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Location, Automotive Policy, and Multinational Strategy: The Position of South Africa in the Global Industry since 1995

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  • ANTHONY BLACK

Abstract

The South African automotive sector has become much more integrated into the global industry since 1995. Rapid export expansion has shifted its orientation fundamentally away from its focus on the small domestic market and the industry is widely regarded as a success story of South Africa's democratic transition. However, important vulnerabilities remain, and it is by no means clear that the mode of integration has been particularly favorable to the long-term development of the industry. The relatively small size of South Africa's domestic market and its regional location pose clear disadvantages in terms of attracting international investment. Integration into the global industry has therefore been partial and continues to reflect a degree of hesitancy by multinational firms to make really major commitments to the South African industry. The warning signs include recent import expansion and low local content in domestically assembled vehicles. Automotive policy has also produced distortions, encouraged uneconomic investments, and led to unforeseen side effects. These impacts limit the gains that have been made and are likely to cause complications in the future. Copyright (c) 2009 Wiley Periodicals, Inc..

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Article provided by Gatton College of Business and Economics, University of Kentucky in its journal Growth and Change.

Volume (Year): 40 (2009)
Issue (Month): 3 ()
Pages: 483-512

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Handle: RePEc:bla:growch:v:40:y:2009:i:3:p:483-512

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  1. Kamal Saggi, 2002. "Trade, Foreign Direct Investment, and International Technology Transfer: A Survey," World Bank Research Observer, World Bank Group, vol. 17(2), pages 191-235, September.
  2. Justin Barnes & Mike Morris, 2004. "The German connection: shifting hegemony in the political economy of the South African automotive industry," Industrial and Corporate Change, Oxford University Press, vol. 13(5), pages 789-814, October.
  3. Rajneesh Narula & John Dunning, 2000. "Industrial Development, Globalization and Multinational Enterprises: New Realities for Developing Countries," Oxford Development Studies, Taylor & Francis Journals, vol. 28(2), pages 141-167.
  4. Yannick Lung, 2002. "Introduction," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 26(4), pages 737-741, December.
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