3.1 Answer the following questions - NSC Economics - Question 3 - 2023 - Paper 1

Small business development is crucial for the South African economy for the following reasons:

1. Employment Creation: Small businesses can create job opportunities for the unemployed, thus helping to alleviate poverty and improve living standards.

2. Economic Growth: They contribute to the economy by generating income and promoting economic activity.

3. Diversification: Small businesses foster a diverse economy by increasing competition and offering various products and services.

Duty-free

Southern African Custom Union (SACU)

Protectionism refers to government policies that restrict international trade to help domestic industries. This is often achieved through measures like tariffs and import quotas, aimed at reducing foreign competition.

One significant disadvantage of applying protectionism is that it can lead to retaliatory measures from other countries. This can escalate into trade wars, ultimately harming consumers through higher prices and limiting their choices in the market.

The African Growth and Opportunity Act (AGOA) can negatively affect South Africa by:

1. Dependence on Exports: It may lead to over-reliance on the U.S. market, making the South African economy vulnerable to changes in U.S. policies.

2. Local Industry Impact: Increased competition from U.S. imports can undermine local industries that cannot compete with larger and more efficient U.S. companies, potentially leading to job losses.