tax adjustments) would adversely affect export earnings, but should not disproportionately hurt workers or poorer households. Seven percent of emissions arise through marketing margins, implying that carbon pricing should be accompanied by supporting public policies and investments.     

Off‐farm wage returns to education: Evidence from Lesotho

This article presents estimates of off‐farm wage returns to education in rural areas of Lesotho. Results from a sample survey conducted in the northern Lowlands and Foothills of Lesotho indicate that returns to education are relatively higher for people wage‐employed in Lesotho than those wage‐employed as migrants in South Africa. For people working within Lesotho, education appears to have a significant and positive effect on off‐farm wages. Most people working within Lesotho are employed as teachers, nurses and civil servants and these job categories require an educated labour force. For people wage‐employed in South Africa, education appears not to have a significant effect on off‐farm wages. Most men working in South Africa are employed as labourers in mines while women working in South Africa are employed as domestic servants.     

SOUTH AFRICA'S EXPORT PERFORMANCE: DETERMINANTS OF EXPORT SUPPLY

This paper presents both a comparative analysis of South Africa's export structure and performance and an econometric investigation of the determinants of export volumes. The paper finds that the improved growth and diversification of South African manufactured exports during the 1990s lag those of East Asia and a few other resource‐based economies. This performance in part reflects relatively low world growth in resource‐based products, but factors that affect the profitability of export supply, such as the real effective exchange rate, infrastructure costs, tariff rates and skilled labour, are also shown to be important. Export demand and the ability to compete in the export market on the basis of price are not found to be a major constraint to export growth.     

Are Manufacturing Exports the Key to Economic Success in Africa?

The poor performance of many African economies has been associatedwith low growth of exports in general and of manufacturing exportsin particular. The two most successful countries in Africa havebeen Botswana and Mauritius. In Botswana, rapid export growthfollowed the discovery of diamonds; in Mauritius, manufacturingexports played a major role. In this paper we draw on both macroand micro evidence from nine African countries to investigatewhether manufacturing exports are the key to success in Africa.We do this by posing three questions. First, how close is thelink between export and income growth? Second, is there evidencefrom these African countries that manufactured exports haveled to greater economic success? Third, what has limited thesuccess of firms in the manufacturing sector? We argue thatexport and income growth are very closely linked. However, thereis, for this sample of countries, no evidence that if theirexports are manufactures, growth rates are higher. We show thatthe factors that limit the success of African manufacturingfirms in exporting are their levels of efficiency and smallsize. We argue that the key to success in an area where Africahas a potential cost advantage — labour-intensive garments— is to enable large firms to use a more labour-intensivetechnology than is the case at present.     

EXPORT‐LED GROWTH IN CHILE: ASSESSING THE ROLE OF EXPORT COMPOSITION IN PRODUCTIVITY GROWTH

This study examines the export‐led growth hypothesis using annual time‐series data from Chile in a production function framework. It addresses the limitations of the existing literature and focuses on the impact of manufactured and primary exports on productivity growth. In order to investigate if and how manufactured and primary exports affect economic growth via increases in productivity, several single‐equation and system cointegration techniques are applied. The estimation results can be interpreted as evidence of productivity‐enhancing effects of manufactured exports and of productivity‐limiting effects of primary exports.     

Export Promotion Policies and the Crowding‐out Effect in Developing Countries*

Critics of export promotion policies have pointed out a fallacy of composition, where what is viable for a small country acting in isolation might not be viable when pursued by a group of countries simultaneously. This paper investigates the crowding‐out effect of the fallacy of composition; that is, whether developing countries that specialize in exports of manufactured products compete and crowd out one another's exports. The results of fixed‐effects panel estimation suggest that developing countries are not crowding out one another's exports. Instead, they are crowding out Western European countries’ exports of manufactured products.     

Water management options for food security in South Africa: scenarios,simulations and policy implications

Recent research activities of the International Water Management Institute on water and food security have led to the development of a user‐friendly simulation model, Podium, to test national policy options on water allocation to different uses. This article presents an application of the model to South Africa, where water resources development and management constitute a high national priority. Data on demography, nutritional requirements, food imports and exports, climate and hydrology are used to create scenarios about meeting future water requirements for food production while simultaneously satisfying the water requirements of other sectors. The simulation results highlight the need to improve productivity in irrigation and also intensify rainfed agriculture to avoid future food insecurity, especially under high population projections. Merely expanding irrigated areas will not make significant impacts on national‐level food security. There also appears to be scope for increasing domestic per capita water consumption without altering current diversions for agriculture and other requirements.     

South African Exporters and the Global Crisis: Intensive Margin Shock,Extensive Margin Hangover

This paper examines how changes at the intensive (established exporters exporting existing products to established markets) and the extensive (new exporters, products or markets) margins contribute to South African export growth and how this was affected by the global financial crisis. We find that the intensive margin is the more important contributor to export growth, contributing more than three quarters of observed growth. The intensive margin contracted significantly during the global financial crisis of 2009 but bounced back to pre‐crisis levels quickly. However, the impacts on the extensive margin persisted after the crisis with lower levels of entry of firms, new products and new destinations. The short‐term impact of the crisis was mitigated by the concentration of South African exports among larger, more productive super‐exporters. However, the fall in entry of new firms, products and destinations as a result of the crisis may mean that this concentration persists, and, at least over the next few years, South Africa does not diversify and broaden its exports.     

