The Impact of Tariff Liberalisation on the Competitiveness of the South African Manufacturing Sector During the 1990s

During the 1990s, South Africa's trade policy was drastically reformed. This mainly entailed rapid tariff liberalisation agreed to under the General Agreement on Tariffs and Trade (GATT) in 1994, and implemented from 1995 onwards under the auspices of the World Trade Organisation (WTO). South Africa's trade policy reform was premised on the assumption that tariff liberalisation would increase the competitiveness of domestic manufacturing industries. This paper attempts to ascertain whether this did in fact materialise by critically appraising the impact of trade policy reform on production in the South African manufacturing sector. The results indicate that tariff liberalisation has not been successful in securing improved competitiveness. The thesis argues that improved competitiveness goes beyond trade policy reform; government polices should also be directed at issues relating to efficiency in production, distortions in factor markets and institutional development. The desired or appropriate level of openness does not necessarily entail completely free markets for trade and investment. In light of the existence of market and institutional failures, the role of government in securing desired industrial outcomes should not be underestimated.

  • Authors: Juganathan Rangasamy
  • Year: 2003
  • Organisation: University of Pretoria
  • Publisher: n/a
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