Lennart Petersson

Integration and intra-industry trade adjustment in South Africa

This article analyses intra-industry trade adjustment by the Southern African Customs Union after 1994, and links between trade liberalisation and employment are examined. The traditional Grubel-Lloyd index is complemented by marginal inter- and intra-industry trade measures, and trade expansion of sectors is scaled, related to change in total exports and imports. In three different empirical approaches, large differences are found: in the level of intra-industry trade (IIT) between different sectors (categorised into resource-based, labour-intensive, scale-intensive and differentiated industries); in the level of IIT of individual sectors in trade with the SADC6, the European Union and the rest of the world; and in the economic significance of trade expansion for different industries and with different trading partners. Trade expansion is dominated by differentiated and scale-intensive industries, indicating that the main economic gain of international integration is found in the opportunity to exploit economies of scale in a larger market. IIT and marginal IIT are positively related to increases in labour productivity, and negatively related to employment change. Interindustry trade and both export and import expansions are positively related to employment gain, but only export is positively related to increased labour productivity.

The South African dream and the three stumbling blocks

Most South Africans nurture a strong hope for a better future. The South African economy, however, has considerable problems with respect to both growth and employment, which in turn reduce the scope for redistribution of the national income. This article deals with a number of stumbling blocks that the political and economic decision makers may be tripped by and which may make the South African dream nothing but a dream. These are: obstacles to growth, increasing economic and social differences, and unfavourable political development.