Displaying items by tag: Regional Integration

This paper looks at the potential increase in regional gains, particularly in Lesotho and South Africa, through the wool value chain, with the aim of increasing regional productivity and the distribution of wealth through wool production. It also looks into the constraints that domestic, regional and international demand pose for the wool industry in both countries. However, it finds that the value chain seems to be collapsing between the two countries and that the wool industry in both countries is facing a downward trajectory. Last, it makes recommendations on possible priorities for the sector, given the existing and emerging challenges within the wool industry.

The Southern African Development Community (SADC) member states have placed industrial development at the core of the region’s integrated development agenda. This report by Trade & Industrial Policy Strategies (TIPS) and the Zambia Institute for Policy Analysis & Research (ZIPAR) is part of a programme that seeks to identify existing and potential opportunities to further the development of specific value chains among and across SADC member states.

The paper explores and assesses regional competitiveness and opportunities in the electrotechnical industry for both South Africa and Zambia. It offers an in-depth assessment of the structure and status of the electrotechnical value chain in these countries by presenting production and consumption patterns, input suppliers and producers, export markets for products from the sectors, as well as the import patterns in relevant subsectors. This research looks at these themes for the purpose of informing cross-cutting country policy initiatives based on a shared understanding of industrial development challenges at a regional level.

Greater regional integration would support economic diversification and industrialisation in Southern Africa by expanding markets for consumers and capital goods as well as drawing together capacities from different of countries. It would, however, require a greater degree of specialisation between nations to permit economies of scale. In this context, the concept of regional value chains proves useful in identifying opportunities for more integrated industrialisation. On the one hand, it underscores the potential for enhancing economic integration based on improved specialisation and competitiveness in the partner economies; on the other, it provides a framework for systematic analysis of factors that prevent investment and growth.

This working paper outlines the evolution of the value-chain concept as a way to understand opportunities for industrialisation. Using the value chain framework in the regional context shifts the focus away from global demand and partnerships to local and regional markets and relationships. It underscores the importance of managing the difficult trade-offs involved in deepening the regional division of labour. The second section of the paper describes the Southern African economy, which was unusually unequal and dependent on commodity exports. It also reviews existing trade in continental SADC. It evaluates the effects of freight transport as a cross-cutting constraint. A case study of copper manufacturing illustrates the utility of value chains to guide analysis. This section points to key blockages to diversification, notably the difficulty of improving coordination between national policies and challenges around reshaping the division of labour to promote regional industrialisation without excessive costs to South African producers.  

This Working Paper is a draft for a chapter in a book: Fortunato, P. ed. (Forthcoming). Productive  Transformation and Regional Value Chains in Southern Africa. UN: New York and Geneva

Business Day - 28 October 2019 by Neva Makgetla (TIPS Senior Economist)

Read online at Business Day.

Or read as a PDF.

WIDER Working Paper 2019/61

This working paper, Charity begins at home The political economy of non-tariff barriers to trade in Southern Africa, forms part of the project: Southern Africa – Towards Inclusive Economic Development (SA-TIED)

Abstract

Increased intra-regional trade in southern Africa will have a positive impact on eonomic growth. However, this requires a shifting of loyalties from the national to the regional.Tension between the goals of long-term regional development and shorter-term national imperatives remains unresolved. This study presents a review of recent and current local content regulation (LCR) initiatives across a sample of the South African Development Community countries. LCRs are widely used across these countries, and their use has increased recently. Evidence suggests that the impact of LCRs is mixed, depending on their national context, whether or not they are implemented in line with the genuine desire to deliver local development, and whether they can remain corruption-free. LCRs may have long-term positive domestic and regional benefits, if they support sustainable local enterprise development and employment. In time this should translate into higher levels of growth across the region, and thus drive higher levels of trade.

Download Working Paper: https://www.wider.unu.edu/sites/default/files/Publications/Working-paper/PDF/wp-2019-61.pdf

TIPS acknowledges the support of the SA-TIED programme for this working paper, with special thanks to UNU-WIDER and the South African Department of Trade and Industry.

