Trade and Industrial Policy for South Africa’s Future

Lawrence Edwards ()

ERSA Working Paper Series, 2024

Abstract: South Africa is facing an export crisis. Over the past decade, the proportion of real exports to GDP has decreased, the number of exporters has dropped, and the number, diversity and complexity of exported goods has diminished. To foster export-led growth, South Africa must rethink its trade and industrial policies. Current localization strategies will not develop a robust export base. Success in boosting exports requires a shift in mindset regarding imports, as the two are interconnected. Industrial policy should prioritize horizontal approaches that address widespread constraints on export activities, rather than focusing on select sectors. Effective industrial policy must facilitate coordination among the state, business, and labour. To achieve these objectives, the Master Plans should be revised to serve as platforms for addressing specific export constraints and enhancing productivity through public investments, rather than relying on subsidies and tariffs. Trade policy needs to simplify the tariff structure, eliminate tariffs on non-produced goods, end reciprocal agreements, and pursue trade agreements with emerging markets. Furthermore, trade in services should not be overlooked. The rise of digitalization offers new potential for services exports, but this necessitates reducing the restrictiveness of South Africa’s regulatory environment, engaging in the World Trade Organization's Joint Statement Initiative on e-commerce, and including services in both existing and forthcoming trade agreements.

Keywords: Industrial Policy; South Africa (search for similar items in EconPapers)
Date: 2024
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