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Prof. Adrian Saville Inaugural Lecture
Africa’s growth paradox and growth path: A structural model
Inaugural lecture delivered at the University of Pretoria’s Gordon Institute of Business Science
(GIBS) in Johannesburg, South Africa on 18 July 2022. Prof. Adrian Saville holds a professorship in
economics, finance, and strategy at GIBS, where he is the founding director of the Centre for African
Management and Markets.
Abstract
Of the world’s 25 least developed countries, 21 are in Africa. Progress for these economies remains
elusive as they are caught in “growth traps”. Per capita incomes for the 200 million people living in
Angola, Burundi, the Democratic Republic of Congo, Gabon, Madagascar, and Zimbabwe are lower
today than in 1990. Concurrently, sub-Saharan Africa houses the world’s second-fastest growing
economic bloc over the last two decades. Fast growth has translated into meaningful gains in some
countries’ socio-economic well-being, while others with similar starting conditions have been left
behind. To understand this paradox and the implications for economic development, this lecture
presents an endogenous growth framework based on machine learning methods, drawing on data
from 160 countries spanning 60 years. Six primary factors, which fall into demographic, economic,
and political categories, explain differences in economic growth rates and development across
countries. Demographically, population growth matters, but the “demographic dividend” requires the
underpinning of healthcare (primary) and education (basic). Economic activity (fixed investment and
economic connectedness) can contribute to economic growth and development. Stable policies,
fortified by institutional capability, are needed to realise the potential of population growth and
economic activity. The lecture presents evidence that poor initial conditions can be overcome.
Identifying the constraints binding Africa’s economic development establishes a scholarly foundation
for work on African markets and management. By highlighting the factors enabling growth and
development, the foundations are identified for research into policy approaches underpinning
sustained and inclusive growth in sub-Saharan Africa.
Inaugural address by Prof. Adrian Saville
We have involved ourselves in a colossal muddle, having blundered in the control of a delicate
machine, the working of which we do not understand. The result is that our possibilities of wealth
may run to waste for a time – perhaps for a long time.
—John Maynard Keynes in Essays in persuasion (1931)
Thank you, Prof. Tawana Kupe and Prof. Morris Mthombeni, and good evening to colleagues,
friends, and family. It is an incredible privilege and pleasure to be given this invitation to present my
inaugural lecture. This is the result of many years of hard work, incredible support, and a fascination
with the topic that I would like to talk about in this inaugural lecture, which is resolving economic
riddles. I have labelled this the paradox of prosperity, which deals with unravelling the economic
growth paradox of why some countries can achieve and sustain elevated economic growth, while
others remain stunted and trapped. This lecture deals specifically with the subject of sub-Saharan
Africa. The field of development economics has been an area of fascination of mine since I first
started my research 30 years ago, trying to understand what it is that helps places become
prosperous.
The saying goes about leaning or standing on the shoulders of giants, leaning on greatness to make
pronouncements. The invitation is that I profess tonight so I hope I stand up to that to that challenge
or test, and I am going to borrow first from what I would argue is one of the greatest – and certainly
one of the most influential – economists of the last 100 years, John Maynard Keynes (1931). He
talks about the endeavour of economists, having involved ourselves in a colossal muddle where
we've bungled in the control of a delicate machine, a machine called the economy, where we
pretend, perhaps, that we are able to understand how economies work, and the result of this
muddling and bungling is that the possibilities of wealth may run to waste for a time – perhaps for a
long time.
This is a philosophical statement and the field of economics that I work in is what can be termed
evidence-based economics. The piece of evidence that I show you here is 200 years of economic
history. It captures the performance for the world economy of income per person over the past two
centuries. This grew from US$1 100 per person to US$15 200 per person from 1820 to 2020. In
other words, over the sweep of 200 years, the data from Angus Maddison shows us that the average
world citizen – there is no such thing, but if we imagine for a moment that there is such a person –
is 15 times better off over the course of eight generations (Groningen Growth and Development
Centre, 2022).
