Government Policy in Multinational-Dominated Global Value Chains

Justin Barnes, Anthony Black, Lorenza Monaco

2021

Through a series of government plans, the South African automotive industry has achieved undeniable success, especially in terms of its export orientation. The industry uses efficient technologies and is integrated into global markets. However, major structural weaknesses exist. Export growth has not been accompanied by increasing local content, investment has been modest and employment creation insignificant. Vehicle and component imports into the domestic market are high and the industry runs significant trade deficits. Most core technologies are imported, including advanced power trains and electronics. This chapter considers the structural impediments to the industry’s development, as well as issues related to ownership and power relations between the state and multinational firms. Analysing the potential for further localization and the deepening of the supply chain, the chapter considers global technology developments, domestic productive capabilities, and power dynamics in the global value chain (GVC). The chapter argues that state–business bargaining dynamics have negatively affected this potential. While efforts to deepen the supply chain would allow for more sustainable growth, the achievement of such goals is impossible without concerted commitment from all stakeholders.

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