n Studies in Economics and Econometrics - Trade and poverty in South Africa : the motor industry development programme

Volume 31, Issue 2
  • ISSN : 0379-6205


There has been substantial trade liberalization in the motor industry over the past decade. Nevertheless, protection remains high and substantial new support has been provided to industry exports.

The slow pace of liberalization has hurt the poor through its effects on vehicle prices, employment and the government budget. High tariffs raise the cost of transport, with adverse effects on the poor who are highly dependent on taxi services for commuting and job search, and on inexpensive vehicles to run small businesses. While protection has saved some jobs and created some new ones in the vehicle and components assembly industries, large subsidies have created few, if any, net new manufacturing jobs and have hindered employment growth in downstream service industries of greater relevance to the poor.
Budgetary resources used to support this sector could have been used more effectively to help the poor, even after taking account of necessary adjustment assistance needed to help any workers displaced by speedier liberalization.

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