Displaying items by tag: Trade Policy

Member countries of the Southern Africa Development Community (SADC) engaged in a number of bilateral trade liberalisation agreements and initiatives from as way back as the 1950s, the main objective being to increase bilateral trade flows through deeper opening and access of regional markets. Southern African countries saw these ‘country to country' trade agreements coupled with the adoption, by the SADC region, of a ‘Protocol on Trade' (TP) in 1996, and its implementation from 2000, was viewed as a coherent trade policy strategy to promote regional economic growth and help reduce poverty. Bilateral trade flows have been analysed on sensitive products textiles and apparel, cereals and vehicles between SADC countries that have signed bilateral trade agreements between themselves and implemented the SADC TP which led to the adoption of a SADC Free Trade Area in 2008. Analysis focused on sensitive products because preferential bilateral trade agreements seem to be more generous (offer better concessions) on these products as compared to commitments member states undertook at the wider regional level under the SADC TP. Trade creation on wheat and sugar products dominates trade diversion even though the percentage increase in trade in these products is small. Moreover, there is no conclusive evidence that bilateral trade agreements increased bilateral trade flows beyond the market access opportunities provided by the SADC TP except only for textile products from Malawi into South Africa. SADC countries need to do more to implement commitments in their bilateral trade agreements to realise the real market access benefits of trade liberalisation. 

This paper proposes that non-temporary circular migration creates and sustains 'circular migration flows', which are the outcome of the continuous interaction between sending and receiving countries that is created and sustained by migration and by transnational networks. Circular migration generates both pecuniary and non-pecuniary flows which are conducive to enterprise creation and development.  A positive migratory experience will see an individual increasing his or her financial, human and social capital, and this facilitates entrepreneurial activities in both home and host countries, including fostering trade linkages between sending and receiving countries. Hence this paradigm helps us consider how migration can stimulate employment. This paper considers this premise with reference to the Southern African sub-region.

Maize is the most important staple cereal product consumed in the Southern African region. The purpose of this paper is to examine the origins of the global 2007/8 food price crisis and the impact this had on the trade in maize within the SACU customs union as well as to consider the impact on consumer prices of maize. The reason why maize is central to this issue is not simply because of its roles as the principle staple food product of the SACU region but because much of the global crisis that occurred in 2008 had its origins in changes in US ethanol policy which were related specifically to the maize sector. The paper also considers whether in fact changes in VAT policy with appropriate and targeted poverty alleviation programs will achieve the objective of decreasing poverty in the SACU region. Lastly the paper considers duty on maize meal and processed maize products which serves to raise the import parity price for meal in an already oligopolistic market.

The paper has attempted to contribute to a key issue in the current debate on economic development: the link between trade and poverty. The paper focused on the impact of imported chickens on Zimbabwe's poultry industry. The general aim of the study was to find the impact of imported chicken on producers, consumers, retailers and government. The study relied on primary data collected through a survey. Questionnaires and interviews were used to gather information on the impact of imported chickens on producers, consumers and government. The method of ordinary least squares to estimate the model suggested to explain the linkages between trade and poverty. Quantity of domestically produced chickens, quantity of imported chickens and a dummy variable have been used as explanatory variables top rice of chickens, the depended variable. The quantity of domestically produced chickens and the dummy have been found to be significant in influencing the price of chickens on the local market. The quantity of locally produced chickens has been found to have an insignificant effect on the rice of the chickens

The results emanating from the study indicated that the imported chickens have had varied impact on the relevant players in the poultry industry. The consumers and retailers benefited, while producers lost. From the study the consumers benefited from a price reduction of chickens as a result of the influx of imported chicken in Zimbabwe. This translated to an improvement in welfare and hence has poverty reduction effect. The consumer surplus gain was estimated to be $24 334. Producers generally faced stiff competition from imported chicken and hence their production was reduced. Retailers benefited most from price differential margin. They imported chicken at lower price and tried to match though generally at lower price the local producer's prices. Other significant results found were that the imported chickens have an impact on employment. There was an increase in unemployment as a result of closure of companies which are directly linked to poultry production.

