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Analysis of the economic impact of a disaggregated agricultural sector in South Africa : a Social Accounting Matrix (SAM) multiplier approach

Phoofolo, Makhetha Lambert (2018-03)

Thesis (MCom)--Stellenbosch University, 2018.

Thesis

ENGLISH SUMMARY : The South African economy is developing and moving towards the secondary and tertiary sectors as indicated by the decline of the agricultural sector’s contribution to GDP in the past years. However, South African agricultural statistical reports still reflect the impact of this sector in economic development based on this declining GDP, direct employment and production value only. This traditional and narrow definition of economic contribution neglects the important indirect and induced economic impact of this sector. The main objective of this study is to quantify the economic impact of the disaggregated agricultural sector within the South African economy using a SAM multiplier model which is a useful methodology to examine the direct, indirect and induced impacts of the sector within the entire economy. The review of the literature reveals that the application of this methodology in studying the role and impact of agriculture is very limited in South Africa. The dataset used in this model is a highly disaggregated national SAM in both agricultural and non-agricultural sectors developed as part of this study for the 2014 base year. The developed detailed 2014 SA SAM has 268 accounts: 104 industries (of which 46 are for agriculture, forestry, fisheries and food processing), 133 commodities, 6 factors, 14 households, 4 tax accounts, one account for transaction costs, core government, savings-investment, stock changes, enterprises, and rest of the world. The model was used for detailed computation of multipliers and policy simulations. The results of this study demonstrated the impact of agricultural sectors on output, and incomes of labor, capital, land, enterprise and households. The results have underlined the impact of agricultural sectors, particularly fruits and vegetables as South African key sectors in generating higher labour income for unskilled and low skilled workers and in generating higher income for the low income households. These results are therefore of relevance to agricultural policy and decision makers as they make it possible to identify promising agricultural and food sectors for investment and subsidies based on these sectors’ greater impact on not only output, but on the generation of income and value added as well.

AFRIKAANSE OPSOMMING : Die Suid-Afrikaanse ekonomie ontwikkel en beweeg na die sekondêre en tersiêre sektore soos aangedui deur die afname in die landbousektor se bydrae tot BBP in die afgelope jare. Suid-Afrikaanse landboustatistiese verslae weerspieël egter steeds die impak van hierdie sektor op ekonomiese ontwikkeling, gegrond op hierdie dalende BBP, direkte indiensneming en produksiewaarde, wat ‘n tradisionele en eng definisie van ekonomiese bydrae is, aangesien dit die belangrike indirekte en geïnduseerde ekonomiese impak van hierdie sektor negeer. Die hoofdoel van hierdie studie is om die ekonomiese impak van die gedisaggregeerde landbousektor binne die Suid-Afrikaanse ekonomie te kwantifiseer deur 'n SAM-gebaseerde vermenigvuldiger model te gebruik wat 'n nuttige metode is om die direkte, indirekte en geïnduseerde impak van die sektor binne die hele ekonomie te ondersoek. Die literatuuroorsig dui daarop dat die toepassing van hierdie metodologie in die bestudering van die rol en impak van landbou in Suid-Afrika baie beperk is. Die datastel wat in hierdie model gebruik word, is 'n hoogs gedisaggregeerde nasionale SAM in beide landbou- en nie-landbousektore wat as deel van hierdie studie vir die 2014-basisjaar ontwikkel is. Die ontwikkelde gedetailleerde 2014 SA SAM het 268 rekeninge: 104 nywerhede (waarvan 46 vir landbou, bosbou, vissery en voedselverwerking), 133 kommoditeite, 6 faktore, 14 huishoudings, 4 belastingrekeninge, een rekening vir transaksiekoste, sentrale regering, spaar / investering, voorraadveranderinge, ondernemings en die res van die wêreld. Die model is gebruik vir die gedetailleerde berekening van vermenigvuldigers en beleidsimulasies. Die resultate van hierdie studie het die impak van landbousektore op uitset en die inkomste van arbeid, kapitaal, grond, ondernemings en huishoudings, getoon. Die resultate het die impak van landbousektore, veral vrugte en groente, as Suid-Afrikaanse sleutelsektore onderstreep om hoër arbeidsinkomste vir ongeskoolde en lae geskoolde werkers te genereer en om hoër inkomste vir die lae-inkomste huishoudings te genereer. Hierdie resultate is dus van belang vir landboubeleidmakers en besluitnemers aangesien dit dit moontlik maak om belowende landbou- n voedselsektore te identifiseer vir beleggings en subsidies gebaseer op sektore se groter impak, nie net op uitset nie, maar ook op die verdeling van inkomste en toegevoegde waarde.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/103492
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