Publication: Factory Southern Africa?: SACU in Global Value Chains
Loading...
Date
2016-01
ISSN
Published
2016-01
Author(s)
Editor(s)
Abstract
Once concentrated among a few large economies, global flows of goods, services, and capital now reach an ever-larger number of countries worldwide. Global trade in goods and in services both increased 10 times between 1980 and 2011, while foreign direct investment (FDI) flows increased almost 30-fold. A value chain is global when some of these stages are carried out in more than one country, most notably when discrete tasks within a production process are fragmented and dispersed across a number of countries. Southern African Customs Union (SACU) - region global value chains (GVCs) are both a new reality and significant opportunity for expanding non-commodity exports to support growth, diversification, and job creation in the region. The task-based nature of GVCs creates opportunities for developing countries to establish very quickly a position in global trade within a sector in which they may have had no previous experience. For South Africa, GVCs are seen as a route to higher manufacturing exports and greater value addition. For other SACU countries, GVCs are seen as a route to diversification and global integration, and to leverage the possibility of greater investment from South Africa itself. The main objectives of the study are as follows: (i) to understand trends of GVC participation and competitiveness of South Africa and the wider SACU region, the outcomes from this participation (exports, jobs, and productivity), and the factors that determine competitiveness; (ii) to map the extent of value chain integration across the region and identify barriers to deeper integration; and (iii) to identify policies and actions that will be required to develop a globally competitive, high value-adding factory Southern Africa.
Link to Data Set
Citation
“Farole, Thomas. 2016. Factory Southern Africa?: SACU in Global Value Chains. © World Bank. http://hdl.handle.net/10986/23787 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Related items
Showing items related by metadata.
Publication Is a ‘Factory Southern Africa’ Feasible?(World Bank, Washington, DC, 2016-01)The countries comprising the Southern African Customs Union (SACU) are currently not very integrated into global value chains (GVCs), potentially missing out on important development opportunities. Accordingly, we explore high level options for promoting their integration. Given East Asia’s spectacular success with integrating into GVCs, we first assess the probability that SACU can copy their flying geese pattern. That was initiated by Japanese multinational corporations (MNCs) investing in successive East Asian countries thereby becoming the lead geese, to be joined subsequently by MNCs from other countries. We argue that the conditions for pursuing a flying geese approach are difficult to replicate in SACU. Therefore, we proffer and explore the proposition that South Africa could serve as the gateway for harnessing MNC geese flying from third countries into the SACU region, in time propelling regional development through knowledge and investment spillovers, and serving as a conduit into GVCs. However, there may be substantial obstacles to deepening this integration potential. Other African gateways are emerging as alternatives to South Africa. And some SACU governments would prefer to build regional value chains (RVCs) rather than prioritize GVC integration. We argue that RVCs are complements to GVCs. SACU countries, excluding South Africa, may not attract many world leading MNCs since their markets are small, but could attract smaller regional players from South Africa or elsewhere. Thus building RVCs in the short run could assist with integration into GVCs in the longer run. Overall, this requires harnessing South African and MNC geese to the South African gateway, in a mutually complementary strategy.Publication Analyzing Trade Competitiveness : A Diagnostics Approach(2010-06-01)Trade has proven to be a powerful engine of growth worldwide. But not all countries have benefited equally. Despite much effort to use trade policy to catalyze exports, many developing countries have failed to achieve successful, sustainable export and economic growth. Even with the benefit of preferential market access, many developing country exporters face a broad and diverse set of constraints that limit their potential to compete in export markets. This paper discusses the concept of "competitiveness" with respect to trade and the various dimensions on which trade competitiveness might be assessed. It argues there is a need for a framework by which trade competitiveness can be assessed in a systematic way. Inspired by the "growth diagnostics" approach, it outlines a possible framework for assessing factors that facilitate or constrain trade competitiveness.Publication Inclusive Global Value Chains(OECD, Paris, and World Bank, Washington, DC, 2015-10)This reports focus is making global value chains (GVCs) more inclusive. This is achieved by overcoming participation constraints for Small and Medium Enterprises (SMEs) and facilitation access for Low Income Developing Countries (LIDCs).The two major points of this report are 1) participation in GVCs is heterogeneous and uneven, across and within countries and 2) available data and survey-based evidence suggest that SME participation in GVCs is mostly taking place through indirect contribution to exports, rather than through exporting directly.Publication Quantifying the Impact of Services Liberalization in a Developing Country(World Bank, Washington, DC, 2004-01)The authors consider how service liberalization differs from goods liberalization in terms of welfare, the level and composition of output, and factor prices within a developing economy, in this case Tunisia. Despite recent movements toward liberalization, Tunisian