Abstract

Advances in information technology have reduced the cost of transactions tremendously and changed the way business is conducted in substantial ways. Production has become more time sensitive and supply chain management involving just-in-time delivery and quality control at source have become part of local as well as international production networks. This paper analyses the impact of liberalizing trade in telecommunication services in the SADC area, focusing on the prospects and conditions for entering international production networks beyond raw materials supply. It starts with a brief review of relevant theory on location decisions, network economies and supply chains, and continues with an analysis of recent data on the quality and cost of transport services, production networks and international transactions within the SADC area. Evidence of emerging regional supply chains in the textile and clothing industry is found, and the South African automotive industry shows signs of getting integrated into the global industry. It is argued that while liberalization of the telecommunications sector has led to an unprecedented growth in the penetration of mobile telephones and access to the Internet, inadequate and expensive transport services and infrastructure are obstacles to further integration of SADC companies in international production networks. Comprehensive reforms within individual countries in all network industries, coordinated reforms within the SADC area, particularly in the transport sectors, and comprehensive international agreements in all network industries are necessary in order to reap the benefits of new information technologies. Finally it is argued that swift liberalization with short periods of adjustment, once domestic regulation is in place, yields most benefits to the poor SADC countries.