The paper concludes with proposing strategies that can be adopted to deal with the supply side constraints of the poultry industry so as to improve its competitiveness and production.

Empirical studies on regional economic integration process in Africa exhibit sluggish progress and there by limited level of intra trade. The existing literatures in Africa, particularly in Southern African regional integration bloc, SADC have neglected effects of regional economic integration dealing with disaggregated data. This study analyzes trade creation and diversion effects of the Southern African Development Community (SADC) using disaggregated data from 2000 to 2007.

The investigation estimates an augmented gravity model using panel data and random effect estimator methods. The results show that the intra -SADC trade is growing in fuel and minerals, and heavy manufacturing sectors while it displays a declining trend in agricultural and light manufacturing sectors. This implies that SADC has displaced trade with the rest of the world in both fuel and minerals, and heavy manufacturing sectors. SADC has served to boost trade significantly among its members rather than with the rest of the world. Countries participating in SADC have moved toward a lower degree of relative openness in these sectors trade with the rest of the world. However, the increasing trend of extra-SADC trade bias over the sample period in both agricultural commodities and light manufacturing sectors means that there has been a negative trade diversion effect. In other words, the value of trade between members and non-members has been increasing for the two sectors. These results seem to suggest that SADC countries retained their openness and outward orientation despite they signed the trade protocol for enhancing intra-SADC trade in agricultural and light manufacturing sectors.

Trade in services generally is viewed as a potentially viable option to contribute to the much needed economic diversification in Botswana. This study is informed by the ongoing policy discussions about the need to develop an educational hub in Botswana. It is intended to be a constructive contribution to these policy discussions. We analyse trends in tertiary education trade. Both exports and imports of tertiary education are discussed. The study does an audit of the policies, regulations and institutions in the education sector with the view to assess their readiness to support the establishment and maintenance of an education hub. The data we use are obtained mainly from the Government of Botswana, which grants most of the scholarships to citizens studying in different countries across the globe. Other information is obtained from the local tertiary institutions, which offer education mainly to citizens but do enrol a few foreign students. Also, the study discusses the trade arrangements that Botswana is party to and makes an assessment of how they can assist (or inhibit) Botswana's endeavours to develop and education hub. The study is intended for policy makers and it is hoped that it will promote productive policy direction.

With the EU sugar reforms, the overall economic weight of the sugar sector has fallen. The sugar sector's contribution to GDP is now comparatively small, around 1.9% of GDP in 2008. In this context, the Mauritian government and the private sector defined the Multi-Annual Adaptation Strategy (MAAS) to restructure and establish a more competitive sugar sector. Among the different policies of the MAAS, one measure is the implementation of the Voluntary Retirement Scheme (VRS) which is in line with the right sizing of the labour force and a reduction in the labour costs in the sugar industry. The aim of this study is to assess the impact of the EU sugar reforms on the livelihood of the VRS beneficiaries. Firstly, we analyse their living conditions before and after the reform. We, then, adopt a gender assessment evaluation of the VRS to evaluate its differential impact on men and women. Third, we investigate as to how the land and compensation they benefited have been used.

Lastly, we focus on the training aspect of the scheme. We analyse the different training programmes and see their contribution in improving the living standards of the beneficiaries. In line with the above, focus group discussions and a survey were undertaken. Focus group discussions were conducted on VRS beneficiaries in the North and South of the island. Our survey considers 175 VRS beneficiaries from five sugar estates. We observe that a high percentage of the beneficiaries move to a lower income bracket with their expenditure exceeding their present income level. Further both men and women are affected negatively under the scheme but the impact appears to be more significant for women. Further, most of the VRS II beneficiaries have not yet been trained. For those who have undergone training, they have not yet obtained a new job or applied their knowledge to set up their own business.