Figure 1: Historical growth paths: 1820–2020 (Source: Groningen Growth and Development
Centre, 2022; Maddison Project Database 2020; real gross domestic product [GDP] per capita [pc]
2011)
That is impressive, but it is nowhere near the advance in prosperity that was enjoyed by the citizens
of Western Europe, whose per person income went from US$2 300 to US$39 800 – a 20-fold
increase over 200 years. This absolutely towers over the gains in prosperity by your average world
citizen. So, 25 times for Europe, 15 times for the world citizen, and if we come to the case of Africa,
this is a place that has been left behind when measured in these terms. In 1820, Africa was modestly
behind the world average, with a per person income of US$800 versus the world’s US$1 100. But
over the next 200 years, the continent’s per person income rose by just four times, to a little over
US$3 000 per person, versus the 15-fold increase for the world average and the 20-fold increase for
Western Europeans.
In the same breath, we can talk about this as the most prosperous time for humankind and, at the
same time, the most unequal circumstance in which we have ever existed. There has been a yawning
deficit in incomes between sub-Saharan Africa and the world economy and more advanced
economies over the last 200 years. Yet, we also find that the sub-Saharan economy is the second-
fastest growing region in the world over the last 20 years, and that the subcontinent is host to the
world's two fastest growing economies over the last 20 years: Rwanda and Ethiopia. These countries
could hardly be more different places. One has a population of 100 million and the other has a
population of 10 million; and one was under German and Belgian rule, and the other was never
colonised. Yet, these two economies have been galloping along with economic growth of between
7% and 9% per annum for 20 years. In the case of Rwanda, even longer.
Since the early 1990s, after that country’s tragic genocide, the Rwandan economy has grown at 7%
per year – doubling in size every decade.
So, sub-Saharan Africa is fast-growing as a region. It has components that are particularly rapidly
growing, yet at the same time, 21 of the world's 25 poorest economies are found in Africa and include
places like Eritrea, South Sudan, Chad, Malawi, the Democratic Republic of Congo, Central African
Republic, and Mozambique. This provides a first lens or a first look at the paradox. How is it that the
world has become so prosperous, and Africa has been left behind? And how is it that some parts of
Africa might have got into a business of what economists call catch-up, yet others belong to the
subset of 21 of the 25?
Here, I will borrow from another great economist of the last 100 years, Simon Kuznets, the Nobel
laureate who, with good economic humour, spoke about there being four types of countries:
developed countries, undeveloped countries, Japan, and Argentina (“How Argentina and Japan
continue to confound macroeconomists”, 2019; Kuznets, 1955). I think this is economic humour at
its finest. The point that he is really making is that there is no such thing as an archetype, that we
need to be very careful of making sweeping claims, that each place has a story, and that
characterisations might be approximately right, and exactly wrong. Kuznets made a very powerful
observation in a single, simple statement.
Figure 2: Four paths
If we extend that observation, we come to the fascination of schools of development economists
trying to figure out what it is that distinguishes developed from developing, and what it is that makes
Japan and Argentina unique.
More exactly, where are the learnings from history that perhaps might give us some clues about how
it is that the developed have become developed? And what it is that is specific or general to the
undeveloped that they are left behind? This is a wall of fame that sweeps all the way from Adam
Smith through the likes of Saburo Okita, to Susan Athey and Esther Duflo, working in the fields of
technology and behavioural economics. This is an extraordinary mix of different schools of thought,
ideas, and arguments dealing with the fundamental questions: What is it that makes economies
perform? And what it is that holds places back? Keep in mind that an economy is not an amorphous,
abstract thing. An economy is a place that houses countries, communities, companies, and people.
The economy is the place in which we struggle or thrive. A place in which our companies build or
battle.
What, then, do these economists have to say about prosperity? There is fierce conflict and contest
about what it is that is necessary for a country to get onto a path of prosperity and there is widespread
disagreement about what it is that holds countries back. If you want to debate, get two economists
into a room and – you know the well-worn joke – you will get at least four views. These are the
schools of economic thought, these are the schools of economic history, and the various contests
amongst developmental economists that have important implications for business, for business
schools, for countries, their citizens, and for policymakers. I will come back to that in terms of the
implications this has for my research and the work that I am doing in trying to figure out what it is
that matters to building a prosperous place.
To this end, Mao Zedong (1957) gave a clue. The great Chinese politician and policymaker, the
author of the Little red book said: “Let a hundred flowers bloom, and a hundred schools of thought
contend”. Of course, this was a statement rather than a practice. What he was really after was just
one idea and that idea was contained in his Little red book about central planning and
industrialisation through an all-seeing and all-doing state.
