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Tiger, Tiger, Burning Bright? 1 Industrial Policy “Lessons” from Ireland for Small African Economies

David Bailey, Helena Lenihan, and Ajit Singh

in Good Growth and Governance in Africa: Rethinking Development Strategies

The chapter examines possibilities for industrial policy in African countries through the lens of lessons that can be learned from the industrial policy approaches pursued in Ireland as well as in ... More

The chapter examines possibilities for industrial policy in African countries through the lens of lessons that can be learned from the industrial policy approaches pursued in Ireland as well as in East Asia. As latecomers to industrialization, the small African economies are well positioned to undertake such an exercise, we suggest. This chapter provides some novel insights by providing a comparison between Ireland and the small African economies. To our knowledge such a comparison offers a unique contribution. Cognizant of the fact that a “one size fits all” approach to industrial policy is not appropriate in the African context, we argue in favor of the adoption of a more “holistic” approach to industrial policy in these economies. Such an approach we argue should focus simultaneously on demand and supply factors of industrial development, and on microeconomic as well as macroeconomic factors.Less

Transforming Agriculture

Gordon Conway, Ousmane Badiane, and Katrin Glatzel

in Food for All in Africa: Sustainable Intensification for African Farmers

This chapter charts a course for a successful agricultural transformation leading to broad-based employment and income growth. It starts by explaining the history of agricultural dynamics and the ... More

This chapter charts a course for a successful agricultural transformation leading to broad-based employment and income growth. It starts by explaining the history of agricultural dynamics and the factors underlying it. The first decade of independent Africa was marked by strong overall economic growth, but things started to deteriorate rather rapidly in the following decade. The biggest impact on smallholders emanated from the far-reaching interventions by governments aimed at organizing nearly all activities in the agricultural sector. Only in the last two decades have African economies experienced a remarkable recovery in economic and agricultural growth. Rapidly modernizing agribusiness value chains, in particular the staple foods processing sector, have provided a major opportunity for labor-intensive industrial development, including a large source of employment for youth and women. Rising incomes are driving rapid transformation in diets and thus staples value chains, with a rapid increase in processed foods. The fundamental changes in the quality of sector governance and increased public sector investment in the last two decades have to be sustained to bring about real transformation of African economies.Less

An Environmental Laboratory: “Native” Agriculture, Tropical Infertility, and Ecological Models of Development

in Africa as a Living Laboratory: Empire, Development, and the Problem of Scientific Knowledge, 1870-1950

This chapter investigates a pivotal transition that took place during the colonial period, facilitated by agricultural departments and environmental scientists. Agriculture was, and would remain, at ... More

This chapter investigates a pivotal transition that took place during the colonial period, facilitated by agricultural departments and environmental scientists. Agriculture was, and would remain, at the center of African economies. The agricultural research described in the chapter repeatedly repelled against the wholesale transfer of European norms to African environments and offered a wide range of different approaches to modernization and development. The factors that impacted both scientific research and agricultural development in Africa are elaborated. The trajectory of studies of agriculture in Northern Rhodesia was a prime example of the ways scientists, colonial officials, and technical specialists wrestled with the issues. Northern Rhodesia's colonial officials attempted to expand crop production for both internal and external markets. The auto-critique that emerged among research scientists and technical specialists at both the territorial and inter-territorial levels fazed colonial certainties, and opened up a space to take ecological specificities and subaltern knowledge more seriously.Less

Growth, Employment Creation, and Poverty Reduction: An Overview, Evidence, and Possible Applications to Africa

Haroon Bhorat

in Economic Growth and Poverty Reduction in Sub-Saharan Africa: Current and Emerging Issues

This chapter attempts to explore the role and importance of the labour market in the interactions between economic growth, poverty, and inequality. Ranging from the relationship between output and ... More

