Abstract:
In general, a country’s “fundamentals”, namely its endowments of physical and human
capital, labour and natural resources along with the quality of its institutions, largely
determine what it produces. Any attempt to reshape the production structure beyond
the boundaries of these fundamentals is likely to fail and limit potential economic
performance. Although fundamentals play an important role, it does not necessarily
pin down exactly what a country will produce and export. Export expansion is pivotal
in a country’s attempt to promote economic growth and can be based on either the
intensive margin, involving expansion in the quantity of existing exports or the extensive
margin, involving expansion in the variety of products exported. Furthermore, a
country also needs to evaluate its domestic production capacity given a specific trading
partner. South Africa and China are moving closer to one another as trading partners,
presenting ample trade opportunities. South Africa’s sectoral exports to China identifies
key trade opportunities, while export sectors with potential to export more existing
products (intensive margin) or more product varieties (extensive margin) are identified
in this article. This analysis could provide valuable insight into the government’s trade
institutions. The information could assist in providing guidance to exporting firms to
ensure increased effectiveness in a very competitive environment.
