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Articles

The role of regional value chains in fostering regional integration in Southern Africa

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ABSTRACT

Regional integration is making steady progress in Africa and a key objective is to improve the prospects for industrialisation by expanding the regional market. The paper draws on a combination of trade data analysis and industry case studies to better understand the links and synergies between regional value chains and regional integration. The trade data and case studies of two diverse sectors (garments and food retailing) demonstrate the expansion and diversity of regional trade and regional value chains in Ssouthern Africa. This increasingly diverse composition of regional exports is suggestive of an opportunity to further enhance industrial development through intra-regional trade. From a political economy perspective, the long term sustainability of Southern African regionalism will require that the benefits are widely spread. In turn this requires the recognition of the importance of regional industrial policy, which takes account of the dynamics driving global and regional value chains and facilitates regional linkages.

JEL CLASSIFICATION:

Acknowledgments

Comments on the paper by John Page and two anonymous reviewers are gratefully acknowledged. This work was funded by UNU-WIDER.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 South African authorities changed their submission of trade statistics to better reflect trade with Botswana, Lesotho, Namibia and eSwatini from 2010. Trade with these countries made up 11.6% of South African exports and 2.5% of South African imports between 2010 and 2011. These shares are used to impute South African exports and imports to these countries over the period 2000–2009.

2 Gravity model estimates for this paper using 2015 data obtained from UNComtrade and CEPII (http://www.cepii.fr/CEPII/en/cepii/cepii.asp), reveal the importance of distance, productivity capacity and market size (GDP), trade agreements in the form of regional trade agreements or common monetary areas, contiguity of borders and logistics in destination markets as critical determinants of intra-SSA trade flows.

3 There are wide discrepancies in the value of exports to South Africa reported by SADC countries and the value of imports from SADC reported by South Africa. The latter was valued at US$6.2 billion in 2017, compared to US$11.3 billion for the former.

4 The sum of these two indicators are commonly used as an indicator of GVC participation (Aslam et al., Citation2017).

5 The high backward linkages (also into the region) for eSwatini may reflect the exports of fizzy drink concentrate to the region that uses large quantities of regionally sourced sugar.

6 Mauritius remains the second largest SSA apparel exporter but its exports have declined since 2000.

7 The exclusionof Madagascar from AGOA (2009–14) and Eswatini (2015–17) led to a radical decline in apparel exports to the US. On regaining AGOA access Madagascar’s apparel exports recovered dramatically by 2018.

8 For a more critical view of ‘developmental regionalism’, see Scholvin (Citation2018).

9 Interviews with the CEO of the NTF, Ms Ndiitah Nghipondoka-Robiati, and the Director of the Agriculture Trade Forum (a subsidiary body of the Namibian Trade Forum), Anton Faul were undertaken in August, 2018.

10 Interview, Vaughan van Eden, project manager for Namibia, who oversaw the supplier development programme.

11 Interviews.

Additional information

Funding

This work was supported by United Nations University World Institute for Development Economics Research [grant number 605UU-0002411].

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