A critique of the MIDP as a post–apartheid policy instrument
The motor industry is one of the leading industries in the South African economy. The MIDP, an import/export complementary arrangement, was introduced to help reintegrate the motor industry into the global economy. The aim was to improve the international competitiveness of companies in the industry; enhance the industry's growth through exporting; improve vehicle affordability; improve the industry's highly skewed trade balance; and stabilise employment levels, but succeeded in having the unintended consequence of growing vehicle imports. In this study a literature review is done on studies that were done on governments' policy and the South African motor industry and an empirical study done on a critique of the MIDP as a post-apartheid policy instrument. Of the approximate 500 component manufacturers; only 32 manufacturers participated in this study. South Africa may not have a motor industry in seven to ten years if urgent attention is not paid to increasing local content, gaining certainty on government's support programme for the industry and improving South Africa's cost competitiveness. Imports have grown rapidly and the industry has still not achieved a sufficient volume of production to realise full economies of scale. Another constraint is South Africa's location, remote from major automotive markets. After a long period of heavy protection followed by liberalisation and export support, it is now time for the industry to move towards a balanced growth path on the basis of policies which impose a more neutral incentive structure. This would involve some ongoing protection and assistance for production at low to moderate levels. Under such a scenario, both the domestic market and exports could provide the basis for sustained future growth.
- ETD@Vaal Triangle Campus