This chapter attempts to explore the role and importance of the labour market in the interactions between economic growth, poverty, and inequality. Ranging from the relationship between output and employment, through the relevant elasticities, to the estimates of labour-intensive growth in cross-country regressions, the role of the labour market in understanding growth, poverty, and inequality outcomes is assessed. An overview of current and ongoing research is provided. This is in an attempt to understand labour market dynamics of pro-poor economic growth, and linkages—not only within the economic growth–poverty nexus, but also the centrality of inequality. This is vital for creating a broader appreciation of the welfare impacts of economic growth. The chapter endeavours to suggest specific African economies where economic growth and welfare outcomes may be intermediated through the labour markets of these respective economies.Less

Economic policy in South Africa—past, present and future

Haroon Bhorat, Alan Hirsch, Ravi Kanbur, and Mthuli Ncube

in The Oxford Companion to the Economics of South Africa

This chapter presents an overview of the economic record and the economic prospects of post-apartheid South Africa. It begins with a broad account of the evolution of the economy since 1994. It then ... More

This chapter presents an overview of the economic record and the economic prospects of post-apartheid South Africa. It begins with a broad account of the evolution of the economy since 1994. It then focuses on macroeconomic policy, including fiscal, monetary, and exchange rate policy. It considers the question of structural transformation and the range of sectoral issues to which it gives rise. Next, it takes up perhaps the most important element in the current debates—how to address the problems of unemployment, inequality, and poverty.Less

Crossing Back: Rethinking Credit Between Cultures

Parker Shipton

in Credit Between Cultures: Farmers, Financiers, and Misunderstanding in Africa

This chapter presents concluding remarks on credit programs conducted for the betterment of poor people, and discusses how histories of African finance, like histories of African economy in general, ... More

This chapter presents concluding remarks on credit programs conducted for the betterment of poor people, and discusses how histories of African finance, like histories of African economy in general, have looked pretty dismal. Typical have been financial credit unmatched by saving, loans delivered tardily and in amounts that shrink as they proceed from city to countryside, subsidies set too high and gobbled by elites, agronomically inappropriate packages of farm inputs, gender biases in loan allocation and extension services, culturally inappropriate requirements about loan collateral, low and falling repayment rates, and rising disaffection and debt. Often, both borrowers and lenders have, paradoxically, felt burned. The chapter also attempts to draw together some lessons, adds some broader reflections about development aid over the past half-century, and discusses how it might be reconceived in the light of what else we know about entrustment and obligation.Less

South Africa’s growth performance

Johannes Fedderke

in The Oxford Companion to the Economics of South Africa

This chapter examines South Africa’s economic growth following democratic transition. It focuses on three principal constraints on growth. These constraints fall into three broad categories: market ... More

This chapter examines South Africa’s economic growth following democratic transition. It focuses on three principal constraints on growth. These constraints fall into three broad categories: market distortions, inadequate human capital provision and political economy questions. The chapter concludes that there has been little change in South Africa’s economic structure despite the democratic transformation. The economy continues to be dominated by an interaction of big business, big labour and big government, which impedes competition and the innovation it fosters.Less

Trade policy reform in South Africa

Lawrence Edwards

in The Oxford Companion to the Economics of South Africa

This chapter discusses trade policy reform in South Africa, from its early inception to its recent formulation. It assesses the economic consequences of the trade liberalisation liberalization ... More

This chapter discusses trade policy reform in South Africa, from its early inception to its recent formulation. It assesses the economic consequences of the trade liberalisation liberalization programme implemented from the early 1990s. It then considers the challenges for future trade policy.Less

Twenty years of economic policymaking—putting people first

Trevor Manuel

in The Oxford Companion to the Economics of South Africa

This chapter discusses economic policymaking in post-apartheid South Africa. Economic policymaking was shaped by the concept of a people-centred democracy, a thriving and open society premised on ... More

