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Browsing Economics and Finance by Author "Bell, Robert Trevor."

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    An analysis of the impact of the motor industry development programme (MIDP) on the development of the South African motor vehicle industry.
    (2001) Damoense, Maylene Yvette.; Bromberger, Norman.; Bell, Robert Trevor.
    The study aims to research the performance of past and present motor industry policy in South Africa - with special reference to Phase VI of the local content programme and the Motor Industry Development programme (MIDP) - in the light of the domestic macroeconomic environment and global developments in the world automotive industry. The overall objective of this dissertation is to contribute to the debate on motor industry policy which concerns what future policy would be appropriate for the development of a viable and competitive motor vehicle industry. Thus this study is primarily policy-oriented, and the empirical analysis produced deals with important developments in the local motor and component industries and attempts to examine key variables to establish the likely impact of industry-specific policy changes - both past and future. The method of investigation involves the study of relevant theoretical literature regarding domestic automotive policy, and considers policies of low-volume automobile producing economies, especially Australia, Philippines, India and Malaysia. Also, empirical data of various sub-sectors of manufacturing in South Africa were examined and compared to the motor vehicle sector in order to determine the extent to which the macroeconomic state of the domestic economy as distinct from automotive policy might explain the performance of the South African motor industry. The dissertation presents a review of the local content programme of motor industry policy in South Africa since the early 1960s. It examines the claim that import-substituting policy in the motor industry actually had a negative impact on the country's balance of payments. The study finds questionable whether local content policy contributed significantly to the large net foreign exchange usage by the motor industry in real terms. There is evidence that increases in the nominal industry trade deficit can largely be explained by the weakening of the Rand, especially during the mid-1980s. Also, empirical data was used to make an examination of the performance of automotive exports under Phase VI and the MIDP in the context of economy-wide trade liberalization. It was found that exports of automotive products grew significantly under both Phase VI and the MIDP in real Rand terms. Thus, it seems probable that industry-specific policy played a major role in the strong export performance of the sector since the late 1980s through to the 1990s. The study then reviews the revised version of the impact of the MIDP and considers the future of the industry. The state of the domestic macroeconomic environment and globalization of the international automobile industry, including the influence of Transnational Corporations' (TNCs') strategies, will undoubtedly determine the future direction of South Africa's automotive sector. In the short to medium term, we might expect an increase in imported vehicles and some rationalization of the industry. Over the longer term, the possibility of fewer OEMs and component suppliers, and automotive exports are likely to rise as trade and the inflow of foreign investment accelerates due to foreign collaboration and global competition. A simple theoretical model applicable to the South African automotive industry attempts to show the welfare implications of a protective automotive regime (similar to Phase VI) and compares it with that of a more liberal (tariffs-only) automotive regime that may be considered as a likely policy-option for South Africa post-MIDP. The theoretical analysis indicates that the tariffs-only policy is superior to that of a more protective regime in that static efficiency losses are lower. However, the dynamic effects of such policy changes and of possible TNC responses to them, which are referred to in the previous paragraph, are not included in this simple model.
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    An empirical analysis of the role of imports in the South African economy.
    (1999) Gumede, Vusi Tallman.; Bell, Robert Trevor.; Contogiannis, Eleftherios.
    It is generally acknowledged that there is no sufficient, exhaustive and elaborate empirical examination of the quantitative impact of policies pertaining to import demand and economic growth in South Africa. In order to arrive at conclusive, sagacious and applicable policies on the economic growth potential of an economy, it is imperative to evaluate, empirically, whether envisaged economic growth rates and employment creation are feasible, given the socio-economic circumstances. The fundamental question of the constraint or rather effective constraints to high economic growth rates, measured by gross domestic product, has always desired urgent attention but has been neglected. There appears to be strong reasons to believe that the South African economy, like other middle-income developing economies, is subject to a "powerful balance of payments constraint that effectively aborts the growth process before it is able to deliver rising per capita incomes" (Industrial Strategy Project1, 1995:49 ). Furthermore, although this issue is widely recognized, there has been little systematic analysis of this important question. Many writings which, implicitly or explicitly, note the foreign exchange shortages as adversely affecting the economy's growth capacity have tended to focus and give enormous emphasis on exports and export expansion as a means to eradicate this economic dilemma. However, together with exports the demand for imports clearly determines the behavior of the trade account of the balance of payments as a whole. Consequently, this dissertation intends to consider one important aspect of the balance of payments constraint, namely, the determinants of the demand for imports in South Africa and the behavior of foreign trade. This study briefly examines the theoretical foundations of the savings and foreign exchange constraints using the 'two-gap' model. In that the main lesson is that the economy characterized by foreign exchange bottlenecks and/or lack of savings will not accomplish its perceived growth capacity. This is the background and motivation for the study of import demand elasticities as it gives impetus to the importance of both imports and exports in an economy. The dissertation derives the import demand function and employs the recent time-series techniques to modeling economic time-series. Prior to the empirical model, the study quantitatively describes the behavior of both imports, and exports, though more emphasis is placed on the former than the latter. In this section, simple quantitative techniques are utilized in order to determine the cyclical and trend behavior of import performance since the beginning of the 1970s. The study also briefly looks at the relationship between import of capital goods and investments into South Africa. Description of trade behavior involves examination of trade flows and their geographical destination by regional trading blocks. That is followed by an extensive literature survey conducted on import demand elasticities in South Africa and trade elasticities in general. This analysis gives a strong background to the time-series model of import demand estimated in this work. Time-series analysis examines the import demand at both aggregate and sectoral levels. Prior to the empirical model chapter there is an overview of time-series econometrics with regards to co-integration, error correction and non-stationary data. Import performance and import demand functions were studied in an economic policy context and the analyses were in some cases restricted by data constraints. Import behavior patterns and empirical results of the import demand models are discussed and international comparisons are drawn. 1 The Industrial Strategy Project (ISP) was authored by Joffe et al (1995). In this dissertation it is referred to as ISP (1995) although in the reference section I refer to Joffe et al (1995) as done in other publications. For instance, see Bell (1995). The same applies to the Normative Model Approach (NEM), in the text it is referred to as NEM (1993) while in the references it is reflected as Central Economic Advisory Services (1993).