Key issues in regional growth and integration in Southern Africa

ABSTRACT

The decade to 2015 saw rapid growth in trade between Southern African Development Community (SADC) countries. Much of this growth reflected South African exports to its neighbours of diversified manufactured goods to meet growing urban consumption and to supply inputs to mining and infrastructure. While most SADC countries, aside from South Africa, grew quite rapidly over this period, their exports remained oriented to a narrow range of minerals and agricultural commodities destined to go outside the region. Drawing from a series of sectoral studies, we assess key regional issues including the investment and production decisions of firms whose operations stretch across borders, and consider the implications for a bottom-up integration agenda that could build productive capabilities across countries. Our evaluation highlights the importance of the spread of supermarkets, the need to address transport and logistics, and value chains whose competitive advantages are inherently regional, as in the cases of poultry and mining.     

Revisiting the Exchange Rate Pass‐Through to Inflation in Africa’s Two Largest Economies: Nigeria and South Africa

This paper revisits the exchange rate pass‐through (ERPT) to inflation in Nigeria and South Africa by incorporating structural breaks and using time series variables, namely the consumer price index, nominal effective exchange rate, gross domestic product, and crude oil price. Based on the Maki cointegration test and a flexible estimation approach of the Autoregressive Distributed Lag (ARDL) model, our empirical evidence suggests that the long‐ and short‐run ERPT to inflation is complete for Nigeria, while for South Africa it is incomplete both in the long run and short run. This result indicates that prices are stickier in South Africa compared to Nigeria. The comparison between Nigeria and South Africa confirms the role of inflation targeting and central bank credibility on the ERPT. The results divulge further that output growth in Nigeria increases inflation in the long run while it is anti‐inflationary in the short run. For South Africa, the effect of output growth is negatively insignificant. In addition, the long‐run effect of oil price is negative and significant for Nigeria, while for South Africa the short‐run effect of oil price is positive and significant. Therefore, the findings of this paper will assist the monetary authorities to achieve monetary policy objectives.     

Education and population awareness in developing countries

Rapid population growth is a fundamental concern of contemporary society, particularly in developing countries. One of the immediate results of rapid population growth in a country is the explosive growth of the school‐age population. This often militates against improvement of the quality of education. To facilitate population awareness among national populations from an early age, many governments introduce population education into school syllabuses. In South Africa such a step has not yet been taken, even though it seems warranted.     

EDUCATIONAL ATTAINMENT DIFFERENCES BETWEEN POPULATION GROUPS IN SOUTH AFRICA AND THE TIMING AND NUMBER OF BIRTHS

From 1981 to 2005, the total fertility rate in South Africa has been reduced from an estimated level of 4.6 to 2.8 children per woman. The relative differences in the total fertility rate between population groups, however, remain large. Our empirical analysis of the determinants of the timing of births shows that better‐educated women schedule birth later and have fewer children. The differences in education between population groups account for a substantive part (up to 40%) of the differences in completed fertility between the population groups. Our findings suggest that educational reforms aimed at equal access to education, which benefit African women most, may not only improve the quality of life of women but also, through their impact on fertility behaviour, yield long‐run benefits, as they will have fewer children and more resources to invest in the next generation.     

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.     

SOUTH AFRICA AND THE NEW PARTNERSHIP FOR AFRICA'S DEVELOPMENT: ECONOMIC SPIN-OFFS AND LINKAGES

The New Partnership for Africa's Development (NEPAD) is a concerted effort by Africa's political leaders to develop a comprehensive and integrated strategic policy framework to raise current levels of socio‐economic development and reduce high levels of poverty across the African continent. The NEPAD framework recognises the need for African countries to pool their resources together in order to enhance regional development and economic integration. To this end, NEPAD emphasises capacity building and also seeks to solicit and disburse funds towards infrastructural development programmes and poverty alleviation projects, among others. South Africa's involvement with the rest of Africa has increased significantly since 1994. Trade exports, foreign direct investment (both market and resource‐seeking in nature) and public‐private partnerships have mushroomed in many parts of the continent. Many South African firms are providing the financial impetus for the infrastructural development and rehabilitation of African economies. This paper discusses salient economic linkages between South Africa and the rest of Africa within the framework of NEPAD. South Africa is the economic hub of sub‐Saharan Africa (and indeed of the African continent), with significant agricultural, manufacturing and services capacity. South African firms have invested in the development of a number of sectors in the rest of Africa, taking advantage of the new investment incentives offered by the NEPAD framework. The target sectors range from mining, the hospitality industry, engineering and construction, finance to telecommunications. These investments and economic involvements are crucial to the development of African countries and the relevant sectors that are important for the realisation of some of the objectives of NEPAD.     

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.