2011年-世界发展银行全球_The_Impact_of_Export_Tax_Incentives_on_Export_Performance___Evidence_from_the_Automotive_Sector_in_South_Africa_38页_2mb

Summary of "The Impact of Export Tax Incentives on Export Performance: Evidence from the Automotive Sector in South Africa"

Core Content

This paper examines the effectiveness of the Motor Industry Development Program (MIDP) in South Africa, which was introduced in 1995 to improve the international competitiveness of the country's automotive industry. The program is based on an import/export complementation arrangement that provides export tax incentives and reduces import tariffs, with the aim of promoting exports and attracting foreign investment. The study uses a difference-in-difference methodology to evaluate the impact of the MIDP on South Africa's automotive exports from 1996 to 2006, and compares it with other automotive-producing and exporting countries.

Main Points

• Objective of the MIDP: To enhance the competitiveness of the South African automotive industry through export tax incentives and reduced import tariffs.
• Structure of the Program: It includes duty-free imports of components up to a percentage of the wholesale value of the vehicle, duty rebate credits for exports, and later the introduction of a "Productive Asset Allowance" (PAA) to subsidize new export production facilities.
• Program Duration: Initially planned for five years, it was extended three times and is scheduled to end in 2020.
• Methodology: The authors use a two-tier approach:
  1. A comparative analysis within South Africa between different manufacturing sectors.
  2. A cross-country analysis comparing South Africa with other automotive-producing countries.
• Key Findings:
  • The MIDP had a positive and significant impact on South Africa's automotive exports.
  • The largest response to the program occurred with a delay, suggesting that the effects of tax incentives take time to materialize.
  • The effectiveness of tax incentives fades over time, reinforcing the idea that while they may influence short-term decisions, they are not the primary factor for long-term investment.

Key Information

• Export Performance: South African automotive exports increased significantly from 1995 to 2005, with vehicle exports rising from below R1 billion to R24 billion. Component exports also saw substantial growth.
• Employment Impact: Although the program created some employment, the increase was relatively modest and skewed towards "motor trade" (sales, distribution, and servicing), which is capital-intensive.
• Costs and Benefits:
  • The program is associated with high compliance costs and significant resource use.
  • It is estimated that every R100,000 of export uses R129,000 of South African resources.
  • Annual subsidies to the auto industry cost R11-12 billion, which translates to a net subsidy of 14% of value added for the sector.
• WTO Considerations: The Agreement on Subsidies and Countervailing Measures (SCM) prohibits export conditional subsidies, and South Africa's MIDP may be subject to legal challenges.
• Comparative Countries: Tunisia and Morocco also implemented export promotion policies for the automotive sector, which led to increases in their exports. However, the effectiveness of these policies in other countries may vary.
• Long-Term Concerns: The study highlights that tax incentives may not be a long-term driver of investment. Factors such as infrastructure, political stability, and legal institutions are more critical for investors.

Conclusion

While the MIDP contributed to the growth of South Africa's automotive exports, its long-term effectiveness in attracting foreign investment is questionable. The program has been associated with high costs and limited employment growth, and its tax incentives lose effectiveness over time. The findings suggest that although export tax incentives can provide short-term benefits, they are not a sustainable strategy for long-term economic development. The paper adds to the ongoing debate on the role of tax incentives in industrial policy and highlights the importance of considering structural factors and investment climate when evaluating the success of such programs.

Key Quotes

• "Exporters are better than non-exporters. A growing body of empirical work has documented the superior characteristics of exporting plants and firms relative to those producing solely for the domestic market."
• "The effectiveness of the tax incentives fades in time."
• "The high level of South African car prices is at least partly due to the effects of the MIDP."
• "Tax incentives may affect some business decisions particularly in the short run, but they may not be a primary consideration for investors in the long run."

References

• Morisset (2003)
• Bernard and Jensen (1999)
• Rodrik (2003)
• Kaplan (2004)
• Flatters (2005)
• Bhorat and Kanbur (2006)
• Barbour (2005)
• Barnes et al. (2003)
• Edwards and Lawrence (2010)
• Hausmann and Klinger (2006)

Figures Mentioned

• Figure 1: Investment and Growth
• Figure 2: Unemployment rates (2008)
• Figure 3: Exports as percentage of GDP
• Figure 4: Vehicles and Components Exports (constant US dollars 2000)
• Figure 5: Automotive (vehicles and components) exports in South Africa and six other African countries
• Figure 6: Automotive (vehicles and components) exports in South Africa and other middle income countries

Implications

The study underscores the need for policy coherence and long-term strategic planning in export promotion. It suggests that while the MIDP has been effective in the short run, its sustainability is questionable due to the rising costs and limited long-term impact. The findings may inform policy design in other developing countries that are considering export tax incentives as part of their industrial development strategies.