Leonard Neill
SOUTH AFRICA'S economic growth is being held hostage by the amount of fixed investment within its own borders, and many types of equipment are simply not available from domestic sources because of the limited economies of scale for the majority of capital items used locally, says Econometrix director Tony Twine.
Addressing the launch of Saitex 2001 in Midrand last week, Twine said if accelerating growth forecasts were to be realised, this import sector would have to increase, as would the level of spending on these items. An analysis of the sources of imports since 1994 indicates that there has not been any decisive shift among the shares of the five continental zones supplying goods to South Africa.
This country does not have to undermine the role of imports in the development of its own economy because they are just as important as exports to balance trade in the global economy, he said.
A great deal of attention has been focused in the past on the fear that South Africa's trade liberalisation would lead to a flood of cheap consumer goods from abroad which, in turn, would lead to the demise of many local industries and add to the high unemployment figures.
But less than 7% of total imports into South Africa are consumer goods. A significant proportion of imports consist of intermediate goods such as machinery, which have been partly processed and will be turned into final goods in this country for a combination of local consumption and for re-export.
The expansion of the South African manufacturing sector has also added significantly to the volumes and value of imports into the economy of investment goods or capital equipment not manufactured in South Africa. This is largely a result of nonviable domestic economies of scale. This category of imports is probably the least observed by the general public, but its availability has, and will continue, to control the development of the country.
An example was the local automotive industry which had restructured itself since 1995 to take advantage of trade in intermediate goods. Its success, he said, illustrates the point that not everything that the country exports or consumes locally has to be generated from the ground up.
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