Tourism is increasing becoming an important phenomena for developing countries and as such it affects the livelihood of many poor people. According to Yunis (2004), tourism is growing much faster in developing countries than in developed countries. However, its potential for poverty reduction has been insufficiently recognized and exploited in developing countries (PPT 2004). The increasing importance of the tourism sector in developing economies obliges a greater investigation to ensure that tourism becomes embedded in poverty reduction strategies. Tourism is generally viewed as an engine of economic growth rather than as a mechanism for delivering on poverty reduction. It is normally argued that tourism is driven by foreign and private sector interests, and is therefore not well placed to contribute to poverty alleviation (PPT 2004). Tourism can indeed exacerbate poverty through increased local costs, loss of access to resources and social and cultural disruptions. However, tourism has the potential to change lives of the poor in developing countries as well.

About 70-75 percent of Botswana beef exports are consumed in the European Union (EU) beef market. In 1997, the EU introduced a directive which made it mandatory for beef exported to the EU to be identifiable and traceable from farm to fork through a computerized system. Botswana then introduced the livestock identification and trace-back system (LITS) in 1999 to fulfill the EU export requirements and maintain the much needed EU market access.

We believe the EU-imposed LITS may pose as a non-tariff barrier to Botswana beef trade with the EU. We use a two-period causal comparative approach to examine the effects of the EU-imposed LITS on Botswana's beef exports, revenue and poverty. The EU-imported de-boned meat requirement of individual identification of cattle and traceability of beef products has imposed an extra financial burden on government almost the size of the current budget for social safety net programmes in Botswana. Both fresh or chilled boneless beef and frozen beef exports to the EU and the real value of total boneless bovine meat exports have declined significantly over the study period.

The incidence of poverty in the rural areas was more than double that experienced in urban areas. However, the majority of cattle were owned by poorer rural households. Cattle income constituted 62 percent of gross income for poorer cattle-owning households. Thus, an increase (decrease) in income from cattle is likely to have a positive (negative) impact on the incidence of poverty in the country. Any circumstance that negatively (positively) impacts trade in the cattle industry will have a negative (positive) impact on poverty in Botswana. Livestock development support programmes that target cattle-owning households to improve cattle off-take in the rural areas will positively and significantly contribute towards poverty reduction in the country.

The focus of this article is on The SADC Trade Protocol aims for liberalization of all trade by 2012. Member countries have agreed to liberalize 85 percent of intra-SADC trade by 2008 and liberalize sensitive products by 2012. The article looks at whether SADC achieved its objectives with relation to liberalization and also tackles the challenge in maintaining fiscal sustainability after liberalization especially for low income countries.

This publication was prepared for the Inside Southern African Trade (INSAT) News Publication Issue 15 available on the Southern African Global Competitiveness Hub website, http://www.satradehub.org  

This paper evaluates the trade, business and investment climate currently in place within the island states of the Western Indian Ocean. Operating on the premise that trade-based globalization poses a considerable challenge to island states' economic stability and prospects for equitable development, this report argues that both state institutions and exporting firms in the Comoros, Madagascar, Mauritius and the Seychelles must aggressively seek to put in place policies and practices that are conducive to attracting foreign investment, encouraging private sector growth and expanding export capabilities. As part of this analysis, this paper provides a politico-economic overview of the Western Indian Ocean island states as well as a theoretical outline of academic perspectives relating to island states' prospects for growth in a globalizing world economy. This is followed by an examination of trade and investment-related trends in these four countries (informed by primary interview research) and the presentation of potential policy options these countries can pursue to improve their competitiveness and overall trade performances.

Keywords: Development Finance, Economy, Globalization, Investment, Island States, Trade, Western Indian Ocean

The Zambian economy has undergone profound reforms in the last two decades. It has transited to a market economy from the previously centrally planned economy. As part of the economy-wide reforms, the country's industrial and trade policies have also been re-oriented to suit the needs of the market-oriented economy. This paper therefore reviews the evolution of Zambia's industrial and trade policies from 1964, when the country gained independence, to 2009. This period is divided into two: the first period being before the reforms in 1991, and the second period being 1991 – 2009.

