Asia's Export Performance
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- Date Submitted: 02/08/2010 02:48 AM
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1. INTRODUCTION
The election of a new democratic government in 1994 led to a number of major economic policy reforms. Following an era of macroeconomic mishandling by the apartheid regime, the country was left in an economic turmoil and things had to take a turn (Abedian, 2005). The new government was of the view that in the long run, sustained economic growth at higher levels would entail transforming the country into a competitive outward economy (Gear, 1996). In April 1996 the government unveiled the Growth, Employment and Redistribution macroeconomic policy (GEAR) strategy. “In addition to encouraging growth and employment, this strategy aimed to transform South Africa into a competitive, outward orientated economy ”(Alves & Edwards, 2006 ).
However, it is more than a decade since GEAR’s inception, and its success and the successes of other policies that followed still remain vague, especially in addressing the issues of international trade, and particularly export performance. Exports of manufactures have increased but not sufficiently to ignite an export-propelled economy as is the case with East Asian countries (Edwards, 2006). Alves and Kaplan (2004) further argue that South Africa’s exports are resource based and the country has failed to diversify into new and fast growing export sectors.
This essay will firstly present a comparative overview of South Africa’s export performance to that of its Asian counterparts. Thereafter, based on theoretical and empirical evidence, macroeconomic (exchange rates and inflation) and microeconomic (unit labour costs and domestic competition) policy recommendations will be made. The final section concludes.
2. SOUTH AFRICA’S EXPORT PERFORMANCE: A COMPARATIVE OVERVIEW.
The 1980s and 1990s were characterized by declines in exports as a share of gross domestic product. As a share of nominal gross domestic product (GDP), exports showed a sharp decline from 33 percent in 1980 to 22 percent in...
The election of a new democratic government in 1994 led to a number of major economic policy reforms. Following an era of macroeconomic mishandling by the apartheid regime, the country was left in an economic turmoil and things had to take a turn (Abedian, 2005). The new government was of the view that in the long run, sustained economic growth at higher levels would entail transforming the country into a competitive outward economy (Gear, 1996). In April 1996 the government unveiled the Growth, Employment and Redistribution macroeconomic policy (GEAR) strategy. “In addition to encouraging growth and employment, this strategy aimed to transform South Africa into a competitive, outward orientated economy ”(Alves & Edwards, 2006 ).
However, it is more than a decade since GEAR’s inception, and its success and the successes of other policies that followed still remain vague, especially in addressing the issues of international trade, and particularly export performance. Exports of manufactures have increased but not sufficiently to ignite an export-propelled economy as is the case with East Asian countries (Edwards, 2006). Alves and Kaplan (2004) further argue that South Africa’s exports are resource based and the country has failed to diversify into new and fast growing export sectors.
This essay will firstly present a comparative overview of South Africa’s export performance to that of its Asian counterparts. Thereafter, based on theoretical and empirical evidence, macroeconomic (exchange rates and inflation) and microeconomic (unit labour costs and domestic competition) policy recommendations will be made. The final section concludes.
2. SOUTH AFRICA’S EXPORT PERFORMANCE: A COMPARATIVE OVERVIEW.
The 1980s and 1990s were characterized by declines in exports as a share of gross domestic product. As a share of nominal gross domestic product (GDP), exports showed a sharp decline from 33 percent in 1980 to 22 percent in...