| Abstract: | This paper examines the responses of firms in the textile industryof South Africa to that country's rapid liberalisation of tradesince the early 1990s. The data reveal that there have beenincreased exports accompanied by reductions in employment andcontraction of production of yarns and fabrics. Drawing on asurvey of companies, followed by interviews, it documents howcompetitive pressures from imports have led firms to increasetheir exports. Exporting is not, however, directly associatedwith better performance. This is due to its being a responseby many firms to weak domestic demand and the need to maintainproduction capacity. But, liberalisation has also been accompaniedby much upgrading of equipment and by increased specialisationand vertical disintegration in order to develop competitiveniches despite South Africa's manufacturing wage levels beinghigher than those of many of its international competitors.Firms focusing on non-price factors of export competitivenesshave been better performing. Firms have also been most successfulwhere technological capabilities based on the domestic marketprovided a foundation for export competitiveness. There areindications that with the restructuring induced by liberalisationthe sector is in a position more effectively to exploit itscompetitive strengths in international markets. In addition,the United States' African Growth and Opportunity Act (AGOA)offers some stimulus for the textile industry to supply fabricsto firms in the export garment sector which previously importedthem. |
