Answer to Question #204068 in Microeconomics for PM RATSHILI

Question

In your opinion, should local industries in south be protected against world competition?(25 marks)

Critically discuss the negative and positive of covid-19 on the south African economy? (25 marks)

Answer 1

Yes, in my opinion, local industries in South Africa should be protected against world competition. South Africa's economy is one of the fastest-growing economies in Africa. It has been boosted by the wide coverage of good infrastructure which has attracted foreign direct investment on a large scale. The viable business environment has led to the large influx of multinational corporations (MNC). In this case, the MNC’s are more competitive than the local industries thus making infant companies in South Africa stagnant. Local companies need to protect for various reasons such as to give new firms the chance to develop, grow and become globally competitive, Protection of domestic industries may allow them to develop a comparative advantage, to deter unfair competition, such as dumping by foreign firms at prices below cost, protect jobs, among other reasons.

South African economy was largely hit following the Covid-19 outbreak leading to businesses and workers that have lost their jobs, loss of tourism revenue; the economy has been headed to recession, poor living standards, and increase debt. It also led to an increased inflation rate.  There has been no major positive impact of Covid-19 in South Africa however it has taught companies and SMEs to be bold during downtimes.