1998 SOUTHERN AFRICA ECONOMIC ... - National Treasury

pole” for the re g i o n . D i rect investment by South A f r i c a n
companies in SADC, a process which is already well underway,
(see South A f r i c a ’s country pro f i l e, p...) can contribute to cap i t a l
fo r m a t i o n , and the development of technology and human
re s o u rces in the re g i o n .South Africa is a potential market fo r
e x p o rts from other SADC countries, and more opport u n i t i e s
will be created when SADC Free Trade A re a ,as set out in the
Trade Pro t o c o l ,comes into effe c t .
P roduction in the region is to a large extent concentrated in
South A f r i c a .G reater freedom of movement for both capital and
labour within the region could result in the relocation of
p roduction from South Africa to other SADC countries. S o u t h
A f r i c a ’s labour costs, for example are in general higher than
those in most other SADC countries, meaning that, all other
things being equal, p roduction costs would be cut by re l o c a t i n g
to other member states, thus increasing competitive n e s s .
F u rt h e r m o re, countries such as Mozambique, Zambia and
Tanzania have vast unutilised potential in terms of natural
re s o u rc e s ,but lack the necessary human and financial capital to
exploit these re s o u rces to the fullest. H oweve r, countries such
as South Africa and Mauritius, for example are re l a t i ve ly rich in
human capital and may be able to provide the necessary skills
and expertise to facilitate development in these countries. O f
c o u r s e, the reality of this situation is not quite as simple - South
Africa has a large unemployment problem and a vast supply of
unskilled labour, whilst the poorer SADC countries lack
adequate infrastructure and support serv i c e,making pro d u c t i o n
u nviable in many cases.
The World Investment Report also suggests that the Southern
African region fo l l ows the “ f lying geese” model,as used by Jap a n
and South East A s i a .In this model,the “lead goose” (in this case,
South A f r i c a ) ,c o n s t a n t ly develops new industries.When it loses
c o m p e t i t i ve advantage in a particular pro d u c t ,it then passes the
n ew industries on to its less-developed neighbours. Because of
c h e aper input costs, the latter are able to produce the goods or
s e rvice more competitive ly, and at the same time inherit the
re l evant expertise and skills developed by the lead go o s e.
M o re basically, c o - o rdination of policies, such as policies aimed
at attracting fo reign inve s t m e n t ,can also assist the region in
becoming more competitive. Rather than trying to deflect
i nvestment from other SADC countries by offering eve r- b e t t e r
i n c e n t i ve packages, c o u n t ry strategies should be aimed at
bringing investment into the region as a whole.
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