The paper focuses on the conduct of trade and industrial policies in Malawi, their linkages and impacts on the performance of the trade and industry sectors. The study establishes that Malawi has gone through three stages of trade and industrial policy. From focusing on the production and trade of a few agricultural commodities during the colonial era, the authorities shifted, in the post-independence era to industrialise through import substitution policies. Following poor economic performance in the late 1970s and early 1980s, Government adopted economic liberalisation policies under the Structural Adjustment Programmes (SAPs) which, in fact, caused manufacturing activities to decline during the SAPs period. Substantial policy reforms ensued aimed at enhancing the performance of trade and industry. Government has adopted and applied a range of policy measures aimed at boosting investment and export incentives and regional integration and miscellaneous trade agreements were pursued to expand the market. In spite of steps towards a favourable policy environment, little progress has been made in particular areas such as that of the diversification of exports.

This paper looks at the nature and extent of linkages between trade and industrial policies in Zimbabwe. The paper establishes that the trade and industrial policies are interlinked in Zimbabwe. The study indicates that trade policy is one of the implementation strategies of the industrial policy - further illustrated in this paper specifically using the example of the clothing and textile industry. The policies are strongly linked in that one focuses on production capacities and the other provides a platform for the exchange of the goods produced. Also, the paper highlights the fact that the two policies are dependent on regional integration.

The paper recommends that the country needs to create a conducive macroeconomic environment for the economic agencies. It is critical to restore and increase the country’s normal capacity utilisation and other sectoral linkages such as the agriculture, mining, tourism and construction which have been under severe stress in the past ten years. The paper suggests that while a strong focus has been placed on priority industries, the country must also give priority to other products.

This paper aims to establish the links between the industrial policy and the trade policy in Botswana. The paper finds that after gaining independence the Botswana government has deliberately targeted industrialisation as a strategy to overcome the high concentration of economic activities and welfare of the country centred on diamonds. The strategy aimed at creating an enabling environment for the establishment, growth and development of particular types of firms through financial support. The government also centered trade policy in negotiating for preferences for Botswana's products whilst securing import requirements at competitive prices. There is evidence, nevertheless, that the formulation of trade policy, such as tariff policy, was largely disengaged from Botswana's industrial policy considerations. Commitments under SACU and SADC affect Botswana government's use of trade policy for own purposes.. Partly combined moreover with the cession of industrial policy to South Africa for most of the pre- and post-independence period, the study generally concludes that the link between the Industrial policy and trade policy has been weak.

Market selection methods, of which a vast number exist, are a critical tool in firms' and government's policy, planning and budgeting processes. To this end, the primary aim of this paper is to determine the international market selection method best-suited to the identification of potential export opportunities for South Africa. The secondary aim is to apply the chosen method to South Africa in order to determine realistic export opportunities (country-product combinations). The decision support model chosen for application in this study consists of a screening process of four consecutive filters, through which relevant information on markets (such as country risk indicators, macroeconomic data, imports per product group, etc.) is fed, and which allows the identification realistic export opportunities. Results are reported on the application of this decision support model to the case of South Africa, adapted for an analysis of foreign trade data at the SITC four-digit level up to 2004. In this way, South Africa's export opportunities in individual countries are listed and categorised according to criteria such as import market characteristics and South Africa's market share in the various markets.

The drive towards SADC trade liberalisation is a goal that is emphasised in most documents of the SADC Secretariat, including the protocol on trade and the regional indicative strategic development plan (RISDP). This trade liberalisation aims to deepen regional integration through increased intra-trade between SADC member states, which was to be facilitated by the removal of trade barriers. Up to so far, the only barriers that have noticeably been reduced are import tariffs. At the same time individual member states are required to meet the growing challenges of global and regional competitiveness. The trade profile of an average SADC member country is characterised by high reliance on few products for trade revenue, which also contribute enormously to the value of total trade, and also has most prospects of industrial development. Therefore, the need for competitiveness is dependent upon the ability to protect the very same sectors that are being liberalised.

