This study explores the potential for South Africa to become an engine for intraregional trade and industrial development by linking other Southern African countries to its global value chains and, in the process, improving its global trade competitiveness. The study identifies 'lead products' exported by South Africa, and then uses revealed comparative advantage and unit cost analysis to identify intermediate inputs in which Southern African countries have competitiveness to export that is currently untapped due to a lack of supply capacity or other factors. Such products are potential areas where regional investments could lead to the successful creation of regional value chains. The study also identifies 'new markets' for agricultural lead products exported by South Africa, which could open new opportunities for Southern Africa to supply intermediate agricultural inputs.
Empirical evidence on the extent to which product markets are integrated within Africa remains noticeably limited. This paper uses highly disaggregated retail price data for 32 narrowly defined products collected at the district level in five SADC countries (Botswana, Malawi, South Africa, Tanzania and Zambia) and Uganda to assess the extent to which product prices are integrated within and between these countries. We find evidence of large and persistent absolute deviations from the law of one price (LOP) both within and between each of the six countries. We also find that price dispersion is higher between the six countries in comparison to within individual countries. Simple econometric estimates indicate that, on average, absolute price deviations between country pairs are smaller for countries adjacent to each other and for countries that share common membership in the Southern African Customs Union, the Common Market for Eastern and Southern Africa or the East African Community. We find no evidence that product prices in the region have become more integrated between 2001 and 2011, despite the liberalization of tariffs under the SADC Protocol on Trade. This implies that trade liberalization may not be sufficient on its own to generate greater product market integration within the region.
This study explores the potential for South Africa to become an engine for intra-regional trade and industrial development in Southern Africa. It focuses on new backward linkages that can be created from South African exports of final products to producers of intermediate inputs in other Southern African countries. We do so by identifying South Africa's lead products, where it has formed its own GVCs, and, in turn, earmarking intermediate inputs used in the production of these lead products.Using Revealed Comparative Advantage and Unit Cost analysis, we identify Southern African countries that could supply the identified imported intermediate inputs more competitively than South Africa's existing partners and kickstart regional integration. We explore issues around the nature of linkages, supplier capabilities and industrial policies in the region, with special reference to the identified product value chains. Focusing on the agricultural sector-a key regional priority with immense potential for industrial growth and large-scale employment-we also identify existing agricultural lead products in South Africa, and the 'new markets' to which South Africa can export.
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