International Food Policy Research Institute
Fourth Floor Conference Facility
31 May 2006
12:30 - 2:00 pm (co-sponsored by DSGD)
Trade liberalization forms a central part of South Africa's post-Apartheid development strategy. However, the country has failed to generate pro-poor growth, with both unemployment and inequality rising over the last ten years. This study uses a dynamic general equilibrium and microsimulation model to jointly assess the effects of liberalization on growth, employment and poverty. More specifically, it examines how men and women have been affected differently. It finds that liberalization has not undermined growth or poverty reduction. However, liberalization has changed the structure of production and exacerbated inequality. Female workers are found to have borne more of the adjustment costs of reforms, and, while all workers have benefited from trade-induced growth, it is male-headed households who have benefited more. Although trade reforms have lowered the gender wage gap, this has been driven by rising employment amongst higher-skilled female workers.
As such, the impact on poverty within female-headed households has remained small while female inequality has risen rapidly. Therefore, while there may not be a trade-off between trade reform and poverty reduction, South Africa should not rely on further liberalization to generate pro-poor growth or address the prevailing inequalities between different population groups, especially for men and women.