Reg Rumney
IT may be fashionable to focus on manufactured goods,=20 but commodities still earn most of South Africa’s=20 foreign exchange.
Precious metals, diamonds, base metals and mineral=20 products make up 69 percent of South Africa’s exports.
Indeed, rather than ignore its traditional source of=20 foreign exchange, South Africa should actually=20 diversify within its traditional commodity business,=20 argue two economists, Haroon Bhorat and Rashad Cassim,=20 in the recent Trade Monitor, published by the=20 Development Policy Research Unit at the University of=20 Cape Town.
Our dependence on commodities is underlined by the=20 latest Nedcor Economic Bulletin which lays the blame=20 for South Africa’s poor export performance during 1994=20 at the door of precious metals and minerals. There was=20 virtually no growth in exports when adjusted for a=20 decline of 9,3 percent in the trade-weighted exchange=20
Bhorat and Cassim accept the need to move from=20 commodity production to export of manufactured goods,=20 but they point to differences between the way African=20 and Asian countries have handled the switch.
Far from being a hindrance, they say, primary=20 commodities were essential to the industrialisation of=20 resource-rich Asian countries. They invested to=20 maintain their cost advantage in traditional exports,=20 such as oil, metals, timber and rice.”These countries=20 moved into manufacturing, for import replacement and=20 for export, from a solid base of primary export=20
Bottom line is that South Africa should “continue=20 investment in areas such as mineral commodities, to=20 generate foreign exchange, rather than diversify into=20 less efficient import-intensive manufacturing.”
Sports Mail