South Africa’s integration into global value chains: status, risks and challenges
Last Modified Date:
2023-12-11, 01:57 PM
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South Africa’s global value chain (GVC) integration lags behind other small open economies, and this is particularly well illustrated with the automotive industry. This paper seeks to understand the causes of this lag. It finds that the level of South Africa’s GVC integration is determined largely by its economic structure and factor endowment, such as distance to market, the size of manufacturing and revenues from natural resources. Other contributing factors include the country’s economic policies, such as free trade agreements, its openness to foreign direct investment and the qualities of its institutions. As countries rethink their approach to GVCs in the wake of the food and energy crisis, South Africa should reflect on how to reshape its industrial policies and revamp its value chains to boost growth.