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Johan Fourie johanf@sun.ac.za TIPS Johannesburg July 24, 2009

Tourism from a trade perspective: the sources of comparative advantage and its implications for South Africa and the region. Johan Fourie johanf@sun.ac.za TIPS Johannesburg July 24, 2009. Introduction. Travel services one of the fastest growing export sectors in the world economy

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Johan Fourie johanf@sun.ac.za TIPS Johannesburg July 24, 2009

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  1. Tourism from a trade perspective: the sources of comparative advantage and its implications for South Africa and the region Johan Fourie johanf@sun.ac.za TIPS Johannesburg July 24, 2009

  2. Introduction • Travel services one of the fastest growing export sectors in the world economy • Africa is the fastest growing region since 2000 • 5.7% in 2008, compared to 3% annually • Growth not only in leading markets (Egypt, Morocco, South Africa and Tunisia) • Botswana, Cape Verde, Ethiopia, Ghana, Libya, Mali, Niger, Rwanda, Sudan and Uganda

  3. Service exports – growth and composition

  4. Service exports in South Africa

  5. NRCA of service exports in SA

  6. Tourist arrivals in Egypt, Morocco, South Africa and Tunisia, 1980-2005

  7. Theoretical background and hypothesis • Trade theories (neoclassical and new) based on supply-side factors • Comparative advantage, Heckscher-Ohlin, imperfect competition, intra-industry trade • Tourism modeling (and forecasting) based on demand-side factors • Linder (1961), Lim (1997) • For (South) Africa: Naudé and Saayman (2005), Saayman and Saayman (2008) • Which countries have a comparative advantage in travel service exports? Why?

  8. Methodology and data • Revealed comparative advantage • Balassa (1965) index • < 1, no revealed comparative advantage • > 1, revealed comparative advantage • Yu, Cai and Leung (2009) index • < 0, no revealed comparative advantage • > 0, revealed comparative advantage • UNCTAD Handbook of Statistics 2007 • 147 countries in 2005 • Africa: 36 countries with 2004/2005 data, 17 with older

  9. The world SOURCE: Du Toit and Fourie (2009)

  10. Countries with strong NRCA • Can these be regarded as our main competitors? • Yes and no. SOURCE: UNCTAD (2007), own calculations

  11. Africa • North African countries • Island economies • Longitudinal band, SA to Ethiopia • Latitudinal band, Sahel countries • Other countries • Limitations • Data queries SOURCE: Fourie (2009b)

  12. The determinants of comparative advantage - Africa

  13. The determinants of comparative advantage • Preliminary evidence • Seems that travel service exports is natural resource intensive (not labour, capital), especially in Africa • POLICY: Protection of natural and cultural resources critical • Game reserves, monuments, etc… • POLICY: Extend natural/cultural resources - build more monuments, for example… • Prioritization of tourism • POLICY: Increase government spending – attend fairs, marketing, etc. • Tourism infrastructure • POLICY: Liberalise further, transport • Local demand important • POLICY: Encourage domestic travel, tourism • Regionalisation/agglomoration • POLICY: Make travel across borders easier – agglomeration economies

  14. Liberalisation of travel services • Can we liberalise further? SOURCE: Fourie (2009). The help of Paul Kruger, tralac is gratefully acknowledged.

  15. Future work • With Paul Kruger – the liberalisation of travel service exports for the southern African region • With Devon Trew – The determinants of South Africa’s comparative advantage in goods and services since 1980 • With Emile du Plessis – South Africa’s comparative advantage in education service exports • With Rachel Jafta – the determinants of ICT service exports • With Krige Siebrits, Karly Spronk – was there displacement of tourists in the Lions tour/Confed Cup – using the IPL as natural experiment

  16. Thank you. Questions, comments? JOHAN FOURIE johanf@sun.ac.za

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