What displaced Mao’s policies were those of Deng Xiaoping. To cite a proverb commonly attributed
to Deng, “I don’t care what colour the cat is as long as it catches mice” (Tyler, 1997). This is one of
my favourite quips about trying to figure out our way through the maze of economic thinking and the
discipline of economics. I have used the term already and I will reference it again: evidence-based
economics. In other words, do not tell me about your thoughts and your ideas and your arguments,
show me the evidence. This is Deng’s pronouncement. It is interesting to know what you believe,
now show me the outcome, the results, the consequences of your practice, and that might be the
policy guidance a country needs. It is this that has really informed my research and my work because,
as South Korean economist Ha-Joon Chang (2014) emphasised, under no circumstance should we
drink the Kool-Aid of just one flavour of economic thinking, and that what is likely to equip us better
is a cocktail of flavours. This is the point that Deng made 40 years before Chang. This is what
intrigues me in economics. In my discipline, what is it that defines, shapes, and influences the
progress and prosperity of a country and its communities and the companies that belong in that
country?
I want to please press pause here just for a moment and take a step sideways, because I am talking
about prosperity and well-being and progress without having defined it. So, what is it that I mean
when I define progress and prosperity? Robert F. Kennedy was not an economist. Rather, he was a
US senator, and in remarks at the University of Kansas in 1968, he made the following
pronouncement in defining progress and prosperity:
Too much and for too long we seem to have surrendered personal excellence and community values
in the mere accumulation of material things. Our gross national product, now, is over US$800 billion
dollars a year, but that gross national product … counts air pollution and cigarette advertising and
ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for
the people who break them…. It measures neither our wit nor our courage, neither our wisdom nor
our learning, neither our compassion nor our devotion to our country. It measures everything in short,
except that which makes life worthwhile.
This is a powerful statement about what progress and prosperity really are. Economists launch into
narratives about gross national product (GNP) or more recently gross domestic product (GDP). I will
not bore you with the academic difference between these two; the differences are important, but for
the sake of this argument, these differences are trivial. Regardless, there is a fascination amongst
economists with how we get this number, called the economy, measured by GNP or GDP – higher.
Incidentally, the economist that I drew on earlier, Kuznets (1934), is the author of GDP national
accounting. He is the person who put the method together of a GNP and a GDP all the way back in
the 1930s. Prior to that, we had no idea how big an economy was. It was only in the 1930s that we
got national accounting and so the numbers that were referenced earlier in discussing GDP per
person from the early 1800s and into the early 1900s come from a fascinating piece of work, namely
Angus Maddison’s Groningen Project, which has gone back through archives to try to retrofit how
big economies really were (Groningen Growth and Development Centre, 2022). It is an intriguing
piece of statistical engineering.
Staying with this pause in my argument, whilst GDP and GNP have for a long time been used as the
measure of prosperity, in recent times they have been brought into challenge. There is a growing
drive to try to approximate the well-being of a country. One of our colleagues at the University of
Pretoria, Lorenzo Fioramonti (2017), has published prolifically in challenging national accounting.
Also in South Africa, Malcolm Ray (2022) contests our fascination with economic growth and echoes
the sentiments of Kennedy, recognising all the challenges, the contests, and the ways in which GDP
is miscalibrated, miscalculated, and how it might be measuring the things that do not matter. These
are very hard contests to refute. There is robust evidence and argument in these challenges. It is an
imperfect and an inexact measure that regularly miscounts and miscalculates, as Morten Jerven
(2013) of Fraser University noted, GDP sometimes is poorly measured and oftentimes not measured
at all.
Look no further than many instances in sub-Saharan Africa where, as recently as 2008, if Uganda
wanted to know what they were exporting, they asked Kenyan statisticians for the numbers, because
there was no Ugandan statistician measuring the exports out of Uganda. In that case, the economy
is not mismeasured, it is not measured at all when it comes to that export component. Even if
measured perfectly, we can get to what French economist Frederic Bastiat (1850) called the broken
window fallacy. This is a famous parable of a storekeeper having the store window broken and then
having to replace the store window. The replacement of the store window is measured as economic
activity and as growth, but what we don't ask is: “What would have happened if that window did not
need to be replaced?” That's the so-called broken window fallacy.
Now, what I want to get to in good economic fashion is the “however”. However, with all this
miscalculation and miscalibration, there are strong positive relationships between the GDP and
important elements of progress, prosperity, and well-being. This can be shown in at least four ways:
country competitiveness, social well-being, the longevity of democracy, and firm performance. Each
of these is considered in turn.