This chapter discusses economic policymaking in post-apartheid South Africa. Economic policymaking was shaped by the concept of a people-centred democracy, a thriving and open society premised on mutual respect, trust and human dignity. The African National Congress (ANC) sought to transform the economy into one that benefited all the people of South Africa. The chapter covers early economic policy thinking in the late 1980s and early 1990s; the introduction of the Growth, Employment and Redistribution Strategy (GEAR) in 1996; strong economic growth from 2003 to 2008; the impact of the global financial crisis; and implementation of the National Development Plan in 2012.Less

Macroeconomic scenarios for South Africa: 2013–25

Ben Smit

in The Oxford Companion to the Economics of South Africa

This chapter examines macroeconomic forecasts for South Africa up to the year 2025. The uncertainties governing economic projections, particularly over longer-term horizons, motivate the ... More

This chapter examines macroeconomic forecasts for South Africa up to the year 2025. The uncertainties governing economic projections, particularly over longer-term horizons, motivate the specification of a number of alternative scenarios rather than just a simple baseline forecast. Three alternative macroeconomic scenarios over the period 2017–25 are considered. The baseline scenario assumes that both the global and the South African economies will continue to recover from the global financial crisis and the Great Recession. The low-road scenario assumes that international conditions improve less and domestic political and labour relation conditions improve very little from current positions. The high-road scenario is based on both improved (relative to the baseline view) global economic climate and a much better domestic political and economic policy context.Less

The political economy of restructuring in South Africa

Sam Ashman, Ben Fine, Vishnu Padayachee, and John Sender

in The Oxford Companion to the Economics of South Africa

This chapter examines the post-apartheid restructuring of South Africa’s economy. The government has adopted a confusing and shifting array of policy perspectives, ranging from the Freedom Charter, ... More

This chapter examines the post-apartheid restructuring of South Africa’s economy. The government has adopted a confusing and shifting array of policy perspectives, ranging from the Freedom Charter, through RDP to GEAR, and from there through AsgiSA to the developmental state, the NGP, and most recently the National Development Plan. Incorrigible optimists may regard more recent initiatives as leaning towards more interventionist policies and a politicized rejection of past failures. However, whilst the ideological shift in debate has indeed been marked by a more interventionist ethos, the significance of this in practice remains uncertain.Less

South Africa’s suboptimal political economy equilibrium

Sandeep Mahajan

in The Oxford Companion to the Economics of South Africa

This chapter focuses on South Africa’s cycle of modest growth, high inequality and record unemployment. It considers the role of the three major players in the political economy of reforms in South ... More

This chapter focuses on South Africa’s cycle of modest growth, high inequality and record unemployment. It considers the role of the three major players in the political economy of reforms in South Africa—the government, organized labour and existing business—who seem unwilling to disrupt the status quo of industrial concentration.Less

The evolution and impact of foreign direct investment into South Africa since 1994

Anthony Black

in The Oxford Companion to the Economics of South Africa

This chapter examines the dimensions and characteristics of foreign direct investment (FDI) into South Africa since its democratization in 1994. It then assesses its impact on the economy with ... More

This chapter examines the dimensions and characteristics of foreign direct investment (FDI) into South Africa since its democratization in 1994. It then assesses its impact on the economy with respect to indicators such as export growth, employment and technological upgrading. It shows that the inflow of FDI has been modest and reflects the pedestrian growth rates that the country has achieved over the last two decades.Less

The liberation dividend

Ruchir Sharma

in The Oxford Companion to the Economics of South Africa

This chapter examines South Africa’s poor economic performance and the role of the African National Congress (ANC). Youth unemployment is at 50%, the highest in the emerging world, whilst overall ... More

