(5 minutes read)
· Purchasing proudly South African goods is the new credo catching up in the country to tide over the present crisis
· A price sensitive country like South Africa, where nearly half of the population live below poverty line, can everyone adhere to the credo, particularly when the locally made goods are more expensive than the imported goods
Purchasing proudly South African goods is the new credo catching up in the country to tide over the present crisis. That can make a difference if 37 million people buy locally produced goods ,which can include services and products, such as locally manufactured clothes, food and household items, instead of opting for imports.
A price sensitive country like South Africa, where nearly half of the population live below the poverty line, can everyone adhere to the credo, particularly when the locally made goods are more expensive than the imported goods. For instance, South African clothing is more expensive than items made in China, Bangladesh, Vietnam, and India. In many cases, local employers are forced to manufacture goods at cheaper rates, incurring sometimes losses to keep the enterprise going. That cannot go for ever since economic reality would stare at them sooner or later.
Many feel that compulsion to produce locally can work only in a closed economy, where imports are restricted either through negative list for imports or hiking up the import duty to make imports costly. But such situations can exist in the short run since in the medium and long term, consumers are forced to part with more resources for buying goods locally. Also the closed model insulated from competition can lead to a high cost economy, affecting the export competitiveness.
Also, one has to keep in mind a closed economy begets clandestine trade especially when the borders are porous. When there is a price difference between imported and domestic goods, there will be an increased tendency to bring goods through illegal channels to make a killing. In the process, all across the board are affected; consumers may still have to pay the same price, exchequer loses revenue and importantly, a non –competitive economy very soon loses its advantages, particularly in the export front since the highly priced products get crowded out in the international market place.