service sectors remain largely closed to foreign participation and are provided at high cost relative to many developing nations. The authors develop a computable general equilibrium (CGE) model of the Tunisian economy with multiple products and services and three trading partners. They model goods liberalization as the unilateral removal of product tariffs. Restraints on services trade involve both restrictions on cross-border supply (mode 1 in the GATS) and on foreign ownership through foreign direct investment (mode 3 in the GATS). The former are modeled as tariff-equivalent price wedges while the latter are comprised of both monopoly-rent distortions (arising from imperfect competition among domestic producers) and inefficiency costs (arising from a failure of domestic service providers to adopt least-cost practices). They find that goods-trade liberalization yields a gain in aggregate welfare and reorients production toward sectors of benchmark comparative advantage. However, a reduction of services barriers in a way that permits greater competition through foreign direct investment generates larger welfare gains. Service liberalization also requires lower adjustment costs, measured in terms of sectoral movement of workers, than does goods-trade liberalization. And it tends to increase economic activity in all sectors and raise the real returns to both capital and labor. The overall welfare gains of comprehensive service liberalization amount to more than 5 percent of initial consumption. The bulk of these gains come from opening markets for finance, business services, and telecommunications. Because these are key inputs into all sectors of the economy, their liberalization cuts costs and drives larger efficiency gains overall. The results point to the potential importance of deregulating services provision for economic development.Publication Toward a Microeconomics of Growth(World Bank, Washington, D.C., 2004-04)What drives growth at the microeconomic level? The authors divide the factors that determine a location's growth performance into two groups, "1st advantage" and "2nd advantage." The term 1st advantage refers to the conditions that provide the environment in which new activities can be profitably developed, including most of the factors on which traditional theory has focused, such as access to inputs (labor and capital), access to markets, provision of basic infrastructure, and the institutional environment. The term 2nd advantage refers to factors that increase returns to scale and can lead to cumulative causation processes. They may be acquired by learning, through technological spillovers, or by the development of thick markets of suppliers and local skills. The authors' analysis suggests that empirical investigation of the drivers of growth must shift down to a more microeconomic level. Such an analysis has become more feasible as data at the subnational level have become more available. By viewing recent empirical evidence on drivers of growth through their analytical framework, the authors are able to begin to sketch out a microeconomic agenda for growth. They emphasize that it is the manner in which 1st and 2nd advantages interact that shapes the pattern of development. The authors then turn to the example of how policy has affected manufacturing growth performance in India. They analyze links between the direction of state-level labor regulation and growth in the organized manufacturing sector, how state-led expansion of bank branches into rural areas has affected unregistered or informal manufacturing, and how the pre-reform technological capability of industries affected their response to liberalization in 1991. The analysis suggests that policy choices at the local level affect growth. Both theory and empirics need to downshift to the microeconomic level if we are to make advances in identifying specific means of encouraging innovation and growth.
Users also downloaded
Showing related downloaded files
Publication Tanzania(World Bank, Washington, DC, 2015-06)This study aims to achieve a better understanding of the agricultural risk and risk management situation in Tanzania with a view to identifying key solutions to reduce current gross domestic product (GDP) growth volatility. For the purpose of this assessment, risk is defined as the probability that an uncertain event will occur that can potentially produce losses to participants along the supply chain. Persistence of unmanaged risks in agriculture is a cause of great economic losses for farmers and other actors along the supply chains (for example, traders, processors, and exporters), affecting export earnings and food security. The agricultural sector risk assessment is a straightforward methodology based on a three-phase sequential process. Phase analyzes the chronological occurrence of inter-seasonal agricultural risks with a view to identify and prioritize the risks that are the drivers of agricultural GDP volatility. This report contains the findings and recommendations of the first phase and includes the identification, analysis, and prioritization of major risks facing the agricultural sector in Tanzania, as well as recommendations regarding key solutions. Chapter one gives introduction and context. Chapter two contains an overview of the agricultural sector and its performance, as well as a discussion of key agro-climatic, weather, and policy restrictions and opportunities. Chapter three includes an assessment of major risks (that is, production, market, and enabling environment risks) facing key export and food crops. Chapter four presents an estimate of historical losses due to realized production risks and a correlation of such losses with production volatility. Chapter five provides insights into the exposure to risks by different stakeholders and their actual capacities, vulnerabilities, and potential to manage agricultural risks. Chapter