Global value chains: a new era for South Africa's foreign trade

Abstract

Global value chains (GVCs) are giving rise to new trade patterns and are helping to improve many countries' growth prospects - particularly in the developing world. Yet South Africa is finding it difficult to participate in GVCs because of the country's heavy reliance on locally-sourced resources, an industrial policy that tends to emphasise low value-added fabrication, and a trade policy that strongly favours exports over imports. While GVCs are usually spawned from regional trade relationships, the GVC phenomenon has not taken off in Africa due to weak trade liberalisation and regional integration attempts. If South Africa is to take advantage of the opportunities presented by GVCs, and in the process enhance its growth and development prospects, a new trade policy framework and a change of mind set are urgently needed.