The initial steps of trade liberalisation in the region involved reduction of tariffs under the implementation of the protocol on trade, however the expected response from trade was low. It is a well known fact that there exist other weaknesses in these economies such lack of productive capacities to respond to trade incentives and infrastructural constraints which restrain potential trade. This study examines the extent to which trade protection under regional integration processes of developing countries affects the least developing members of the bloc. The static comparative tariff analysis method of relative tariff ratio is applied to determine the degree of protection between members of SADC. The results show that the least developing members of the bloc grant more access to the developing members, and they also face the most restrictive protection in the counterpart markets. Furthermore, the potential for the least developing members to build up their industrial capacity is negatively affected by deeper integration as they rely on trade instruments.

This paper investigates the impact of the quality of infrastructure on exports, with a specific focus on Sub-Sahara Africa. Improving the quality of infrastructure has a positive effect on exports by lowering the transport costs faced by the exporter. This paper provides a new specification on how to model transport costs in the gravity model. Specifically, minimum and maximum infrastructure variables are included in the model rather than exporter and importer infrastructure variables. The gravity model forms part of a Heckman selection model, which is used to deal with the biases induced by excluding zero bilateral exports in the gravity model. The results suggest that it is the minimum quality of infrastructure between two trading countries that matters most for transport costs and therefore trade. This result also holds when using disaggregated export data and specific infrastructure variables. No robust evidence was found that Sub-Sahara Africa exports less than expected or that improving the quality of infrastructure has a significantly different effect on Sub- Saharan exports. However, using disaggregated trade data it was found that Sub-Saharan countries, given its characteristics, export more primary products and less manufactured goods (although the findings for manufactured goods are not robust).

South Africa's energy system has been, and still is, one of the key contributing factors to the social and economic development of the nation. By international standards, the South African economy is very energy-intensive, meaning that the country uses a large amount of energy for every rand of economic output. Historically world economic and political factors have had a profound effect on international oil prices which in turn have impacted heavily on individual nation's energy policies.

The focus of this research centres on issues concerning industrial energy use. The theoretical background to this research is well grounded in traditional trade theory, with trade patterns and the international competitiveness of countries explained as a function of both supply and demand side factors. The empirical work undertaken seeks to verify such explanations by determining the extent to which changes in the energy intensity of the South African manufacturing sector are due to changes in the types of goods produced domestically versus changes in the types of goods internationally traded.

The future direction of South African industrial policy is the subject of vigorous and healthy debate. The outcome is important for the country's economic development. This study is an attempt to contribute to these discussions through an overview of and some questions about the economic impacts of South Africa's post apartheid trade and industrial policy. It comprises two main parts. These parts can be read independently.

The first part reviews some key themes in international policy discussions and draws lessons from the recent experiences of other developing countries. The second and largest part of the report reviews South Africa's industrial policy over the past decade. While not comprehensive, the range of policies examined is sufficient to dismiss the claim made by some that South Africa has not had an industrial policy. In fact, whether by intention or not, South Africa has experimented with a very wide range of policies that have had a direct impact on the path and success of its industrial development.

This review raises some serious questions about the economic impacts of South Africa's industrial policies and of some future alternatives that are now under discussion. Despite the intensity of and broad interest in the debate, there appears to have been very little serious economic analysis of past policies or of future plans. Basic assumptions about the effectiveness of sector-specific interventions, for instance, appear to be poorly founded. Many policies have impacts that are at variance with stated intentions. International experience is drawn upon with great selectivity to support particular views about preferred policy directions.

The real questions facing South Africa are not whether South Africa does or should have an industrial policy. They are not about whether there should be more or less government intervention. The most important questions are pragmatic and not ideological they are about what works and does not work in South Africa and why.