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Adjusting to Trade Liberalisation: The Case of Firms in the South African Textile Sector

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  • Simon Roberts
  • John Thoburn

Abstract

This paper examines the responses of firms in the textile industry of South Africa to that country's rapid liberalisation of trade since the early 1990s. The data reveal that there have been increased exports accompanied by reductions in employment and contraction of production of yarns and fabrics. Drawing on a survey of companies, followed by interviews, it documents how competitive pressures from imports have led firms to increase their exports. Exporting is not, however, directly associated with better performance. This is due to its being a response by many firms to weak domestic demand and the need to maintain production capacity. But, liberalisation has also been accompanied by much upgrading of equipment and by increased specialisation and vertical disintegration in order to develop competitive niches despite South Africa's manufacturing wage levels being higher than those of many of its international competitors. Firms focusing on non-price factors of export competitiveness have been better performing. Firms have also been most successful where technological capabilities based on the domestic market provided a foundation for export competitiveness. There are indications that with the restructuring induced by liberalisation the sector is in a position more effectively to exploit its competitive strengths in international markets. In addition, the United States' African Growth and Opportunity Act (AGOA) offers some stimulus for the textile industry to supply fabrics to firms in the export garment sector which previously imported them. Copyright 2003, Oxford University Press.

Suggested Citation

  • Simon Roberts & John Thoburn, 2003. "Adjusting to Trade Liberalisation: The Case of Firms in the South African Textile Sector," Journal of African Economies, Centre for the Study of African Economies, vol. 12(1), pages 74-103, March.
    • Handle: RePEc:oup:jafrec:v:12:y:2003:i:1:p:74-103
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    Cited by:

    1. Yan Dong & Yuliang Yao & Kefeng Xu, 2008. "Designing Supply Chain Backorder Contracts for Customer Retention," Working Papers 0038, College of Business, University of Texas at San Antonio.
    2. Garth Frazer & Johannes Van Biesebroeck, 2010. "Trade Growth under the African Growth and Opportunity Act," The Review of Economics and Statistics, MIT Press, vol. 92(1), pages 128-144, February.
    3. Al-Kwifi, Osama Sam & Frankwick, Gary L. & Ahmed, Zafar U., 2020. "Achieving rapid internationalization of sub-Saharan African firms: Ethiopian Airlines' operations under challenging conditions," Journal of Business Research, Elsevier, vol. 119(C), pages 663-673.
    4. Hamza El Guili, 2018. "Internationalization of African SMEs: Context, Trends and Challenges," Proceedings of the 11th International RAIS Conference, November 19-20, 2018 020HG, Research Association for Interdisciplinary Studies.
    5. Manwa, Farai & Wijeweera, Albert & Kortt, Michael A., 2019. "Trade and growth in SACU countries: A panel data analysis," Economic Analysis and Policy, Elsevier, vol. 63(C), pages 107-118.
    6. Rhys Jenkins, 2005. "Globalization, Production and Poverty," WIDER Working Paper Series RP2005-40, World Institute for Development Economic Research (UNU-WIDER).
    7. Syed Abdul Sattar SHAH & Anwar Ali Shah G. SYED & Faiz M. SHAIKH, 2013. "Effects Of Wto On The Textile Industry On Developing Countries," Romanian Statistical Review, Romanian Statistical Review, vol. 61(6), pages 60-77, July.
    8. Simon Roberts & John T. Thoburn, 2004. "Globalization and the South African textiles industry: impacts on firms and workers," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(1), pages 125-139.
    9. Lila J. Truett & Dale B. Truett, 2010. "New Challenges For The South African Textile And Apparel Industries In The Global Economy," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 35(4), pages 73-91, December.
    10. Lila J. Truett & Dale B. Truett, 2008. "The South African Textile Industry: Challenges and Opportunities," Working Papers 0044, College of Business, University of Texas at San Antonio.
    11. Johannes Machaka & Simon Roberts, 2003. "The Dti'S New‘Integrated Manufacturing Strategy?’," South African Journal of Economics, Economic Society of South Africa, vol. 71(4), pages 679-704, December.
    12. Agbahoungba, Lesfran Sam Wanilo & Thiam, Ibrahima, 2018. "Effets du Commerce Extérieur sur la Croissance Economique en Zone CEDEAO [Economic Growth effects of External Trade in ECOWAS]," MPRA Paper 89035, University Library of Munich, Germany, revised 2018.
    13. Sanjaya Lall (QEH), "undated". "FDI, AGOA And Manufactured Exports From A Land-Locked, Least-Developed African Economy: Lesotho," QEH Working Papers qehwps109, Queen Elizabeth House, University of Oxford.
    14. Manwa, Farai & Wijeweera, Albert, 2016. "Trade liberalisation and economic growth link: The case of Southern African Custom Union countries," Economic Analysis and Policy, Elsevier, vol. 51(C), pages 12-21.

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