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Economic Policies for a New South Africa
... The IMF (Lachman et al., 1992) and World Bank (1994) modelling exercises in subsequent years prioritised investor confidence over basic needs. While recognising that redistribution would be central for democracy, these modelling exercises nevertheless called for a gradual approach to transform the quality of life to groups disadvantaged by the apartheid system. ...
... While recognising that redistribution would be central for democracy, these modelling exercises nevertheless called for a gradual approach to transform the quality of life to groups disadvantaged by the apartheid system. The 'social backlogs' left by apartheid could be financed through private-sector-led investment, but this would require some socially progressive compromises in the short-term to enable long-term equilibrium (Lachman et al., 1992:1). ...
The sovereign credit ratings issued by the ‘Big Three’ credit rating agencies (CRAs) – Standard & Poor’s (S&P), Moody’s, and Fitch – significantly influence how emerging market governments structure their economies. This is despite several rating failures that have cast doubt on the accuracy and transparency of ratings and revealed problems such as conflict of interest in the business model of CRAs. Existing critiques about the political economy of sovereign credit ratings, however, fail to explain how their authority remains intact amidst these contestations. This thesis shows how the authoritative agency of CRAs and sovereign credit ratings are produced by an epistemic culture that places a high value on numerical data as a transparent reflection of reality and therefore the most rational basis for decision making. While acknowledging that ratings can be improved, the assumption is that under certain conditions, CRAs can unearth the objective ‘truth’ about a government’s fiscal profligacy. This thesis reveals the historical, discursive, and geopolitical framework that informs this assumption and how it fits into global power relationships. As such, the thesis shows how modern credit arrangements are embedded in long-term colonial histories and the continued relevance of these histories in the reproduction of the global political economy.
The goal is to re-politicise the discourse of sovereign credit ratings by exposing the historical ambiguities, ideological contestations, and methodological compromises that underpin their production. This analysis is divided into two themes. The first two chapters of this project examine the historical processes through which financial markets and the economy became de-politicised, and conceived as a natural, self-regulatory mechanism that can be scientifically ‘known’ and the macro-economic policies this assumption made possible. The two chapters after that reveal the myriad subjective assessments, political considerations, and methodological compromises that go into the production of ratings. These include deciding what type of data to collect, model specifications, as well as how to interpret flawed or missing data.
The final two chapters of this thesis consider how sovereign credit ratings are entangled in the political economy of South Africa. These chapters reveal the post-colonial nature of modern financial markets by showing how South Africa’s political economy has profoundly been shaped by colonial regimes of power and knowledge. Sovereign credit ratings are entangled in the reproduction of these power structures in two ways. First, the assessment of creditworthiness necessitates a forgetting of not only these violent histories and how they have come to shape asymmetrical power relations around the globe, but also their own complicity in the reproduction of these hierarchies. Secondly, their authoritative position in financial markets contributes significantly to the normalisation and sedimentation of macroeconomic policies which similarly require a ‘forgetting’ of these histories by disciplining unorthodox fiscal and monetary measures to address them. By exposing the political processes inherent in ratings, this thesis emphasises the necessity of broadening their content to enable modalities of economic policy making that aligns with the social welfare and democratic needs of society.
Keywords: sovereign credit ratings, global South, South Africa, governmentality, post-colonial finance
... The International Monetary Fund (IMF), which had severed links with South Africa in 1983, became involved again after 1990. In 1992, the IMF issued its fi rst report (Lachmann and Bercuson 1992), which, according to Elling Tjønneland, could be summed up as 'growth fi rst and redistribution later' (quoted in Padayachee 1997: 30). In its annual report for 1995, the IMF noted with pleasure that 'the most telling signal of the new government's economic ideology has been its broad advocacy of free trade' (quoted in Michie and Padayachee 1997: 20), and in July the same year, Mandela announced that the government must 'abandon its obsession with grand plans and make economic growth its top priority' (Michie and Padayachee 1997: 21). ...
... The International Monetary Fund (IMF), which had severed links with South Africa in 1983, became involved again after 1990. In 1992, the IMF issued its fi rst report (Lachmann and Bercuson 1992), which, according to Elling Tjønneland, could be summed up as 'growth fi rst and redistribution later' (quoted in Padayachee 1997: 30). In its annual report for 1995, the IMF noted with pleasure that 'the most telling signal of the new government's economic ideology has been its broad advocacy of free trade' (quoted in Michie and Padayachee 1997: 20), and in July the same year, Mandela announced that the government must 'abandon its obsession with grand plans and make economic growth its top priority' (Michie and Padayachee 1997: 21). ...