The first relationship is GDP and competitiveness. Michael Porter and Jeffrey Sachs (2001)
investigated development and country progress. What they call competitiveness is not so much
competing in order to win a race, rather “competitiveness” refers to a place that is getting better. That
we can finish any race or run any race in stronger shape or form, that is Porter and Sachs’s definition
of competitiveness. Here, you see the correspondence between GDP per person and
competitiveness or gross national income per person and competitiveness. It is a strong positive
relationship, suggesting that a GDP might be measuring something useful.
Figure 3: Relationship between the GDP and competitiveness (Source: Schwab, 2019)
The second relationship evidences GDP and happiness. It should not be lost on us that measured
across the horizontal axis is a logarithmic scale, suggesting that as GDP per capita increases, life
satisfaction increases at an accelerating rate. There are some interesting statistical paradoxes or
curiosities in here. One of which is the so-called Easterlin Paradox, which says that very early on
there are linear relationships between GDP and happiness – that each dollar leads to an equivalent
improvement in well-being, and that once we have crossed through some threshold (the estimate for
this goes in the order of US$70 000 per family) that the relationship between happiness and money
breaks down (Easterlin, 1974). But this is a strong relationship between GDP – this miscalibrated,
mismeasured thing – and something else that is important to us, called happiness.
Figure 4: Relationship between the GDP and happiness (Source: Easterlin, 1974)
As a further aside, happiness is not that feel-good feeling when you get a new car or new clothes.
Happiness is a sense of well-being, an intrinsic sense of belonging and purpose – perhaps the feeling
that you get while being professorial. Certainly, what I get from teaching. That this gives me
something that money cannot achieve – this is what happiness means. There are lots of ways in
which we can measure happiness – by looking at rates of incarceration, inequality, the strength of
relationships, the number of people who are in therapy for depression, and so on. This means
happiness can be measured.
To show the third relationship between GDP and country well-being, I draw on the work of the
Zambian-born economist Dambisa Moyo. She points to the evidence for a link between per capita
income and the longevity of democracy. Once your per person income is above $6 000, Moyo
suggests that democracy lasts forever (Eng, 2013), that there is a strong positive relationship
between democracy and lots of freedom.
Figure 5: Relationship between GDP and firm performance (Source: Saville, 2022)
Finally, there is the relationship between the economy and company performance. In the data
captured in Figure 5, the green column shows you South Africa’s economic growth and the black
spot is the growth in bottom line performance of all companies listed on the Johannesburg Stock
Exchange. This work has been replicated around the world, where we have measured the
relationship between economic growth and company performance in Japan, Nigeria, Brazil, Canada,
Chile, and Colombia, to mention a few interesting examples. In total, this work covers 95% of the
world's market capitalisation. The upshot is that in the case of South Africa, there is an R-squared
of 0.8. On top of that, there is a second statistical tool called Granger causality. This tests whether
the chicken causes the egg, or the egg causes the chicken. The Granger causality here runs from
the green column for country economic growth to the black spot for the performance of companies.
An R-squared of 0.8 suggests that as much as four fifths of company performance can be explained
by the economic context.
In summary, while GDP is an inexact measure of progress, and there are lots of problems with
measuring this thing called “the economy”, when we get into the business of measuring the size of
a country by GDP or GNP or any of its derivatives, this measure corresponds highly with
competitiveness, happiness, the longevity of democracy, and the performance of companies that
make up that country’s markets. But whilst growth matters, growth is not development. Dudley Seers
(1969), the development economist, said if you want to know how a country is doing, just ask these
three questions: What has happened to poverty? What has happened to unemployment? What has
happened to inequality? So, if a country is growing, the question this urges is: Does the growth come
with reductions in unemployment, reductions in poverty, and improvements in equality? If you can
answer “yes”, “yes”, and “yes”, then growth is coming along with development. That’s Seers’s one-
liner on how we identify development as opposed to growth.
Figure 6: Charts showing growth in countries across different countries (Source: Nussbaum,
2013; Seers, 1969; Sen 1999)
The data shared in the two charts in Figure 6 gives some evidence for the relationships across
different countries. I want to draw your attention to the case for South Africa. In the top column, you
see the relationship between South Africa’s economic growth over the 1995–2010 period and South
Africa’s job creation. Economic growth in the country ran at 3.5% per year over this period and job
creation ran at approximately zero, giving, in economic language, an elasticity of zero. In other
words, if the economy were to double, it would create approximately no jobs.
