oa Journal of Development Perspectives - Policy and industry structure in the South African Automotive sector: from import substitution to 'extreme' export orientation
|Article Title||Policy and industry structure in the South African Automotive sector: from import substitution to 'extreme' export orientation|
|© Publisher:||Economic Society of South Africa|
|Journal||Journal of Development Perspectives|
|Affiliations||1 Professor, PRISM, School of Economics, University of Cape Town|
|Publication Date||Dec 2007|
|Pages||1 - 30|
|Keyword(s)||export sector, government intervention, import duties, import substitution, Motor Industry Development Programme, production cost, South African automotive industry, tariff protection and tariff reduction|
The South African automotive industry developed under high levels of protection which led to an inefficient and high cost production structure. Since the early 1990s, the industry has been through a rapid process of adjustment with the implementation of policies which reduced tariffs and allowed exporters to rebate import duties. This paper examines the effect of these policy changes on the structure of the industry. A mixed picture emerges. In some respects the industry is more efficient. Export growth has led to an improvement in economies of scale and higher productivity. On the other hand some export sectors appear vulnerable to declining support. Imports are rising rapidly and the industry still lacks sufficient scale to encourage high levels of domestic content on an economic basis. Future policy needs to ensure an appropriate balance between production for export and for the domestic market.
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