South African manufactured exports

Neil Rankin

Those developing countries that have managed to achieve sustained high levels of growth have almost always relied on open economies, the growth of industry and the expansion of manufactured exports.  In contrast to these successful countries, mostly situated in South and East Asia, most countries in sub-Saharan Africa have grown slowly, and in some cases contracted.  Even South Africa, the largest economy in the region, has failed to achieve growth rates high enough to reduce unemployment.  Neil Rankin’s research examines two separate but closely related aspects of South African manufacturing exports: the performance of manufactured exports since 1970 and their responsiveness to price changes, and South African firm-level export behaviour in comparison to other African countries.

Although South African manufactured exports have grown since the late 80’s supply remains very inelastic at the sector level.  In fact, manufactured export supply is more sensitive to the price of imported intermediate inputs than to its own price.  This area of research also examines the impact of the end of sanctions on export elasticity, and the changes in export supply since the repeal of sanctions and the political reforms of the early 1990’s.

Comparing firm export participation across African countries, South Africa has a much higher proportion of firms participating in the export market.  Approximately 77% of large South African firms export.  This is a higher proportion than in other African countries.  Many of these exports are to the region, although 40% of the South African firms do export internationally.  Not only are South African firms more likely to export but they are also more productive than other African firms.  South African firms are approximately 30% more productive than Ghanaian firms, 40% more productive than Kenyan firms and 50% more productive than Nigerian firms.

Productivity and exporting, by country.

 

Ghana

Kenya

Tanzania

Nigeria

South Africa

Total

Proportion of large firms exporting (%)

0.51

0.68

0.45

0.12

0.77

0.57

Productivity relative to Kenya (%)

0.10

0

0

-0.04

0.43

n/a

Notes: Large firms are classified as firms with more than 75 employees.
Relative productivity is the coefficient on the country dummy in a Cobb-Douglas gross output production function.

The relationship between firm productivity and the probability of exporting is explored in detail.  Among this sample of African firms exporting firms are significantly more productive than non-exporters.  However, there is little evidence that more productive firms self-select themselves into the export market.  Rather it seems that exporters experience a once-off increase in productivity levels once they enter the export market.

Working Papers:

Rankin, N. 2002, ‘The Export Behaviour of South African Firms’ Trade and Industrial Policies Strategy (TIPS) Working Paper. (http://www.tips.org.za/research/papers/showpaper.asp?ID=493).