Can trade liberalisation in South Africa reduce poverty and inequality while boosting economic growth? Macro–micro reflections

Figures & data

Figure 1: South Africa's annual GDP growth: 1990–2010

Source: New York University (2009) and The South African Reserve Bank (2012).

Figure 2: South Africa's unemployment rate: 1994–2010

Source: World Bank (2012) and CIA (2012).

Figure 3: South African productivity index

Note: Year 2003 = 100.
Source: Statistics South Africa (2008).

Figure 4: South African indices for labour productivity, total factor productivity and capital/labour ratios

Source: Statistics South Africa (2008).
Note: Year 2003 = 100.

Table 1: Macroeconomic effects of trade liberalisation (% change from BAU path)

	GDP path	Consumption	Investment	Exports	Imports	Skilled wage	Unskilled wage	CPI path	Price of capital	User cost of capital
2007	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2008	–0.01	–1.75	0.67	2.74	2.87	–1.87	–1.80	–1.53	–2.61	–1.90
2009	0.02	–1. 63	–0.67	2.96	2.98	–1.76	–1.65	–1.046	–2.34	–1.84
2010	0.05	–1.53	0.69	3.14	3.08	–1.67	–1.53	–1.41	–2.06	–1.79
2011	0.07	–1.44	0.71	3.30	3.17	–1.58	–1.43	–1.36	–1.86	–1.76
2012	0.1	–1.37	0.73	3.44	3.25	–1.51	–1.33	–1.32	–1.72	–1.73
2013	0.12	–1.30	0.74	3.56	3.32	–1.45	–1.25	–1.28	–1.63	–1.70
2014	0.14	–1.24	0.74	3.66	3.37	–1.39	–1.17	–1.25	–1.57	–1.68
2015	0.17	–1.19	0.75	3.74	3.42	–1.33	–1.11	–1.23	–1.53	–1.66
2016	0.18	–1.14	0.75	3.82	3.46	–1.29	–1.05	–1.21	–1.52	–1.65
2017	0.20	–1.10	0.76	3.88	3.50	–1.25	–1.00	–1.20	–1.51	–1.64
2018	0.22	–1.07	0.76	3.93	3.53	–1.21	–0.96	–1.19	–1.51	–1.63
2019	0.23	–1.04	0.76	3.98	3.56	–1.18	–0.93	–1.18	–1.51	–1.62
2020	0.24	–1.02	0.75	4.01	3.58	–1.15	–0.90	–1.18	–1.51	–1.62

Note: CPI, Consumer Price Index.

Table 2: Impact of trade liberalisation on poverty (% of BAU)

	Short run = 2009			Long run =2020
	P0	P1	P2	P0	P1	P2
South Africa	0	0.55	0.83	–0.19	–2.15	–2.65
Residential area
Urban	0.0014	0.17	0.29	–0.01	–1.58	–1.98
Rural	0.0013	0.2	0.38	–0.52	–4.41	–4.65
Ethnic group
African	0.009	0.12	0.19	–1.1	–1.3	–1.66
Coloured	0.001	0.25	0.26	–5.2	–5.54	–6.1
Indian	0.026	0.19	0.43	–0.6	–1.82	–1.97
White	0.01	0.15	0.33	0	0	0
Region, ethnic and skill group
Urban African skilled	0	0	0	0	0	0
Urban coloured skilled	0	0	0	0	0	0
Urban Indian skilled	0	0	0	0	0	0
Urban white skilled	0	0	0	0	0	0
Urban African unskilled	0.007	0.22	0.45	–1.43	–1.44	–1.78
Urban coloured unskilled	0.001	0.54	0.84	–1.27	–2.35	–2.98
Urban Indian unskilled	0.03	0.55	0.65	–0.2	–0.67	–0.85
Urban White unskilled	0	0	0	0	0	0
Rural African skilled	0	0	0	0	0	0
Rural coloured skilled	0	0	0	0	0	0
Rural Indian skilled	0	0	0	0	0	0
Rural white skilled	0	0	0	0	0	0
Rural African unskilled	0	0	0	–1.34	–3.59	–3.92
Rural coloured unskilled	0	0	0	–1.4	–6.22	–7.05
Rural Indian unskilled	0.0031	0.72	0.78	0	0	0
Rural white unskilled	0.006	0	0	0	0	0

