Methodology
Qualitative analysis which analyses literature on value chains and regional integration, as well as country level data on imports and exports in Southern Africa.
Research Objective
To analyse the challenges and prospects for regional integration, RVCs and GVCs to promote sustainable development.
Synopsis
- Regional integration can either lead to trade promotion or trade diversion.
- Southern Africa accounts for 40% of Africa’s GVC participation.
- Most foreign value add in African exports is from outside the continent, but South Africa provides over 10% of intermediate goods in Botswana, Namibia, Swaziland, Zambia and Zimbabwe.
- Examples of VCs in Southern Africa:
- In automotives, South Africa exports products which are then exported back to SA (RVCs).
- Textile products are exported to SA by SACU members (RVCs) and then exported internationally by SA (GVCs).
- Dairy products, cocoa, soap, and plastic are exported to SA from SACU countries (RVCs).
Policy Recommendations
- In order to increase regional integration, non-tariff measures need to be developed, to reflect harmonised standards, national development objectives etc. Can’t be too restrictive and become NTBs.
- RVCs should be used as an entry point for smaller countries that cannot yet enter GVCs, make upgrading easier.
- Understanding countries’ participation in trade and VCs down to the firm level is necessary in order to promote RVCs (i.e. firms that have severe customs regs. such as SACU more likely to export intra-regionally, foreign owned firms and more experienced managers more likely to export extra-regionally).
- Effects of trade liberalisation on firms and workers needs to be further studied.
- Social accounting matrices on trade impact studies are also lacking in VC research, need further development.