six presents a risk prioritization by different supply chains and discusses the possible solutions, as well as specific recommendations for the agricultural sector development program (ASDP).Publication World Development Report 2017(Washington, DC: World Bank, 2017-01-30)Why are carefully designed, sensible policies too often not adopted or implemented? When they are, why do they often fail to generate development outcomes such as security, growth, and equity? And why do some bad policies endure? This book addresses these fundamental questions, which are at the heart of development. Policy making and policy implementation do not occur in a vacuum. Rather, they take place in complex political and social settings, in which individuals and groups with unequal power interact within changing rules as they pursue conflicting interests. The process of these interactions is what this Report calls governance, and the space in which these interactions take place, the policy arena. The capacity of actors to commit and their willingness to cooperate and coordinate to achieve socially desirable goals are what matter for effectiveness. However, who bargains, who is excluded, and what barriers block entry to the policy arena determine the selection and implementation of policies and, consequently, their impact on development outcomes. Exclusion, capture, and clientelism are manifestations of power asymmetries that lead to failures to achieve security, growth, and equity. The distribution of power in society is partly determined by history. Yet, there is room for positive change. This Report reveals that governance can mitigate, even overcome, power asymmetries to bring about more effective policy interventions that achieve sustainable improvements in security, growth, and equity. This happens by shifting the incentives of those with power, reshaping their preferences in favor of good outcomes, and taking into account the interests of previously excluded participants. These changes can come about through bargains among elites and greater citizen engagement, as well as by international actors supporting rules that strengthen coalitions for reform.Publication Africa's Future, Africa's Challenge : Early Childhood Care and Development in Sub-Saharan Africa(Washington, DC : World Bank, 2008)This book seeks to achieve a balance, describing challenges that are being faced as well as developments that are underway. It seeks a balance in terms of the voices heard, including not just voices of the North commenting on the South, but voices from the South, and in concert with the North. It seeks to provide the voices of specialists and generalists, of those from international and local organizations, from academia and the field. It seeks a diversity of views and values. Such diversity and complexity are the reality of Sub-Saharan Africa (SSA) today. The major focus of this book is on SSA from the Sahel south. Approximately 130 million children between birth and age 6 live in SSA. Every year 27 million children are born, and every year 4.7 million children under age 5 die. Rates of birth and of child deaths are consistently higher in SSA than in any other part of the world; the under-5 mortality rate of 163 per 1,000 is twice that of the rest of the developing world and 30 times that of industrialized countries (UNICEF 2006). Of the children who are born, 65 percent will experience poverty, 14 million will be orphans affected by HIV/AIDS directly and within their families and one-third will experience exclusion because of their gender or ethnicity.Publication Ten Steps to a Results-Based Monitoring and Evaluation System : A Handbook for Development Practitioners(Washington, DC: World Bank, 2004)An effective state is essential to achieving socio-economic and sustainable development. With the advent of globalization, there are growing pressures on governments and organizations around the world to be more responsive to the demands of internal and external stakeholders for good governance, accountability and transparency, greater development effectiveness, and delivery of tangible results. Governments, parliaments, citizens, the private sector, Non-governmental Organizations (NGOs), civil society, international organizations, and donors are among the stakeholders interested in better performance. As demands for greater accountability and real results have increased, there is an attendant need for enhanced results-based monitoring and evaluation of policies, programs, and projects. This handbook provides a comprehensive ten-step model that will help guide development practitioners through the process of designing and building a results-based monitoring and evaluation system. These steps begin with a 'readiness assessment' and take the practitioner through the design, management, and importantly, the sustainability of such systems. The handbook describes each step in detail, the tasks needed to complete each one, and the tools available to help along the way.Publication World Development Report 1984(New York: Oxford University Press, 1984)Long-term needs and sustained effort are underlying themes in this year's report. As with most of its predecessors, it is divided into two parts. The first looks at economic performance, past and prospective. The second part is this year devoted to population - the causes and consequences of rapid population growth, its link to development, why it has slowed down in some developing countries. The two parts mirror each other: economic policy and performance in the next decade will matter for population growth in the developing countries for several decades beyond. Population policy and change in the rest of this century will set the terms for the whole of development strategy in the next. In both cases, policy changes will not yield immediate benefits, but delay will reduce the room for maneuver that policy makers will have in years to come.