Infant industry characteristics and decentralisation policy in South Africa∗

I wish to thank my colleagues Michael McGrath and Robert Preston‐Whyte for their helpful comments. I would also like to acknowledge and thank the HSRC for their financial support.

Abstract

The policy of decentralisation of industry in South Africa is effected through a system of incentives and subsidies designed towards shifting resources from the urban areas to the rural areas. This paper examines this policy in the light of the infant industry argument for protection and its economic efficacy. In particular, the analysis is applied to a comparison of manufacturing industry in the Black States and in the rest of South Africa. Furthermore, the relationship between estimated differential subsidy rates granted to a sample of decentralised firms is examined in terms of their differential infant industry characteristics and capital intensity.

Notes

Senior lecturer, Department of Economics, University of Natal, Durban.

I wish to thank my colleagues Michael McGrath and Robert Preston‐Whyte for their helpful comments. I would also like to acknowledge and thank the HSRC for their financial support.