OECD s Work on South Africa s Trade

Transcription

1 OECD s Work on South Africa s Trade By Przemyslaw Kowalski, Development Division, Trade and Agriculture Directorate National Agricultural Marketing Council, Pretoria, 24 November 2009

2 Presentation Outline Part I: Overview of completed work: South Africa chapter in the Globalisation and Emerging Economies (South Africa s Trade and Growth, OECD Trade Policy Working Paper No. 87) Part II: OECD s current work on Globalisation and Comparative Advantage in OECD and emerging market economies Discussion of past, current and future work, possible future co-operation

3 South Africa s Trade and Growth Working Paper Contents Economic growth and general trade performance Positioning in the world trade network Composition and performance of SA s exports at a product and sector level Econometric assessment of comparative trade performance Main historical and trade policy developments Econometric assessment of impact of trade liberalisation on total factor productivity

4 Changing architecture of world trade network Stable core with new and well established member: China Many countries became middle powers by increasing bilateral relationships Globalisation has not led to marginalisation of less well connected in fact the trade network has become more multilateral

5 SA: striding towards the core of 100 C 95 IP United States Soviet Union/Russia the trade network India China 90 Brazil P Indonesia O South Af rica

6 Major South African Export Sectors Chapter Structural Performance Export Share % Trade Ratio Sector HS M/X Pearls, precious stones and metals etc star star Iron and steel star traditional Mineral fuels traditional traditional Boilers, machinery emerging emerging Vehicles other than railway emerging emerging Ores etc snail traditional Aluminium snail star Electrical, electronic equipment emerging emerging Edible nuts, fruit star emerging Inorganic chemicals snail traditional Organic chemicals star emerging Iron and steel emerging star Beverages and spirits star snail Copper, articles of snail star Aircraft emerging emerging Plastics star traditional Misc. chemical products traditional emerging Paper, paperboard emerging snail Furniture, lighting, prefab buildings emerging snail Wood, articles emerging snail

7 Sectors with Highest Comparative Advantage HS chapter Annual average growth rate 71 Natural/cultured pearls, prec stone Ores, slag and ash Edible fruit and nuts; peel of citr Explosives; pyrotechnic prod; match Iron and steel Aluminium and articles thereof Wool, fine/coarse animal hair, hors Pulp of wood/of other fibrous cellu Sugars and sugar confectionery Inorgn chem; compds of prec mtl, r Beverages, spirits and vinegar Nickel and articles thereof Other base metals; cermets; article Prep of vegetable, fruit, nuts or o Tobacco and manufactured tobacco su Railw/tramw locom, rolling-stock & Raw hides and skins (other than fu Salt; sulphur; earth & ston; plaste Fish & crustacean, mollusc & other Art of stone, plaster, cement, asbe

8 Intensely exported manufactures HS chapter Annual average growth rate 84 Nuclear reactors, boilers, mchy & m Electrical mchy equip parts thereof Vehicles o/t railw/tramw roll-stock Aircraft, spacecraft, and parts the

9 Top 25 Export Growth Products Rank Product Product_Name Value Growth % Platinum in other semi-manufactured 670,107, Platinum unwrought or in powder form 580,953, Rhodium unwrought or in powder form 246,679, Palladium unwrought or in powder form 104,677, Rhodium in other semi-manufactured 91,089, Palladium in other semi-manufacture 71,251, Iridium, osmium and ruthenium unwrought 38,277, Ferro-vanadium 7,648, Niobium, tantalum and vanadium ores 1,615, Plates, sheet, strip and foil, nickel 550, Nickel ores and concentrates 493, Esters of acrylic acid 260, Petroleum oils, etc, (excl. crude) 229, Butan-1-ol (n-butyl alcohol) 184, Smoking tobacco 112, Kraftliner, uncoated 32, Wire of refined copper 25, Photosensitive semiconductor device 22, Radio receivers 16, Engines, diesel 14,555

10 Export mix according to skill 100% intensity Primary Low-skill manufacture High-skill manufacture 90% 80% 70% 60% 50% 40% 30% % % 0%

11 Taxes on international trade and 12 transactions % of revenue % of GDP % of merchandise imports

12 Simple average tariff by production stage Capital goods Consumer goods Intermediate goods Raw materials

13 Effective rates of protection Effective Rate of Protection Tobacco Wearing apparel Textiles Footwear Furniture Food Rubber products Motor vehicles, parts and accessories Average across sectors Beverages Plastic products Leather and leather products Other manufacturing Metal products excluding machinery Wood and wood products Glass and glass products Basic iron and steel Non-metallic minerals Paper and paper products

14 Outstanding issues How does further liberalisation fit with economic policy objectives? Employment Dependency on natural resources Relation of trade and labour market policies Relation of trade and industrial policies How to avoid negative consequences of industrial policy? Future of SA agriculture? Importance of services in South Africa s trade and growth

15 Special focus: How to assess country s relative trade global trends performance? permanent exporting country factors permanent partner country factors permanent bilateral factors role of own competitiveness and policy developments

16 From gravity to fixed effects ij ij i j M m m ij m ji ij j i ij P z b d Y Y Y X log 1 log log ) log( log 1 log log 1 ijt N N j jt N i it N N j N N p ij j N i i T t t jt it ijt Y Y X / ) ( log

