SA Industrial Policy: The Motor Industry 

South Africa's Motor Industry Development Program (MIDP) is widely regarded as an industrial policy success. The program has been revised and renewed several times. Completion of the most recent review was announced in September 2008. The program raises some interesting questions about the economics and the politics of industrial policy-making.

My 2005 presentation and report on the economics of MIDP stimulated some lively debate. See a front page story and lead editorial in South Africa's Business Day, reports in the Afrikaans language papers Beeld and Rapport, a long extract in the Mail and Guardian, and a report in the Financial Mail. A Mail and Guardian article on vehicle sales and prices provoked an online discussion of car prices.

My case study of the motor industry for a UCT trade and poverty project focuses on poverty implications. The September 2006 Geekonomics column anticipated the MIDP Review report, and my Blog post commented on views from the industry.

A set of articles in the Mail and Guardian drew on a 2006 report by Matthew Stern and myself to illustrate further MIDP perversities arising from the SACU revenue sharing formula. My Blog post of July 2007 commented further and corrected an error in the M&G piece.

An article in the July 30 2007 Business Day and an editorial the next day draw on my 2005 paper to comment on the absence of economic underpinnings for the dti's industrial policies. The Mail and Guardian used the MIDP as an example in its unflattering review of the dti's new industrial policy strategy.

The OECD's first Economic Survey of South Africa included a box on MIDP that drew on my analysis to illustrate the dangers of government capture by firms that depend on industry-specific support. In a related press conference the Minister of Finance emphasised the importance of proper economic assessment of all industrial policy measures.

An explanation of the APDP by the dti's two principal consultants provoked my late 2008 article and Blog posting.

Details of APDP remain a secret shared only the motor industry and the dti. However, based on available information I have updated some of my earlier analysis. Recent (2009) presentation notes provide a brief summary.