“Trade liberalization is a central part of South Africa’s post-Apartheid development strategy. However, despite considerable reforms, the country has failed to
generate pro-poor growth, with both unemployment and inequality worsening over the last ten years. This has raised concern that trade liberalization may have worked against the country’s development objectives. This study uses a dynamic general equilibrium and microsimulation model to assess the effects of trade liberalization on growth, employment and poverty in South Africa. More specifically, it examines how men and women have been affected differently and whether liberalization has contributed to the
faster rise in female unemployment and poverty. The results suggest that trade policies have not contributed to increased poverty and that trade-induced technological change has accelerated growth. However, liberalization has changed the sectoral structure of production and has exacerbated income inequality. While male and female workers have benefited from trade-induced growth, it is male-headed households who have benefited
more from rising factor incomes. Trade reforms have however contributed to the
observed decline in the gender wage gap, but this has been driven by rising employment
amongst higher-skilled female workers. As such, the decline in poverty amongst femaleheaded
households has remained small. While further liberalization may increase growth employment and poverty in South Africa. More specifically, it examines how men and
women have been affected differently and whether liberalization has contributed to the
faster rise in female unemployment and poverty. The results suggest that trade policies
have not contributed to increased poverty and that trade-induced technological change
has accelerated growth. However, liberalization has changed the sectoral structure of
production and has exacerbated income inequality. While male and female workers have
benefited from trade-induced growth, it is male-headed households who have benefited
more from rising factor incomes. Trade reforms have however contributed to the
observed decline in the gender wage gap, but this has been driven by rising employment
amongst higher-skilled female workers. As such, the decline in poverty amongst femaleheaded
households has remained small. While further liberalization may increase growth
and reduce poverty, it is men and male-headed households who are more likely to benefit.
These findings suggest that, while there is no trade-off between trade reform and poverty
reduction, the country should not rely on further liberalization to generate pro-poor
growth or address the prevailing inequalities between different population groups, such as men and women.”
