SA could add about $800m to its economy if it adds its name to the Information Technology Agreement — an international pact eliminating tariffs on hundreds of information and communications technology ICT products for its 82 signatory countries, according to a new study.
The study by the non-profit Information Technology and Innovation Foundation (ITIF), a US-based global technology policy think tank, released this week also found that SA could raise new tax revenue, recovering 92% of the government’s lost tariff revenue in the 10th year — "making this a win-win economic policy".
Despite the agreement’s economic benefits, many developing nations, including SA, have yet to join because their governments are concerned about the loss of income from forgone tariffs.
"Increasing the use of technology in all sectors of the economy is one of the most important drivers of economic growth in developing countries because it enhances productivity, spurs innovation, and bolsters living standards," said Stephen Ezell, ITIF’s vice-president of global innovation policy and the report’s lead author.
"If SA joins the agreement, its businesses and consumers will use more technology products because of lower prices, while becoming more deeply integrated in global value chains for ICT production. This will spur significant economic growth for the country while generating new tax revenues that substantially offset tariff losses."
ITIF analysed how the increase in ICT imports and lower prices due to tariff elimination under the trade pact would spur greater economic growth and tax revenue in six developing countries: Argentina, Cambodia, Chile, Kenya, Pakistan and SA. It concluded that joining the agreement would bolster Argentina’s economic growth by an estimated 1.52%, or $12.7bn in additional output, in the 10th year; Cambodia’s by about 1% or $320m; Chile’s by 0.23% or $920m; Kenya’s by 1.29% or $1.4bn; Pakistan’s by 1.3% or $4.6bn; and SA’s by 0.17% or about $800m.
"Countries that haven’t joined the [agreement] are missing a significant opportunity for economic growth, innovation, and prosperity," said Ezell. "Joining the [trade pact] makes countries more attractive locations for ICT goods and services producers and exporters, and sends a strong signal that these countries are open for business."
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