WIDER Working Paper 2019/38

This working paper, Moving up the copper value chain in Southern Africa, forms part of the project: Southern Africa – Towards Inclusive Economic Development (SA-TIED)

Abstract

t: Interest in industrial hemp has revived in the past 20 years. Malawi is considering legalizing the cultivation of industrial hemp as an alternative cash crop to tobacco with great potential. This study considers the potential and challenges of creating an industrial hemp value chain between South Africa and Malawi, with Malawi concentrating on upstream cultivation and South Africa on downstream value-adding activity. The research supports a finding that industrial hemp offers strong opportunities as a niche market even if mainstream demand is slow to materialize or does not materialize at all. It also shows that undertaking such an inter-regional endeavour would be considerably more complicated than initially envisaged, given the agricultural structure and operation of the Malawian economy and its smallholder farmers.

Download Working Paper: https://www.wider.unu.edu/sites/default/files/Publications/Working-paper/PDF/wp-2019-52.pdf

TIPS acknowledges the support of the SA-TIED programme for this working paper, with special thanks to UNU-WIDER and the South African Department of Trade and Industry.

WIDER Working Paper 2019/38

This working paper, Motorcycle parts and aftermarket industry regional value chain in Southern Africa, forms part of the project: Southern Africa – Towards Inclusive Economic Development (SA-TIED)

Abstract

This paper provides an overview of the structure, key functions, and characteristics of the motorcycle parts and aftermarket industries in Southern Africa in order to identify challenges to and opportunities for growth in these industries. The research examines the end markets and utilization of motorcycles, the status of these markets, and demand for local or regional production processes. The paper also considers the main factors affecting the sales of motorcycles and their parts in the region and assesses whether a more coordinated approach between governments and foreign and local firms could lead to assembly and/or manufacturing value-added activity in the Southern African Development Community region.

Download Working Paper: https://www.wider.unu.edu/sites/default/files/Publications/Working-paper/PDF/wp-2019-38.pdf

TIPS acknowledges the support of the SA-TIED programme for this working paper, with special thanks to UNU-WIDER and the South African Department of Trade and Industry.

WIDER Working Paper 2019/26

This working paper, Black cat, white cat - lessons to be learned from ASEAN, forms part of the project: Southern Africa – Towards Inclusive Economic Development (SA-TIED)

Abstract

There is some consensus at present that SADC needs to re-imagine itself and breathe new life into its somewhat moribund structure. The European Union is often presented as the textbook example to be followed by other regional associations. The European Union is characterised by a rules-based, heavily bureaucratic and powerful supranational institutional structure to which individual nations have ceded sovereignty in several spheres (most notably the economy). The European Union has progressed in a highly linear and consecutive fashion from a free trade area to a customs union, to a single market and a common currency.

 On the other end of the integration spectrum sits the Association of Southeast Asian Nations (ASEAN). Based on Confucian values and culture, it emphasises harmony, group above individual, and pragmatism above rules. ASEAN is designed around principles and behaviour norms rather than rules; it is intergovernmental instead of supranational; it is more market driven than government driven; it has strong bottom up and extra-entity processes, decision-making is based on unanimity not majority; it is institutionally and bureaucratically lite; it embraces open regionalism with unclear rules for entry; and deepening integration is being achieved in an ad hoc, parallel fashion rather than a linear, consecutive fashion.

In this paper, some of the key elements of ASEAN and its operationalisation are considered, not as recommendations or a systematic alternative guide to reconsidering the conceptual basis of SADC’s regional integration efforts – but simply as potential catalysts for discussion and thinking about problems from a different perspective.

Download Working Paper: https://www.wider.unu.edu/sites/default/files/Publications/Working-paper/PDF/wp-2019-26.pdf

TIPS acknowledges the support of the SA-TIED programme for this working paper, with special thanks to UNU-WIDER and the South African Department of Trade and Industry.

This paper argues that adopting a “developmental regionalism” approach to trade integration provides the best prospects for the African Continental Free Trade Agreement (AfCFTA) to catalyse the process of transformative industrial development, cross-border investment and democracy, governance, peace and security in Africa. It also looks at the progress being made by African countries and the continent in implementing each of the four pillars of this approach.

This paper was written in celebration of the significant contribution to African integration made by Chief Olu Akinkugbe. 

Dr Faizel Ismail also presented the Keynote Address at the Olu Akinkugbe Business Law In Africa Fellowship Conference held at the Lagos Business School on 28 November 2018.