17 Interpretation of fixed N i1 T t1 i t 2 N jn 1 j effects terms isolate the time effects that are common to all trading country pairs time-invariant fixed effects for exporting and importing countries, respectively 2 ( N N ) ij p1 are country pair-specific time-invariant fixed effects that account for factors such as the time-invariant bilateral trading costs N i1 it 2N jn 1 jt time-variant importer and exporter-specific fixed effects (price effects along with time-varying factors specific to an exporting or importing country e.g. opening up to trade on an MFN basis or country-specific reforms and policies)

18 Data Trade bilateral exports from Comtrade, countries: OECD countries plus Brazil, India, Indonesia, China, Russian Federation and South Africa (BRIICS) and Chile; Hong Kong, China; Singapore; Thailand; China Taipei; Malaysia; Philippines; Venezuela; Israel; Colombia and Argentina raw materials, intermediate goods, consumption goods, capital goods

19 Source: ComTrade data, authors calculations Average annual percentage change in relative export indicator ( ) South Africa s comparative trade performance China Brazil India Indonesia Russia South Africa

20 Summary of average annual change in exporter and importer fixed effects China Brazil India Indonesia Russia South Africa Exporter Total trade Consumption goods Raw materials Capital goods Intermediate goods Importer Total trade Consumption goods Raw materials Capital goods Intermediate goods

21 Current OECD work on trade and specialisation dynamics scope of research

22 Current OECD work on trade and specialisation dynamics analysis of production, trade and comparative advantage developments in OECD and major emerging market (EM) economies determining the impact on trade competitiveness of various underlying economic and policy factors

23 Four reports + case studies Production, Consumption and Trade Developments Comparative Advantage Developments Factor Content of Trade and Labour Market Implications of Globalisation Changing Patterns of Comparative Advantage: Policy Implications Case studies: construction services in India and China, agriculture in Brazil and South Africa, textiles worldwide, others?

24 Assessment of Policy Implications Comparative empirical assessment of effectiveness of a range of trade and domestic (but trade-related) policies in improving trade performance Export performance at sector level determined by: industry measures of dependence on various policies economy wide policies Result: establishing the relative importance of various policies for export performance across the OECD membership and EM economies

25 Assessment of Policy Implications (2) database of policy indicators and econometric assessment of the actual export performance at the sector level decomposition of determinants of trade flows that allows to capture how well conditions in country i provide for the production needs of industry k (Chor, 2008):

26 Comparative Advantage Dynamics Selected Preliminary Results with Special Focus on South Africa

27 Comparative Advantage Developments Concept and policy implications of revealed comparative advantage (RCA) analysis Patterns and trends in RCA using various indices; similarities and disparities across the OECD membership and EM economies Dynamic analysis of RCA; mobility in the middle-scale and upper and lower ranges of RCA Identification of potential case studies

28 RCA indices by broad sector

29 Incidence of RCA by sector 70 % of products with RCA> digit 4 digit 6 digit 10 0

30 Changes in RCA wrt

31 Changes in RCA wrt 1992 movements at the top and bottom of distribution

32 Rank correlation coefficient of RCA indices

33 Cumulative RCA distribution-sa bilxrca cumul_bilxrca_90 cumul_bilxrca_07 cumul_bilxrca_97

34 Cumulative RCA distribution- USA bilxrca cumul_bilxrca_90 cumul_bilxrca_07 cumul_bilxrca_97

35 Cumulative RCA distribution- Germany bilxrca cumul_bilxrca_90 cumul_bilxrca_07 cumul_bilxrca_97

36 Cumulative RCA distribution- China bilxrca cumul_bilxrca_90 cumul_bilxrca_07 cumul_bilxrca_97

37 Cumulative RCA distribution- Brazil bilxrca cumul_bilxrca_90 cumul_bilxrca_07 cumul_bilxrca_97

38 Kernel density estimate--sa Kernel density estimate bilxrca kernel = epanechnikov, bandwidth =

39 Kernel density estimate--us Kernel density estimate bilxrca kernel = epanechnikov, bandwidth =

40 Kernel density estimate-- Germany Kernel density estimate bilxrca kernel = epanechnikov, bandwidth =

41 Kernel density estimate-- China Kernel density estimate bilxrca kernel = epanechnikov, bandwidth =

42 Kernel density estimate-india Kernel density estimate bilxrca kernel = epanechnikov, bandwidth =

43 Kernel density estimate-- Brazil Kernel density estimate bilxrca kernel = epanechnikov, bandwidth =

44 change in coeff of variation Dispersion of RCA indices falls in the OECD y = x R² = Initial coefficient of variation

45 change in coeff of variation No clear tendency in the EM economies y = x R² = Inittial coeff of variation

46 RCA transition matrix South Africa deciles

47 RCA mobility index

48 Measuring dynamics, ergodic distribution South Africa Brazil

49 Measuring dynamics, ergodic distribution (2) China India

50 Measuring dynamics, ergodic distribution (3) United States Germany

51 Measuring dynamics, ergodic distribution (4) Chile Russia

52 Some further steps? Assessment of RCA mobility by product group (factor intensity, technology or natural resource content) Bringing out the concept of competitiveness and establishing relation to comparative advantage developments Correlation analysis of dynamics indicators and economic development indicators Impact of policies

53 Thank you!