That gives a big clue as to why development might be missing when South Africa experiences
economic growth. That evidence is developed further in the graph. As an aside, if employment
elasticity of growth is zero, we have a big clue as to why initiatives like the Youth Employment Service
(https://yes4youth.co.za/) are fundamental to transforming the shape and nature of countries like
South Africa.
Going back to Kuznets’s story of Japan and Argentina, Japan grew10 times per person income from
1945 to 1985. It is a fascinating story of what you might call an economic miracle. South Korea does
12 times per person income over 40 years and Chile does five times over 40 years. Each of them
parades as an economic miracle and it is at this point that frustration might develop with the story
about economics: these are not miracles. Rather, their progress – or lack thereof – is explained by
evidence. This is the work that I want to share with you in bringing this lecture to a culmination.
In a sentence, this work of trying to understand country performance goes in search of common
ingredients for economic success. I have already complained that there is this broad spectrum of
debate and disagreement about what ingredients matter and what shapes country progress. This
makes development economics a very unsettled discipline. The nature and extent of disagreement
leaves economics a long way away from being a science. Instead, it takes us into the realm of art
and hand-waving when we talk to what it is that makes a country so successful and then we talk
about the so-called “economic miracles”. Against this backdrop, what might happen if we borrow
from the term evidence-based economics and gather all the evidence we could possibly find on all
of the countries we know and go in search of just the thing that Deng spoke about – namely the cat
that catches mice. In essence, this is the work that we started 15 years ago, beginning with just over
160 countries.
In this data survey, we have got some countries with as much as 50 years of data and we have
1 000-line items of data per country. I did not know it was called this at the time, but today we would
call this “big data”. The method that we applied – I also did not know at the time – today, we would
call it “machine learning”. Equipped with this big data set, I left all my assumptions, my beliefs, and
my philosophy about economics at the door and threw this big data into a pool and we gave an
algorithm the opportunity to trawl through these 10 million data points and find, in a simple statement,
the things that correspond with economic transition and transformation.
We made some rules. We spoke about fundamental versus proximate relationships. Fundamental
factors explain outcomes – they are causal. Proximate factors merely coincide – they do not explain.
An example of a fundamental factor might be something like foreign direct investment or your level
of investment as a percentage of GDP. A proximate factor could be the number of kilometres of
tarred road you have per square kilometre. Of course, as a country gets more developed, it will have
more tarred road. The tarred road does not explain – or cause – the economic development, although
economists like Paul Rosenstein-Rodan (1944) would disagree. Either way, we need to be very
careful to not confuse things that are proximate that “go along with” as opposed to things causative,
that are fundamental drivers of outcomes.
It is critical that this tool is agnostic. A non-believing, unknowing machine was asked to find the
ingredients that lead prosperity, defined as sustained, elevated, and inclusive improvements in
income per person (Seers, 1969). From this data, there are six things that go along with country
transition and transformation:
1. High levels of savings that underpin gross domestic fixed investment;
2. Demography points to young and growing populations as a critical ingredient. The
demography pillar says what you need are more people going into the workforce than going into
retirement. It explains the headwinds faced by places as different as Japan, China, and Russia which
have greying populations;
3. Education;
4. Healthcare;
5. Openness, which speaks to connectedness to others, ranging from the level of individual
people all the way to connections between nation states; and
6. Policy and institutional stability. The real landing moment in this sixth factor is the finding that
it is more about the stability of policy and institutions than the minutiae of them. That is not to suggest
that there is no such thing as good policy or bad policy. This finding highlights the paramount
importance of stability of policy. I think it is much like parenting in that sense, where having rules and
sticking to them is the key. We are not attempting to define precisely what is fundamentally good
parenting or fundamentally bad parenting. Anyone who has given attention to South Africa in recent
years knows the importance of institutional strength and stability underpinning policy.
I describe these six factors in a little bit more detail in Figure 7.
Figure 7: Six-factor model (Source: Saville, 2022; Saville et al., 2021)
I have evidenced some of the relationship in the illustrations alongside the descriptions. There are a
couple of statistical points that really have gravity and demand a little bit of emphasis. The first is
that this work has now extended to almost 200 countries. The second is that alongside being able to
identify these six components, we have advanced the work to figure out sequencing and weighting.
