Abstract for: Sustaining industrial growth in Africa: A reflection on South Africa's automotive industry support model
The use of selective industrial policy to re-integrate South Africa's previously protected automotive industry into the global business is one of the few successful cases on the African continent in recent times. South Africa's success provides a useful reference point for other African countries in which selective industrial policy is a key part of national development strategy. Despite the re-integration, the automotive industry has experienced deteriorating trade deficit since 1995 contrary to what had been envisaged. The paper uses a system dynamics model to explain this apparent contradiction. It is found that the offer fiscal incentives to the industry had a positive effect on industry investment and exports but not long-term competitiveness. The paper argues that for a replica of South Africa's selective industry support model to sustain industrial growth and subsequent international trade, it has to be implemented in conjunction with a targeted technology acquisition strategy.