Clustering as a strategy for manufacturing performance in the Eastern Cape Automotive industry
- Authors: Makuwaza, Gwynneth Chandakaita
- Date: 2001
- Subjects: Automobile industry and trade , Automobile industry and trade -- South Africa -- Eastern Cape , Automobile industry and trade -- South Africa -- Eastern Cape -- Performance
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:937 , http://hdl.handle.net/10962/d1002670 , Automobile industry and trade , Automobile industry and trade -- South Africa -- Eastern Cape , Automobile industry and trade -- South Africa -- Eastern Cape -- Performance
- Description: South Africa's current industrial policy focuses on the economy at two levels: a sectoral and spatial level. The former relates to the manner in which industrial policy is concentrating on particular sectors i.e. industrial clusters. This shift in industrial policy from targeting individual industries to an emphasis on industrial clusters, has complemented the change in focus to export promotion under trade policy. Furthermore, there has been increasing recognition of the need to improve industry performance and competitiveness in order to successfully implement export growth. Industry clusters are considered as having the potential to increase manufacturing performance and can provide the basis for sustainable competitive advantage for nations. Consequently the concept of industry clusters was introduced in South Africa in 1997. Because industry clusters are relatively new in South Africa, most of the cluster initiatives in various sectors of the economy are in their early stages of development. Nevertheless, some are already showing signs of potential success in increasing competitiveness in particular sectors. This thesis uses Porter's "diamond" framework apprdach to investigate whether clustering has improved the manufacturing performance of the motor industry in the Eastern Cape. International experience from both developed and developing countries will illustrate the potential of clustering as a powerful strategy in increasing manufacturing performance and consequently competitiveness. Ultimately this should lead to long-term economic development, especially if government adopts clusterbased economic development policies. Information from a survey conducted on both the motor vehicle assemblers and component suppliers is used in this study. The findings reveal that it is mainly the motor vehicle assemblers who have experienced some improvements in manufacturing performance. The components sector on the other hand has not experienced any such improvements. This thesis concludes with the recommendation that it is important to develop cluster policy as a broader and dynamic view of competition. The main emphasis under such policy would be a move from targeting particular industries and providing subsidies towards focusing attention to all clusters in the economy. To effectively apply such a policy requires the repositioning of national, local and provincial government in order to become more involved in regional development issues. Moreover, the various levels of government need to incorporate cluster policy into their competitive strategies.
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The economic implications of trade policy reform in South Africa for the automotive industry in the Eastern Cape Province
- Authors: Onyango, Donald Otieno
- Date: 2000
- Subjects: Automobile industry and trade -- South Africa -- Eastern Cape , South Africa -- Commercial policy
- Language: English
- Type: Thesis , Masters , MA
- Identifier: vital:936 , http://hdl.handle.net/10962/d1002669 , Automobile industry and trade -- South Africa -- Eastern Cape , South Africa -- Commercial policy
- Description: South Africa is no longer a pariah state and has been fully integrated into the global family of nations. With the country’s accession to multilateral agreements like the World Trade Organization (WTO), there has been pressure on the government to abandon its hitherto protectionist trade regime in favour of free and fair trade. Trade liberalisation has had profound implications for the country’s manufacturing sector in general, and the automotive industry in particular, which has seen tariff protection radically slashed and import restrictions greatly eased. Not only has the market share of domestic producers fallen, but increases in exports have to date not matched those of imports. As a result there has been a deterioration in the sector’s balance of trade and a reduction in employment levels, at a time when the country desperately needs to create new jobs. Recent developments, however, suggest that this scenario may be set to change. The thesis applies orthodox neoclassical and heterodox approaches to trade policy to an assessment of the likely economic impact of trade liberalisation on the automotive industry in the Eastern Cape, and by extension nationally. The thesis argues that reliance on orthodox trade theory to inform the direction of trade policy, especially in a developing country context, is unlikely to bring about an adequate increase in the level of exports and employment. This is because liberalisation of the import regime is likely to increase import levels without necessarily stimulating export levels, a scenario which serves to negate the presupposed benefits of liberalisation. The study uses information from surveys conducted on both motor vehicle assemblers and component manufacturing firms to investigate the effect of trade liberalisation on the sector in the Province and finds that, by and large, the motor assemblers have not fared as badly as expected and have in fact positioned themselves to export more vehicles and components. The components sector has had to contend with increased competition from cheaper imports. The thesis, while acknowledging that, as far as possible, free trade is an optimal position, nonetheless argues that governments still have an important role to play in the promotion of industrialisation. The scope of government intervention should, however, be limited to selective interventions which are aimed at counteracting market failure and facilitating innovation and the diffusion of technological know-how. The thesis argues that institution of supply side measures, such as the encouragement of research and development (R&D), skills development and industrial training, is necessary for sustained growth in the manufacturing sector to be realised. The thesis also finds that, contrary to expectations, the liberalisation of the automotive sector has not had the desired effects. Despite an increase in the value of automotive exports and an overall trend towards reduced net foreign exchange usage, employment levels are on the decline. The thesis also finds that without major export initiatives by both motor vehicle assemblers and component manufacturers, the future of the industry will be placed in jeopardy, especially with reduced protection and incentives.
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