The international trade prospective of agriculture sector in South African..


M. Y. Teweldemedhin1* and Van H. D. Schalkwyk2

The objective of this paper is to analyse the international trade performance of the South African agricultural industry in aggregate and by product group categories. A useful tool in this regard is the Gini and intra-industrial trade coefficient (IIT), which is used to examine the international trade balance of South Africa. Moreover, Ordinary Least Squares (OLS) is also used to identify factors that may be necessary to achieve high IIT. The IIT coefficient, after 1994, achieved more than 85 percent, which is a record level even for industrialised countries. This high IIT performance reveals trade liberalisation between the Southern Africa Customs Union (SACU) and the European Union (EU), opening South Africa’s market to the world. It also reveals that South Africa is able to increase its specialisation and flexibility to gain market access, and has shown a greater ability to compete in a changing trade environment. The results of the econometric analysis of IIT determinants give a greater magnitude to the coefficients export to Gross Domestic Product (GDP) and export -to -import ratios. These results imply that if South Africa’s industries take measures to increase trade liberalisation, diversity, and the level of industrial specialisation, the IIT level would be higher, and significant economic gain might be achieved by minimising costs.

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