{"id":13298,"title":"Jumpstarting South Africa\u2019s Economy","link":"https:\/\/bst-europe.eu\/de\/globalization\/jumpstarting-south-africas-economy\/","date":"24. November 2016","date_unix":1479996841,"date_modified_unix":1479996841,"date_iso":"2016-11-24T14:14:01+00:00","content":"<p><em>In our <\/em><a href=\"https:\/\/bst-europe.eu\/topics\/international-trade\/changes_in_global_value_chains\/how-trade-integrated-is-africa\/\" target=\"_blank\" aria-label=\"\u00d6ffnet in einem neuen Tab\" ><em>last post<\/em><\/a><em> we introduced you to part one of our two-part GED video series on trade integration in Africa. We talked about Africa\u2019s heavy commodity export reliance and about inner African trade zone proposals. In today\u2019s video we want to get more focused and talk about trade development in South Africa!<\/em><\/p>\n<p>&nbsp;<\/p>\n<p><strong>Trade integration in Africa &#8211; Part 2:<\/strong><\/p>\n<div class=\"postContentEmbed\">\n<div class=\"embedContainer embedContainer--video\"><iframe loading=\"lazy\" title=\"Inside South Africa\u2019s Trade Strategy\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube-nocookie.com\/embed\/uN7UZmErGxs?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n<\/div>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p><strong>This blogpost in short:<\/strong><\/p>\n<ul>\n<li>Before the financial crisis of 2008, South Africa experienced a long stretch of high positive economic growth.<\/li>\n<li>This growth has declined drastically over the last seven years and has most recently flat lined at not much more than one percent.<\/li>\n<li>This is in part due to South Africa\u2019s heavy reliance on raw material exports to China, where growth has started to decrease as well.<\/li>\n<li>An Asian free trade agreement such as the FTAAP could restart South African growth, but would likely present a non sustainable solution to the problem that could further increase African inequalities.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>For a long time, South Africa was considered Africa\u2019s model economy. Between the years 2000 and 2007 South African GDP growth averaged a sizzling 4.3 percent annually. The world noticed and eventually South Africa claimed its spot as the newest addition to the illustrious BRICS club of countries. Along with fellow members Brazil, Russia, India and China this makes South Africa one of the most powerful emerging markets in the world.<\/p>\n<p>&nbsp;<\/p>\n<p>Then the big financial crisis hit and South Africa\u2019s economy plummeted. In the years after the crisis, they were never able to regain pre-crisis levels of growth and recently it appears that growth has flat lined at a meager 1.3 percent. What happened?<\/p>\n<p>&nbsp;<\/p>\n<p>As we discussed <a href=\"https:\/\/www.youtube.com\/watch?v=1QFk708OvnM\" target=\"_blank\" aria-label=\"\u00d6ffnet in einem neuen Tab\" >in Part 1 of our series<\/a>, Africa \u2013 since being forced into this role during colonial times \u2013 has always been heavily reliant on raw material exports to the rest of the world and, most recently, especially to China. South Africa is no exception. Although the finance sector was responsible for a lot of pre-crisis job creation, mining and the export of precious metals and rare earth elements remained a main driver behind its wealth. A whole fourth of the country\u2019s exports were gold, iron ore and platinum. Most recently though, Chinese growth has slowed down significantly from its once astronomical heights. Less growth in China however, means less demand for South African exports, giving us at least a partial explanation for the slump South African growth has been experiencing over the last some years.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Could trade agreements be the answer?