The South African automotive industry was heavily protected during the early years of its industrial development. Beginning in 1989, the automotive industry experienced major policy reforms. The purpose of this paper is to examine the welfare effects of protection in the South African automotive industry. Simulation analyses of the economic gains and losses to consumers and producers of automobiles has revealed that protection of the auto industry imposes substantial costs on consumers and transfers large benefits to assemblers and component suppliers within the South African automotive industry. The government revenue is large. The results indicate substantial societal deadweight efficiency loss to South Africa.
International Conference on Modelling Economic Dynamics, 2007 (MED2007). International Conference on Modelling Economic Dynamics: MED2007 Conference Papers (Hull, England 23-25 August 2007)