Empirical investigation of the effects of trade openness on poverty in South Africa and Lesotho

Abstract

The study examined the impact of trade openness on poverty in South Africa and Lesotho separately. The study used the autoregressive distributed lag (ARDL) bounds testing approach with annual data from 1980 to 2019. The study used the consumption-based measure of poverty, measured by consumption expenditure as a target variable of investigation. The study further employed three measures of trade openness, which are sum of trade to GDP, the ratio of exports to GDP, and imports to GDP ratio. The use of three proxies of trade openness allowed the study to check the robustness of the results and to examine the individual effects of exports and imports on poverty. As a contribution to existing literature, the study included a dummy variable for Lesotho to capture the effect of the structural break that occurred from 1990 resulting from retrenchments of Lesotho nationals from South African mines. The overarching aim of the study is to contribute to the ongoing literature on the extent in which trade openness impacts poverty in South Africa and Lesotho, which are members of the Southern African Customs Union (SACU). The pursuit of the present study, among other things, is motivated by SACU’s mandate highlighting the need to foster sustainable economic growth and development among member countries. Such a mandate is underpinned by a focus on generating employment opportunities and alleviating poverty in the SACU area. The study provides a comparison of how the impact of trade openness on poverty differs between South Africa which is an upper-middle income country and Lesotho which is a lower middle-income country. The comparison also considers if the results differ with different proxies of trade openness. The results show that for South Africa, in the long run and short run, trade openness does not lead to poverty reduction, irrespective of the proxy used to measure trade openness. Instead, in the long run, trade openness, proxied by the sum of trade to GDP and the ratio of imports to GDP, has a negative effect on poverty. In the short run, the sum of trade/GDP and exports/GDP are both insignificant to poverty while imports/GDP have a negative impact on poverty. For Lesotho, in the long run, sum of trade/GDP is insignificant to poverty while exports/GDP and imports/GDP have a positive effect on poverty. In the short run, the sum of trade/GDP has a positive impact on poverty, exports/GDP have a negative effect on poverty while imports/GDP are insignificant to poverty. The coefficient of the dummy variable is negative and significant in the short run, confirming the evidence of a structural break. These results suggest that policies adopted in South Africa have not brought significant poverty alleviation. This could be an indication of a situation where policies implemented over the past tend to prevent the poor from benefiting from the gains of trade openness. Based on the findings, the main recommendation for South Africa is that policymakers could review the policies in place and understand the unintended consequences of each policy on poverty reduction. Policymakers in Lesotho could ensure that they adopt policies that benefit the poor directly. If well implemented, such policies could provide relief that will protect the poor from short term adjustment costs arising from trade openness. In view of the overall findings, the current study, therefore, recommends that there be a critical review of policies to assess unintended consequences of trade openness that may lead to increased poverty and ensure alignment of policies to overall poverty reduction objectives. In this context, the study recommends that the mechanism of distributing gains from trade be reviewed to ensure that gains from trade openness, such that the returns from trade, including funds from SACU revenue, are invested towards poverty reduction.