That is, we have teased out the best order in which to “download” these factors and their relative
power to create prosperity. For instance, healthcare carries a higher weight than education,
emphasising that if you want a prosperous nation, prioritise your work on healthcare before
education. Getting people healthy is a leading indicator – a fundamental factor.
Two other nuances should be highlighted. First, savings fund investment. Whilst we can fund
investment in other ways like borrowing from other countries, it is a domestic saving culture that
correlates with the sort of investment that drives prosperity. Second, openness can be good or bad.
Porous borders may elevate unhelpful connectedness like drug trafficking. We want productive trade
and human engagement.
To tie it all together in a single number, we calibrate each country’s six-factor score. The caveat to
insert here is that the structural growth rate of a six-factor score is not a forecasting tool. Those are
likely to be wrong. What the model is pointing to is the innate structural strength. If we point to
someone and say, he/she can run a marathon, this does not mean they will run a marathon or that
they will not battle to finish the marathon.
But when we just point to their attributes and we can evidence their experience, the miles they have
in their legs, the history of their training, their logbooks and so on, that their parents might have been
good marathon runners, there is something in the DNA and so on. We can talk about the fundamental
structural growth of a country. Does it have the “legs” and “lungs” to run the prosperity marathon?
Figure 8: Six-factor model echoing Kuznets (Source: Saville, 2022)
It will not be lost on you that Greece and Tanzania both score mid-table with 50 out of 100 possible
points. Greece has a 1% growth structure and Tanzania has a 5% growth structure. So, Tanzania
has set itself up structurally to be in the business of what we might talk about in 25 years as a growth
“miracle”, whereas Greece is structurally stuck. You will also see that Tanzania is clustered with
Ethiopia and India, and that the superstar of the last three decades, China, has been swallowed
down into 3% and 4% growth rates, suggesting China's best growth story is behind it. You might
have also found South Africa and seen it has a 2% growth structure, suggesting that there is work
cut out for the country if policymakers want to get to the promise of 5.4% economic growth.
I will finish with some observations about what this means for my work. That includes first
distinguishing between environmental determinism and reconstructionism, or what strategists
colloquially refer to as red ocean and blue ocean. Red ocean is environmental determinism – that
we are subject to the circumstances we have been given. Blue ocean refers to reconstructionism;
for countries and for communities, this points to our ability to build. This is exactly the definition of
economic development, except it is not miraculous. Development is about re-crafting, transforming,
and changing growth into inclusive growth, which then becomes relabelled development, and this is
the evidence-based economics of the six-factor model that takes us in that direction.
Some valuable research has started to come from this. This includes something Prof. Kupe spoke
about in his introduction. The Visa Africa Integration Index (Saville & Firth, 2016) is where we were
given access to vast microeconomic data, which gave us the ability to measure the connectedness
of countries which to that point had not been measured, thereby closing a huge data deficit in 19
sub-Saharan African economies. This helped us to determine that the microeconomic ingredients of
access to information (I) and the movement of people (P) mattered much more than macroeconomic
ingredients of trade (T) and capital (C) (Ghemawat, 2011). This is the direction this work starts to
take us in. It helps emphasise what might be important not just for countries and their policies, but
also for companies and their strategies.
I have caricatured countries using the dimensions of TCIP to point to what we could call trailblazers.
Rwanda and Ethiopia have the attributes of trailblazers. South Africa belongs to the ranks of the
frustrated. But with this work, we can start to figure out what might be important for policy at the
country level and for strategy at the company level.
Figure 9: Dimensions of TCIP (Source: Ghemawat, 2011, 2016; Jerven, 2013; McKenzie, 2017)
I can put this into three ways of thinking about the research that I will do in developing my career
from here. The first is about understanding context and what context means for structure. The
structural growth models that come out of this talk about South Africa as a 1.5% or 2% growth
economy and this provides valuable information and insight.
It gets us from forecasting into knowledge about the essence of a place. The second is it gives us
the ability to evaluate policy free from baggage. We can test or stress-test policy without all our bias
and miscalibrations. The third is that it informs what we can do in terms of growth models, not just
for countries, but also for companies and ultimately from company growth models down into
management models.
I started by borrowing from John Maynard Keynes. I’ll finish by quoting this great economist, who,
on occasion of his retirement from the editorship of the Economic Journal, said, “I give you the toast
of the Royal Economic Society, of economics and economists, who are the trustees not of civilization,
but of the possibility of civilization” (Harrod, 1951). I believe that is what my work points to and that
is the direction my career is pointed in.
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