Table 3: Macroeconomic effects of trade liberalisation with induced TFP effects (% change from BAU path)

	GDP path	Consumption	Investment	Exports	Imports	Skilled wage	Unskilled wage	CPI path	Price of capital	User cost of capital
2007	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
2008	–0.06	8.52	17.50	3.36	10.32	7.87	8.65	0.35	12.94	1.27
2009	0.91	9.34	18.86	4.63	11.03	9.41	9.98	0.15	7.93	–0.93
2010	1.88	10.29	18.96	6.14	11.62	10.94	11.48	–0.17	5.60	–1.87
2011	2.76	11.17	18.57	7.63	12.07	12.31	12.85	–0.50	3.93	–2.43
2012	3.53	11.93	17.99	9.00	12.40	13.49	14.06	–0.79	2.55	–2.79
2013	4.18	12.58	17.36	10.22	12.66	14.49	15.09	–1.02	1.37	–3.03
2014	4.72	13.12	16.74	11.26	12.85	15.32	15.94	–1.20	0.38	–3.18
2015	5.16	13.55	16.16	12.14	12.98	16.00	16.64	–1.34	–0.44	–3.28
2016	5.51	13.90	15.63	12.87	13.08	16.53	17.19	–1.44	–1.11	–3.33
2017	5.78	14.17	15.15	13.46	13.15	16.94	17.61	–1.51	–1.66	–3.36
2018	5.99	14.37	14.72	13.93	13.18	17.24	17.93	–1.56	–2.09	–3.37
2019	6.15	14.51	14.34	14.30	13.20	17.46	18.16	–1.59	–2.43	–3.36
2020	6.26	14.60	14.00	14.58	13.19	17.61	18.31	–1.60	–2.70	–3.34

Note: CPI, Consumer Price Index.

Table 4: Impact of trade liberalisation with induced TFP effects on poverty (% of BAU)

	Short run = 2009			Long run =2020
	P0	P1	P2	P0	P1	P2
South Africa	–0.54	–0.2	–1.3	–5.34	–4.3	–7.78
Residential area
Urban	–0.33	–0.15	–1.67	–5.22	–5.16	–6.45
Rural	–0.56	–0.46	–1.34	–7.46	–6.6	–8.3
Ethnic group
African	–1.15	–1.3	–2.2	–6.44	–5.42	–7.7
Coloured	–1.31	–0.78	–1.8	–7.92	–7.2	–8.2
Indian	–0.5	–0.1	–1.45	–5.77	–4.32	–7.2
White	–0.21	–0.1	–1.78	–4.25	–3.21	–5.4
Region, ethnic and skill group
Urban African skilled	0	0	0	0	0	0
Urban coloured skilled	0	0	0	0	0	0
Urban Indian skilled	0	0	0	0	0	0
Urban white skilled	0	0	0	0	0	0
Urban African unskilled	–0.7	–0.4	–1.45	–9.36	–11.4	–12.3
Urban coloured unskilled	–1.2	–0.54	–1.84	–9.9	–12.8	–16.6
Urban Indian unskilled	–0.12	–0.55	–1.65	2.3	–3.8	–5.6
Urban white unskilled	–0.13	–1.62	–1.92	–1.34	–3.3	–8.8
Rural African skilled	0	0	0	0	0	0
Rural coloured skilled	0	0	0	0	0	0
Rural Indian skilled	0	0	0	0	0	0
Rural white skilled	0	0	0	0	0	0
Rural African unskilled	–1.4	–1.3	–1.93	–10.52	–9.98	–11.2
Rural coloured unskilled	–1.86	–2.3	–2.23	–10.19	–8.87	–12.15
Rural Indian unskilled	–0.87	–0.72	–1.78	–4.19	–2.4	–6.4
Rural white unskilled	–0.67	–0.57	–1.83	–3.23	–3.2	–5.6

New York University, 2009. NYU Development Research Institute Database: Macro Time Series. http://nyudri.org/resources/global-development-network-growth-database/ Accessed 10 January 2012.

 Google Scholar