Foreign trade regimes and employment in South Africa: An intertemporal comparison

Previous research has suggested that the labour requirements of an import substitution policy compare unfavourably with a policy of export promotion for South Africa. This paper presents an alternative methodology. Using an open input/output model, more emphasis is placed on the backward linkages that trigger off spillover effects which result from a unit Increase in domestic value added ofexportables and importables. The results show that a broad import substitution policy is not less favourable in terms of employment generation than a broad export promotion policy. This could indicate that a policy of ‘inward industrialisation ‘, which relies to some extent on import substitution, might not have relatively unfavourable employment effects.

Notes

Development Bank of Southern Africa. The author wishes to thank Prof C L McCarthy and Dr A Roukens de Lange for their useful comments on an earlier draft Final responsibility for opinions expressed remains with the author.