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Transaction Costs and Clothing and Textile Trade in SADC


  • Shannon Tagg

    () (Department of Trade and Industry)


This working paper looks at clothing and textile trade in the Southern African Development Community (SADC). Clothing and textile production is important in terms of employment and development, and thus they have been priority sectors since the SADCC inception in 1980. Evidence of intra-regional trade is presented. The scope for increased trade is then discussed and transaction costs are examined as one of the major factors restricting this increased trade. The original aim of this paper was to use a transport model to calculate the optimal pattern of clothing, textiles and fibre trade within the SADC region. This has not proved feasible and thus this paper now examines the Southern African Customs Union’s (SACU) trade with SADC and identifies patterns and trends within a transaction cost economics framework. SACU’s total exports of textiles, fabrics and clothing to SADC underperformed between 1989 and 1998, in contrast to the import sector, which performed quite well during this period. Transaction costs are significant barriers to trade in the SADC region. The paper examines various transaction costs, including inland transport costs, shipping constraints, tariffs and non-tariff barriers and shows that trade liberalisation is an important policy mechanism of reducing transaction costs. The paper analyses various trade agreements that offer great potential for improving the trade environment in the SADC region.

Suggested Citation

  • Shannon Tagg, 2002. "Transaction Costs and Clothing and Textile Trade in SADC," Working Papers 02064, University of Cape Town, Development Policy Research Unit.
  • Handle: RePEc:ctw:wpaper:02064

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    References listed on IDEAS

    1. Ethier, Wilfred, 1974. "Some of the theorems of international trade with many goods and factors," Journal of International Economics, Elsevier, vol. 4(2), pages 199-206, May.
    2. Wood, Adrian, 1997. "Openness and Wage Inequality in Developing Countries: The Latin American Challenge to East Asian Conventional Wisdom," World Bank Economic Review, World Bank Group, vol. 11(1), pages 33-57, January.
    3. Eli Bekman & John Bound & Stephen Machin, 1998. "Implications of Skill-Biased Technological Change: International Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1245-1279.
    4. Slaughter, Matthew J, 1998. "International Trade and Labour-Market Outcomes: Results, Questions, and Policy Options," Economic Journal, Royal Economic Society, vol. 108(450), pages 1452-1462, September.
    5. Hanson, G.H. & Harrison, A., 1995. "Trade, Technology and Wage Inequality," Papers 95-20, Columbia - Graduate School of Business.
    6. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680, June.
    7. Jeffrey D. Sachs & Howard J. Shatz, 1994. "Trade and Jobs in Manufacturing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 1-84.
    8. H. Bhorat & J. Hodge, 1999. "Decomposing Shifts in Labour Demand in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 67(3), pages 155-168, September.
    9. Eli Berman & John Bound & Zvi Griliches, 1993. "Changes in the Demand for Skilled Labor within U.S. Manufacturing Industries: Evidence from the Annual Survey of Manufacturing," NBER Working Papers 4255, National Bureau of Economic Research, Inc.
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    More about this item


    South Africa: Clothing and textile production in the SADC region; textile trade;

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics


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