SOAS University of London

Department of Economics

Linking to Trade: The Role of Domestic Suppliers Network of Exporters in South Africa (UNU-WIDER 2018-2019)

Principal Investigator: Antonio Andreoni (Senior Lecturer in Economics at SOAS and Visiting Associate Professor of the South African Research Chair in Industrial Development, University of Johannesburg)  

Co-Principal Investigator: Sofia Torreggiani (ESRC PhD student at SOAS Economics)

Under the Southern Africa – Towards Inclusive Economic Development programme, Antonio Andreoni and Sofia Torreggiani will work on firm-level tax data and investigate the role of domestic supplier network of exporters in South Africa.

Building on a novel firm-level dataset for South Africa, this project aims at developing new micro-evidence of the South African domestic production system, focusing on the network of suppliers contributing to the country’s export performance. The study has three key objectives and will deploy network analysis and micro-panel econometrics. Firstly, using value-added tax (VAT) data, we will construct a firm-to-firm input-output matrix representing the domestic suppliers network. Secondly, combining this dataset with custom records from traders, we will uncover the domestic suppliers network of exporters – firms contributing both directly and indirectly to exports – and characterise firms with respect to their distance from foreign markets. Furthermore, we will introduce a new variable quantifying the amount of firm’s turnover embodied in exports as an indicator of firm’s domestic value addition in trade and capacity to capture external demand. Thirdly, matching the resulting dataset with employment and company income tax (CIT) data, we will assess the extent to which firm’s centrality within the domestic suppliers network (vis-à-vis other firm-level characteristics) explains firm’s involvement in exports. Advancing our understanding of the structure of the domestic production system and firms’ different contribution to trade is a fundamental step towards more effective industrial and trade policies.

UNU-WIDER launched its newest programme ‘Southern Africa – Towards Inclusive Economic Development (SA-TIED)’ on 30 November 2017 in Pretoria, South Africa. Together with the International Food Policy Research Institute (IFPRI) and a number of South African government agencies, the Institute will work to deliver an ambitious and comprehensive research and capacity-building programme focusing on economic transformation and inclusive growth in the region of southern Africa. The South African partner organizations include the National Treasury (NT), the Department of Trade and Industry (dti), the Department of Planning, Monitoring and Evaluation (DPME), the South African Revenue Service (SARS), and Trade and Industrial Policy Strategies (TIPS).

One of the key objectives of the SA-TIED programme is to understand the opportunities and constraints to private sector development and productivity growth. This is also key for the design of effective policies for job creation, and economic growth more broadly. The recent availability of tax administrative data on enterprises in South Africa provides a valuable resource for policy-relevant academic research that allows for a deeper understanding of the functioning of the private sector and the mechanisms through which government policy and globalization impact on economic growth and development.

Dr Antonio Andreoni and Sofia Torreggiani 's research proposal ‘Linking to Trade: The Role of Domestic Suppliers Network of Exporters in South Africa‘ was selected from a pool of more than 60 submissions.