A 'developmental regionalism' approach to the AfCFTA: In celebration of the 90th birthday of Chief Olu Akinkugbe CFR CON

The energy landscape in Southern Africa has been rapidly evolving over the last decades. An economy-wide transition to sustainability is underway, with energy at its core. In addition, a progressive movement of regional integration with numerous energy-related initiatives is taking place, principally through the Southern African Power Pool (SAPP). At the same time, electricity supply industries in the region are restructuring, with the emergence of independent power producers and increased individualism. These dynamics call for a renewed approach to regional electricity integration in support of sustainable energy development and a critical analysis of regional electricity dynamics with the aim of improving regional sustainability.

Against this background, this paper reviews the performance of the SAPP region through an electricity sustainability prism of analysis. Three key dimensions are considered to assess electricity sustainability in the region: electricity security; electricity equity; and environmental sustainability. The paper then analyses the existing role of regional integration in terms of electricity sustainability in the Southern African Development Community (SADC) region and explores the potential to improve Southern Africa’s electricity sustainability through regional integration channels.

This study provides an overview and analysis of the structure, key functions and characteristics of the forestry value chain operating in and among South Africa, Mozambique and Tanzania in order to identify market opportunities and the interventions required to support the growth of the regional value chain. The research focuses on three value chains – forestry to timber; forestry to pulp and paper; and forestry to furniture.

It focuses on three countries – South Africa, Mozambique and Tanzania. The latter two were selected on the basis of their current level of forestry output, together with their contiguous location. An evidence-based approach has been adopted for this study, based on the compilation of industry data from existing and new sources. The value chain analysis is focused on answering the following questions: how is the value chain organised? How does it function? Who are the main actors? What are the key institutions and forms of coordination? How well is the chain performing in coordination, competitiveness and intra-regional trade? Where are the opportunities to (1) relocate parts of the chain among the countries, and (2) to enhance existing intra-regional activities?

This report makes nine key recommendations, all of which aim to strengthen the capacity of the Southern African Development Community (SADC) Technical Infrastructure to achieve its core mandates, while promoting regional value chain development. 

The paper begins with a broad contextual overview of the Southern African Development Community’s (SADC’s) transport and logistics performance in terms of the Logistics Performance Index and tracks the performance of individual member states in the decade from 2007. Two interesting findings emerge. First that the better performing SADC member states have been improving their logistics performance over time while the worst performing states have seen their performance decrease and deteriorate since 2007. The second interesting (and controversial) finding is that improved logistics service and operations is viewed as more important than additional investments in infrastructure in the region.

The paper then identifies the cross-cutting logistics issues collated from a literature review, a small sample of interviews with logistics firms operating in the region, completed value chain reports from the Regional Value Chain Project (see www.competition.org.za/regional-value-chains), SADC documentation, and finally the tradebarriers.org website, a Tripartite Community – comprising Common Market for Eastern and Southern Africa (COMESA), the East African Community (ECA) and SADC and Member States – initiative to report, monitor and eliminate NTB complaints.

A key finding of the paper is that from an economic perspective it is the standing time of trucks stationary at border posts which is the most powerful explanatory variable of SADC’s high transport costs and low logistics competitiveness. The research suggests that standing time is largely due to border post management issues rather than the commonly assumes infrastructure constraints.

This paper argues that the dramatic changes in the trade architecture of the world during the first decade of the new millennium have created both opportunities and challenges for Africa’s development. African countries need to develop proactive strategies to harness these new changes and use them to advance the integration of the African continent.

The paper looks at the main elements of the changes in the global trade architecture in the first decade of the new millennium. It then explains how these changes impacted on the Doha Development Round. The shift to mega-regionals and mega-bilaterals by the major developed country players and the implications of these developments for Africa’s trade with the world are also briefly discussed. The paper then sets out the changes in the trade policies of the EU and the US on Africa in the new millennium and the implications of these policies for Africa’s economic development. The paper also discusses the role of China in the trade and economic development of Africa and looks at the unfolding regional integration strategy of African countries. 

See Commonwealth Trade Hope Topics Series Issue 131 The changing global trade architecture: Implications for Sub-Saharan Africa's development

Faizel Ismail is Adjunct Professor in the School of Economics, University of Cape Town and a TIPS Research Fellow

Session 5: International lessons

Session 5: International lessons

Session 4: Market integration and trade

Paper to follow

Session 4: Market integration and trade

Session 4: Market integration and trade

Session 3: Regional manufacturing and industrial policy 2