Platinum In The South African Economy

The paper will place into perspective the contribution that platinum makes to the South African economy. It will use statistics from official sources, namely the Department of Minerals and Energy, the Department of Customs and Excise, the South African Reserve Bank and Statistics South Africa. Surprisingly few people are aware of these statistics, especially Supply and Usage tables, published by Statistics South Africa, and trade statistics, published by the Customs and Excise division of the South African Revenue Service. The paper will therefore contain a concise explanation of input-output tables and supply usage tables, as well as the derivation of gross domestic product and an outline of the System of National Accounts, of which Input-Output Tables and supply and usage tables are components. GDP is a commonly used, but poorly understood, measure of the wealth of an economy. The paper will explain the methods used by SSA to calculate this indicator and its place in the System of National Accounts (SNA). South Africa exports almost all its platinum production (87.5% in 2002). Exports are a final demand, as opposed to intermediate demand from secondary industries, and therefore do not enter the value-adding process, which is the essence of GDP. By definition, therefore, platinum on its own is not a major contributor to GDP. The platinum industry does, however, have an impact (known as the multiplier effect) on other sectors of the economy. The paper will explain the meaning and derivation of these multipliers, using a model based on an Inverse Leontief Matrix.