Determining the export market diversification opportunities for the Western Cape Province of South Africa
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The South African government recognises the need for export growth to contribute towards economic growth and articulates this in different national policy documents. It is evident that the Western Cape Province also recognises the need for export growth, as the province is facing various economic and socio-economic challenges. Therefore, aligning policies to focus on export promotion which supports the labour intensive sectors within the province by uplifting employment and eradicate poverty. The aim of this study is to determine specifically export market diversification opportunities for the Western Cape Province. The main objective is to determine the Western Cape’s world-wide market diversification opportunities with the highest export potential. The literature underlines the importance of export growth and the benefits of export diversification. It can also be concluded that countries operating in the extensive margin are more likely to generate high economic growth and development opportunities. By implementing export diversification strategies, higher employment levels and output growth can be achieved on a provincial and national level. A three-step methodological process to determine the export market diversification opportunities for the Western Cape Province is used. Firstly, the products in which the Western Cape Province has a revealed export specialisation are determined by using the revealed trade advantage (RTA); secondly, the geographical concentration of the Western Cape’s exports of these products is determined by means of the Herfindahl Hirschman Index (HHI); and lastly, the export market opportunities for the Western Cape Province’s export-orientated products that are geographically concentrated are determined by using the decision support model (DSM). The results of the study identified 188 geographically concentrated export products for the Western Cape and 2 866 realistic product-country level export diversification opportunities. It is recommended that the Department of Trade and Industry (DTI) and the Western Cape trade promotion organisation, WESGRO, in collaboration with the relevant export councils and industry associations, use the results of this study to focus their export promotion and diversification strategies on the identified product-country combinations.