The impact of globalisation on South Africa

Several decades of relative economic isolation meant that organisations in South Africa were ill-prepared to take advantage of the opportunities arising from trade liberalisation, while the potential adjustment costs were correspondingly high. Trade liberalisation has certainly resulted in a sharp increase in exports, especially in the manufacturing industry. Manufactured exports increased by an average annual nominal rate of more than 10% between 1990 and 1994 and this already high growth rate was much higher in the period thereafter, i.e. after trade sanction were lifted (Bennett, Jooste, & Strydom, 2000: 177).

However, as far as employment in particular is concerned, trade liberalisation did not have the positive effect that might have been expected on the basis of good export performance or from the postwar experience of East Asia. One reason is that South Africa’s trade liberalisation initiatives have been relatively recent and the effect of employment takes years to materialise.

Another reason for the fact that employment has not been affected positively is the changing nature of global competition, which in recent years had been much more intense than before. There is much greater competition in the trade in low wage, labour -intensive products. A further reason has to do with the structural shift that took place in South Africa towards capital-intensive sectors, partly as a result of trade liberalisation.

Trade liberalisation might therefore have contributed to the weak employment performance in South Africa over the last few years. However, the ILO maintains that this impact is probably relatively small. On the other hand, the impact on unskilled employment could have been relatively large (Mohamad, 2002:27).

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