Why Factory Asia beats Factory South Africa

“Among the non-western economic blocs, East Asia has the highest intraregional trade, comprising largely intermediate goods, underpinning the region’s global trade and competitiveness agenda, and attracting ample FDI. In other words, Factory Asia has worked well. Factory Southern Africa has not. Southern Africa remains the least integrated region in the world despite the presence of a customs union and a free trade area.”Report co-author Sandeep Mahajan says a successful Factory Southern Africa requires dynamic trade based on nimble networks of multi-national firms. Formal and informal trade barriers have to be removed. “South Africa,” he says, “needs to open up, as well as integrate its own rural and advanced regions.” Current policy, he says, “tends towards mercantilism, at the cost of much larger gains from trade based on the principles of comparative advantage."