This chapter examines South Africa’s poor economic performance and the role of the African National Congress (ANC). Youth unemployment is at 50%, the highest in the emerging world, whilst overall unemployment rate is 2% higher than it was in 1994, when the ANC toppled white rule. South Africa has one of the highest levels of inequality in the world (0.6 on the Gini scale). Over the past couple of years, GDP growth rate has slowed down to 2.5% a year, about half the emerging market average. GDP growth is constrained by the oligopoly power of the ruling party; of corporations that endure from the apartheid era; and of the unions allied to the ruling party. The economic justice promised by Mandela and the ANC remains a distant dream. Thus, the surreal calm of South Africa grows more difficult to explain every year.Less

South Africa’s fiscal framework

Kenneth Creamer

in The Oxford Companion to the Economics of South Africa

This chapter examines South Africa’s post-apartheid fiscal framework. The fiscal framework is based on two pillars: increased social spending and expanded public infrastructure. It is argued that ... More

This chapter examines South Africa’s post-apartheid fiscal framework. The fiscal framework is based on two pillars: increased social spending and expanded public infrastructure. It is argued that South Africa’s overall macro stance should prioritize fiscal policy. The policy mix should be one of reconstructive fiscal policy-stabilizing monetary policy-floating exchange rate. This approach prioritizes the fiscal instrument due to its ability to shape the social and infrastructure environment. Further, it compares favourably to a tight fiscal policy-easy monetary policy-competitive exchange rate stance.Less

Inflation in South Africa

Janine Aron and John Muellbauer

in The Oxford Companion to the Economics of South Africa

This chapter examines the persistent problem of inflation in South Africa. It discusses the measurement of consumer prices and the drivers of inflation. It argues that with the ever-present threat of ... More

This chapter examines the persistent problem of inflation in South Africa. It discusses the measurement of consumer prices and the drivers of inflation. It argues that with the ever-present threat of a wage-price-exchange rate spiral, policymakers will have to use all tools at their disposal, and not just monetary policy, to keep down inflation. Policies to enhance productivity growth and thus limiting the rise in unit labour costs should be a key element in a long-term strategy to hold down inflation.Less

Commanding heights: The governance of state-owned enterprises in contemporary South Africa

Brian Levy

in The Oxford Companion to the Economics of South Africa

This chapter examines the performance of South African state-owned enterprises (SOEs) over the past two decades. It discusses three distinct patterns of principal-agent governance: effective ... More

This chapter examines the performance of South African state-owned enterprises (SOEs) over the past two decades. It discusses three distinct patterns of principal-agent governance: effective governance with a strong developmental principal, and a high performing, responsive agent; autonomous agents who are at least as powerful as their purported principals; and governance complicated by multiple (or captured) principals. These patterns are illustrated using as examples some of the country’s largest SOEs.Less

Unemployment in South Africa

Cecil Mlatsheni and Murray Leibbrandt

in The Oxford Companion to the Economics of South Africa

Over the past 20 years the unemployment rate in South Africa has not fallen below 20% and stands at 25% in 2013. Racial inequality is also evident in unemployment. The unemployment rates of Africans ... More

Over the past 20 years the unemployment rate in South Africa has not fallen below 20% and stands at 25% in 2013. Racial inequality is also evident in unemployment. The unemployment rates of Africans in 1994 was 26%, it reached a peak of 37% in 2002 and was at 27% in 2007. In contrast, unemployment of whites consistently remained at 4% in 1994 and 2007, with a peak of 6% in 2002. This chapter analyses the reasons for high unemployment and measures to combat high unemployment.Less

Post-apartheid poverty and inequality trends

Arden Finn, Murray Leibbrandt, and Vimal Ranchhod

in The Oxford Companion to the Economics of South Africa

This chapter analyses trends in poverty and income inequality in post-apartheid South Africa by comparing data from the SALDRU/PSLSD 1993 survey, the IES 2000 survey, and the NIDS wave 2:2010 survey. ... More

This chapter analyses trends in poverty and income inequality in post-apartheid South Africa by comparing data from the SALDRU/PSLSD 1993 survey, the IES 2000 survey, and the NIDS wave 2:2010 survey. The period covered is from 1993 to 2010.Less