Global Trade Performance

1.1 Introduction

The thesis titled, “An Analysis of Global Trade Performance, the Competitiveness of South African Fruit Industry and the Effect of the Rand Depreciation”, will examine South Africa’s global fruit trade performance, the international competitiveness of the South African fruit industry as well as the effects of volatile exchange rate South African rand of fruit exported by South Africa. The theme of the thesis is triple-folded, “global trade performance”, “the competitiveness”, and “the rand depreciation”. These concepts will be used throughout the thesis.

The Organization for Economic Cooperation and Development (OECD, 2013) defined “competitiveness” as; firstly, the ability to face competition and to be prosperous. Secondly,

Correspondingly, South Africa’s exports to non-traditional markets such as India and China increase rapidly. According to the Central Intelligence (CIA) world fact book (2012), South Africa’s main export partners for all products are China, United States, Japan, Germany, and India. The main import partners for all products are China, Germany, Saudi Arabia, United States, Japan, and India according to the CIA world fact book. South African exports and imports are dominated by the mineral products. However, South Africa is still a developing country. Its economic growth depends entirely on natural resources such as mining and agriculture (Rankin, 2013).

In 2012, agriculture contributed only 3% to the GDP of South Africa, industry 28% and services 69%. Although agriculture had least contribution to the GDP, its importance should not be overlooked.

Agriculture also plays an important role in South Africa’s trade with the world. South African agriculture exports mainly fruits. According to Trade Map (2015), fruit exports were within the top ten South African export in 2015 with the contribution of 2.8% to the total exports, and they were South Africa’s leading exports for agricultural products. Citrus fruit has a substantial effect of fruit exports. In 2015, South Africa’s major export partners

Competitive services are important as intermediate inputs to a high-performing private sector. The interactions between all of these factors determine firm productivity. Through trade and foreign investment, developing countries can benefit from a range of ideas that come from abroad namely: intellectual property, trademarks, managerial and business practices, marketing expertise, and organizational models. The flows of goods, services, people, ideas, and capital are now interdependent and should be assessed jointly.

What is critical to the developing countries is the emergence and endurance of Global Value Chain (GVC) (World Trade Organization, 2013). The flow of know-how from developed to developing countries often takes place in the context of vertical trade and production chains that cross many borders from raw material to finished product. Taking advantage of the GVC structure is a key determinant of industrial development in the 21st century. Developing countries can industrialize by joining GVCs instead of building their own value chain from scratch, as Japan and the Republic of Korea had to do in the 20th