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The Export Behaviour of South African Manufacturing Firms

  • Year: 2001
  • Organisation: Centre for the Study of African Economies, Univers...
  • Author(s): Neil Rankin

This paper presents results based on a recent South African firm-level survey. It examines the export behaviour of South African manufacturing firms, it attempts to characterise the decision to export and it also considers the destination of exports. We find the following:

  • 71% of South African firms export. These firms export on average 18% of their output.
  • The proportion of firms exporting is one of the highest for a number of African countries. However, given that a firm exports, the percentage of output exported is amongst the lowest.
  • There are very few specialist exporters. Less than half the firms in the sample export more than 10% of their output.
  • More than a quarter of exporters export only to countries in the SADC region.
  • SADC is the major market for all sectors and for more than 50% of firms in all sectors except the iron and steel sector and the textiles and garments sector.
  • Other major markets include the rest of Africa, Western Europe, Asia and North America, although there are noticeable differences in major markets between sectors.
  • For those firms that export, about 55% of exports go to SADC and 45% to the rest of the world. Less than 6% of total output for all firms is exported to the rest of the world. However, these figures mask important differences between sectors.
  • Exporters produce more output per employee and have higher average labour costs.
  • Estimates of production functions for firms suggest that firms with some foreign ownership produce more output than identical firms with none. This suggests that foreign ownership may be an important channel for technological transfer.
  • Production function estimates suggest that returns to scale are constant.
  • Exporting in general does not make a difference to efficiency but exporting out of SADC does. Firms that export outside of SADC produce more output with the same amount of inputs than those that do not. 3
  • Larger firms are more likely to export suggesting that fixed costs may be important for exporting.
  • Larger, more efficient firms are more likely to export outside of SADC. It is argued that there may be some efficiency threshold which firms need to overcome in order to enter global markets.
  • Further research on factors determining the amount exported is needed. It seems as though if a firm is exporting, its size is not an important factor in determining the amount exported.
  • If an increase in manufactured exports is a policy goal (we suggest that it should be), policy should focus on encouraging firms to export more rather than persuading more firms to export.
  • In order to provide better insight into the dynamic evolution of South African manufacturing firms it would be very valuable to add a time dimension to the survey data. Expanding the human capital and skills section would also be useful.