A Review of Methodological Approaches used to Analyse the Impact of Trade Liberalisation on Growth and Poverty in South Africa

"A critical review of the methodological approaches used to explore the impact of trade liberalisation in South Africa on growth and poverty in particular is preceded by a re-examination of key features of the theoretical debate on trade liberalisation and the controversies surrounding the associated empirical evidence. The appropriateness of the questions and concerns highlighted in the literature on ‘trade reform’ in South Africa are then considered, in the light of the recent emphasis on using trade policy to meet the country’s national and regional development goals. An important reason for the polarised and ideological debate on trade, growth and poverty has been the persistent view that a ‘free trade’ system is a relevant benchmark, and argues that the theory and evidence are not as compelling as proponents contend. Instead, alternative scenarios should be evaluated against those that are relevant for industrial, other development goals rather than relative to an unrealistic free trade ideal. In the debate,the broader state of play in multilateral, regional and bilateral trade negotiations and the associated obligations and pressures should also be appreciated. The dialogue on ‘trade reform’ in South Africa should move beyond simply characterising the debate as one between ‘free trade’ and ‘protectionism’.The appropriate question is rather how to manage trade sensibly, in order to allow for growth without creating balance of payment difficulties and policy space to promote the structural change necessary to create jobs."