The Impact of Trade Liberalisation on the South African Tourism Industry

The tourism sector of the South African economy has been characterized by rapid growth in the mid-1990s which has levelled off more recently, and an increasing contribution to overall employment. The question now is how South Africa's negotiation process in removing barriers to the trade in services might affect the tourism and travel industry, and by extension, whether this sector is likely to maintain above average growth in an environment of trade liberalisation.

South Africa is in the process of removing barriers to trade such as tariffs and discriminatory laws that do not allow foreign businesses to compete on an equal footing with domestic ones. However, it is arguable that South Africa needs some degree of protectionism in order to improve its capabilities before going head to head with institutions from more technically advanced nations. Furthermore, it is possible that concessions already made to lure overseas investors place them at an advantage vis-a-vis their South African counterparts. This paper aims to identify some of the challenges to tourism growth in South Africa by analysing the likely impacts of trade regime openness. In this sense the study is inward-looking and does not attempt to treat the subject of South African interests abroad.

The first section presents a discussion about the various definitions of tourism and how these impact the scope of analysis. Secondly, a characterisation of tourism and the role it plays in the South African economy is elaborated. [Also discussed are the pivotal structures and institutions involved, as well as recent forecasts from the industry.] Next, the regulatory environment which governs foreign commercial presence and investment is outlined, with attention to candidate areas for liberalisation. From the accepted literature in the field of tourism and trade in services comes a discussion of the analytical tools of economics. Finally, by applying established economic models to the tourism sector under trade liberalisation, a final assessment of South African tourism is formulated.