Developing a Trade and Industry Policy for the Service Sector in South Africa

The manufacturing sector has traditionally been the primary focus of both the trade and industrial policy literature and the national departments of trade and industry which practiced the policy for economic development. The reason lies in the ability to trade in manufactured products. Services, by contrast, are often non-tradeable. This paper begins by looking at the aggregate contribution of service industries to the South African economy. This effort concentrates on the contribution to output, growth, capital formation, employment, trade and foreign investment. The second section takes the reader one level down, analysing the nature of service production in South Africa. The detail lies around the extent of its intermediate role, the multiplier effect of rising output, the capital and skill intensity of production, and openness to trade and competition. Each measure is evaluated in terms of relevance to policy-making, South African empirical values and the implications for policy. The final section of the paper is dedicated to bringing the disparate themes together and exploring some policy issues in the South African context. It considers where trade and industrial policy from the DTI might be directed and what types of tools may be used.

  • Authors: James Hodge
  • Year: 1998
  • Organisation: TIPS/DPRU
  • Publisher: TIPS
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