<\/strong><\/p>\n<p><strong>\u00a0<\/strong><\/p>\n<p>Before, we talked about trade zones and agreements within Africa, their potential and problems in facilitating intra-Africa cross-border trade. Today we want to take a look at global deals \u2013 so called mega-regional free trade agreements \u2013 and their potential to grow the South African economy. In our study \u201c<a href=\"http:\/\/www.bertelsmann-stiftung.de\/fileadmin\/files\/BSt\/Publikationen\/GrauePublikationen\/NW_The_Forgotten_Continent.pdf\" target=\"_blank\" aria-label=\"\u00d6ffnet in einem neuen Tab\" >The Forgotten Continent \u2013 The effects of mega-regional free trade agreements on Africa<\/a>\u201d we analyzed the effects of various planned agreements of the west such as TTIP and TPP on South Africa. We also looked at planned Asian agreements such as the RCEP and the even more ambitious FTAAP (Free Trade Area Asia-Pacific). While western Agreements \u2013 which by now look unlikely from a political viewpoint anyway \u2013 showed little to no effect on South African growth, the Asian agreements tell a different story.<\/p>\n<p>&nbsp;<\/p>\n<p><a href=\"https:\/\/bst-europe.eu\/wp-content\/uploads\/sites\/24\/2016\/06\/BST_Afrika_Grafik10.jpg\" target=\"_blank\" aria-label=\"\u00d6ffnet in einem neuen Tab\" ><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-6588\" src=\"https:\/\/bst-europe.eu\/wp-content\/uploads\/sites\/24\/2016\/06\/BST_Afrika_Grafik10.jpg\" alt=\"BST_Afrika_Grafik10\" width=\"2067\" height=\"1329\" srcset=\"https:\/\/bst-europe.eu\/wp-content\/uploads\/sites\/24\/2016\/06\/BST_Afrika_Grafik10.jpg 2067w, https:\/\/bst-europe.eu\/wp-content\/uploads\/sites\/24\/2016\/06\/BST_Afrika_Grafik10-300x193.jpg 300w, https:\/\/bst-europe.eu\/wp-content\/uploads\/sites\/24\/2016\/06\/BST_Afrika_Grafik10-1024x658.jpg 1024w, https:\/\/bst-europe.eu\/wp-content\/uploads\/sites\/24\/2016\/06\/BST_Afrika_Grafik10-768x494.jpg 768w, https:\/\/bst-europe.eu\/wp-content\/uploads\/sites\/24\/2016\/06\/BST_Afrika_Grafik10-600x386.jpg 600w, https:\/\/bst-europe.eu\/wp-content\/uploads\/sites\/24\/2016\/06\/BST_Afrika_Grafik10-1536x988.jpg 1536w, https:\/\/bst-europe.eu\/wp-content\/uploads\/sites\/24\/2016\/06\/BST_Afrika_Grafik10-2048x1317.jpg 2048w\" sizes=\"auto, (max-width: 2067px) 100vw, 2067px\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<p>Our results show that a China led FTAAP could bring about a 62.4 percent value added growth in the South African mining sector translating to a whole 7.86 percent real income growth for the country. As we said before, if China is doing well South Africa is getting a windfall.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Is any growth good growth?<\/strong><\/p>\n<p>&nbsp;<\/p>\n<p>Such numbers would certainly pull the struggling BRICS country out of its stagnation. But would it be real positive growth? History shows that the wealth of the mining sector reaches only a fragment of South African population. Another China fueled growth jump would almost definitely further increase the already large inequality in the economy. Let\u2019s face it: The commodity lottery has never been a prescription for lasting, sustainable growth.<\/p>\n<p>&nbsp;<\/p>\n<p>It remains up to South Africa then to decide how it wants to face the global trading order of the future. To learn more about the situation at hand and the results we found, <a href=\"http:\/\/www.bertelsmann-stiftung.de\/fileadmin\/files\/BSt\/Publikationen\/GrauePublikationen\/NW_The_Forgotten_Continent.pdf\" target=\"_blank\" aria-label=\"\u00d6ffnet in einem neuen Tab\" >click here<\/a> to read the full study, or <a href=\"https:\/\/bst-europe.eu\/topics\/international-trade\/changes_in_global_value_chains\/how-trade-integrated-is-africa\/\" target=\"_blank\" aria-label=\"\u00d6ffnet in einem neuen Tab\" >click here<\/a> to read our first blogpost and watch video one of our series on trade integration in Africa!<\/p>\n<p>&nbsp;<\/p>\n","excerpt":"<p>In part two of our two-part GED video series on African trade integration we take a look at the example of South Africa and examine how trade agreements might hold the key to restart Africa&#8217;s sputtering growth engine.<\/p>\n","thumbnail":"https:\/\/bst-europe.eu\/wp-content\/uploads\/sites\/24\/2016\/11\/20084824571_01f5a26942_o-scaled.jpg","thumbnailsquare":"https:\/\/bst-europe.eu\/wp-content\/uploads\/sites\/24\/2016\/11\/20084824571_01f5a26942_o-scaled.jpg","authors":[{"id":4750,"name":"Fritz Putzhammer","link":"https:\/\/bst-europe.eu\/de\/blogger\/fritz-putzhammer\/"},{"id":309,"name":"Samuel George","link":"https:\/\/bst-europe.eu\/de\/blogger\/samuel-george\/"}],"categories":[{"id":152,"name":"Globalization","link":"https:\/\/bst-europe.eu\/category\/globalization\/"}],"tags":[]}