Bofuma ke sehlooho sa bohlokwa haholo se bohareng ba Dipheo tsa Ntlafatso ya Dilemo tse Sekete le Dipheo tsa Ntlafatso ya Moshwelella jwalo ka ha di hlahiswa ke Matjhaba a Kopaneng. Kahoo, phuputso ena e batlisisa phello ya ho buleha ha kgwebo bofumeng dinaheng tse pedi tse kgethilweng tsa Mokgatlo wa Lekgetho wa Dinaha tsa Afrika e Borwa (SACU), e leng, Lesotho le Rephabliki ya Afrika Borwa. Naha ya Lesotho e nkwa e le naha e sa tswelang pele haholo mme e behilwe boemong ba naha e futsanehileng, ha Afrika Borwa e le naha e ntseng e tswela pele moruong eo hape e nkilweng e le naha e hodimo-dimo. Nako ya phuputso e akaretsa 1980 ho isa 2019, e leng nako ya sewa sa pele ho COVID-19. Phuputsong e matla ya phello ya ho buleha ha kgwebo bofumeng, phuputso e sebedisa mokgwa wa tlhahlobo ya meedi ya ho dieha ho tsamaiswa ka mokgwa o ikemetseng (ARDL) ho kopanya. Kaha maemo a bofuma a ntse a tswela pele Afrika Borwa le Lesotho, sepheo se seholo sa phuputso ena ke ho kenya letsoho dipatlisisong tsa hore na ho buleha ha kgwebo ya matjhaba ho ama bofuma hakae dinaheng tse kgethilweng tsa SACU. Takatso ya phuputso ya jwale, hara tse ding, e susumetswa ke thomo ya SACU e totobatsang tlhokeho ya ho kgothalletsa kgolo le ntlafatso ya moruo wa moshwelella hara dinaha tseo e leng ditho. Thomo e jwalo e tshehetswa ke tsepamiso ya maikutlo hodima ho hlahisa menyetla ya mesebetsi le ho fokotsa bofuma sebakeng sa SACU. Kemedi ya bofuma e sebedisitsweng phuputsong ena ke Malapa le Mekgatlo e sa Etsang Phaello e Sebeletsang ditshenyehelo tsa Malapa tsa ho qetela tsa tshebediso ya motho ka mong tse lekantsweng ka 2015 US$ kamehla. Tlhaloso ya kemedi ena ke hore ha ditshenyehelo tsa ho qetela tsa tshebediso ya tjhelete ya malapa di le hodimo, ho fokotsa sekgahla sa bofuma. Diphetoho tse hlalosang tse sebedisitsweng tlhahlobong di kenyelletsa ho buleha ha kgwebo, e emetsweng ke thepa e iswang kantle ho naha le e tswang kahare ho naha e le karolo ya Kakaretso ya Dihlahiswa tsa Lehae (GDP), ho phahama ha ditheko ho emetsweng ke Indekse ya Theko ya Moreki, kgolo ya moruo e emetsweng ke GDP motho ka mong, le thuto e emetsweng ke tshebediso ya tjhelete ya mmuso thutong e le peresente ya GDP. Diphetho tse matla di senola diphumano tse latelang mabapi le hore na ho buleha ha kgwebo ho ama bofuma ka nako e kgutshwane le nako e telele jwang: sa pele, bakeng sa Afrika Borwa, phuputso e fumana hore phapang ya ho buleha ha kgwebo e bonahala ka dipalo ka katisi e mpe. Sena se fana ka maikutlo a hore keketseho ya ho buleha ha kgwebo e amahanngwa le ho theoha ha ditshenyehelo tsa tshebediso ya tjhelete malapeng, ho lebisang ho, keketseho ya bofuma. Ha ho bapiswa, phuputso e fumana hore ho phahama ha ditheko ho na le dipalo palo tse nang le katisi e mpe, ho bolelang hore ho eketseha ha ho phahama ha ditheko ho lebisang ho ho fokotseha ha ditshenyehelo tsa tshebediso ya ditjhelete ya malapa le keketseho e tsamaellang ya bofuma. Phuputso e fumana hore kgolo ya moruo e bonahala ka dipalo-palo ka katisi e ntle, e leng se bontshang hore ha kgolo ya moruo e ntlafala, lekeno la tjhelete la malapa le lona e ya ntlafala, kahoo bofuma bo a fokotseha. Ho phaella moo, thuto e bonahala ka dipalo-palo tse nang le katisi e ntle, e bolelang hore keketseho ya ditshenyehelo tsa mmuso thutong e lebisa ho eketseha ha ditshenyehelo tsa tshebediso ya tjhelete ya malapa le ho fokotseha ho tsamaellanang ha bofuma. Diphetho tsa Afrika Borwa di kenya letsoho diphuputsong tse teng tse fumaneng hore ho buleha ha kgwebo ho kenya letsoho hampe phokotsong ya bofuma. Sena se bolela hore ho buleha kgwebong ho amahanngwa le ho fokotseha ha ditshenyehelo tsa tshebediso ya tjhelete ya malapa, kahoo bofuma bo a eketseha. Bakeng sa Lesotho, diphumano tsa hona jwale di dumellana le diphumano tse fetileng, ho latela moo ho fumanweng hore bolokolohi ba kgwebo ha bo fetole phokotso ya bofuma dinaheng tse sa tswelang pele moruong. Diphetho tsa Lesotho di bontsha hore thuto ke yona feela e fapaneng e nang le kamano e kgolo le bofuma. Sena se bolela hore keketseho ya ditshenyehelo tsa mmuso thutong e baka keketseho ya ditshenyehelo tsa tshebediso ya ditjhelete ya malapa, le ho fokotseha ha bofuma kamora moo. Dikatisi tsa ho buleha ha kgwebo, ho phahama ha ditheko le kgolo ya moruo ha di na thuso ho latela dipalo. Diphetho tsena di fana ka maikutlo a hore maano a amohetsweng Lesotho ha a so ka a tlisa phokotso ya bofuma. Sena e ka ba sesupo sa boemo boo maano a kentsweng tshebetsong nakong e fetileng a atisang ho thibela mafutsana ho rua molemo melemong ya ho buleha ha kgwebo, kgolo ya moruo le thuto e ntlafetseng. Ka hona, baetsi ba maano ba Lesotho ba ka nahana ho hlahloba maano a hajwale le ho supa maano a tla fella ka hore ho be le basebetsi ba atlehang le ba amanang le phokotso ya bofuma. Bakeng sa Afrika Borwa, baetsi ba maano ba ka hlahloba maano a teng le ho utlwisisa diphello tse sa lebellwang tsa leano le leng le le leng la phokotso ya bofuma. Ka lebaka la diphumano tse akaretsang, phuputso ya hajwale e kgothalletsa hore ho be le tshekatsheko e hlokolosi ya melemo e fumanwang ponahatsong ya kgwebo, e le hore dipoelo tse tswang kgwebong, ho kenyeletswa le ditjhelete tse tswang lekenong la SACU, di tle di tsetelwe bakeng sa phokotso ya bofuma. Sena se ka etswa ka sepheo se hlakileng sa ho utlwisisa phello e sebetsang ya maano a jwalo ho ba futsanehileng ka nako e kgutshwane le e telele.