... The International Monetary Fund (IMF), which had severed links with South Africa in 1983, became involved again after 1990. In 1992, the IMF issued its fi rst report (Lachmann and Bercuson 1992), which, according to Elling Tjønneland, could be summed up as 'growth fi rst and redistribution later' (quoted in Padayachee 1997: 30). In its annual report for 1995, the IMF noted with pleasure that 'the most telling signal of the new government's economic ideology has been its broad advocacy of free trade' (quoted in Michie and Padayachee 1997: 20), and in July the same year, Mandela announced that the government must 'abandon its obsession with grand plans and make economic growth its top priority' (Michie and Padayachee 1997: 21). ...
What is the 'state' and how can we best study it? This book investigates new ways of analysing the state.The contributors argue that the state is not a fixed and definite object. Our perceptions of it are constantly changing, and differ from person to person. What is your idea of the state if you are a refugee? Or if you are living in post-aparteid South Africa? Our perceptions are formed and sustained by evolving discourses and techniques -- these come from institutions such as government, but are also made by communities and individuals. The contributors examine how state structures are viewed from the inside, by official state bodies, composed of bureaucrats and politicians; and how these state manifestations are supported, reproduced or transformed at a local level. An outline of theoretical approaches is followed by nine case studies ranging from South Africa to Peru to Norway. With a good range of contributors including Cris Shore, Clifton Crais, Ana Alonso and Bruce Kapferer, this is a comprehensive critical analysis of anthropological approaches to the study of state formation.
... There are great differences in per capita GDP between the metropolitan and rural areas in South Africa (about 10 times). Moreover, the per capita GDP difference between the black and white populations is a factor of ten, and the infant mortality rate is five times greater for black than white South Africans (Lachman and Bercuson, 1992). Political Stability. ...
South Africa is at a crossroads in its decentralization policy. On the one hand, it has declared its intention to strengthen the fiscal powers of local governments. On the other hand, the institutional arrangements to guarantee fiscal decentralization -- revenue powers and expenditure responsibility -- have not yet been fully defined. Nor has a target been set for the vertical division of resources between the central and lower levels of government. The revenue dimension of fiscal decentralization in South Africa, particularly the question of an equitable vertical share for local governments, is the subject of this paper.In the first section of the paper, we ask how South Africa fits the profile of countries that are “good” candidates for decentralization. We then turn to a description of vertical revenue sharing as it presently exists in South Africa. We also offer a proposal about how an equitable vertical share for South Africa should be determined. A final section summarizes the results. The policy question raised in this paper is straightforward: What percent of all tax and non-tax revenues should be assigned to the central government and what percent should be assigned to the local government? The implementation question is also straightforward: Once the assignment is decided, how do we structure each revenue instrument to guarantee the “desired” assignment of resources?
The UTIP-UNIDO data set of industrial pay inequality is a panel comprised of the between-groups component of Theil’s T statistic measured in different countries and years across a stable and consistent set of industrial sectors. The Theil method is described in full elsewhere (Conceição, Ferreira and Galbraith 1999). Initially computed by Galbraith, Lu and Darity (1999) and updated by Galbraith and Kum (2004), the UTIP-UNIDO data set has the virtue of providing dense, consistent, accurate measures, and it has the limitation of being restricted to the inequality of inter-industrial pay. Its principal direct interest for economists is the study of common trends and of common factors affecting inequality, such as interest rates, debt crises, changing financial regimes, technology and trade. It has also proved to be a sensitive measure of major political events. Perhaps most important, the UTIP-UNIDO measures prove to be an effective instrument for estimating Gini coefficients for gross household income inequality, and this permits the construction of a dense and consistent panel of such estimates, complementing and extending the direct measurements available from other sources.
The UTIP-UNIDO data set of industrial pay inequality is a panel comprised of the between-groups component of Theil’s T statistic measured in different countries and years across a stable and consistent set of industrial sectors. The Theil method is described in full elsewhere (Conceição, Ferreira and Galbraith 1999). Initially computed by Galbraith, Lu and Darity (1999) and updated by Galbraith and Kum (2004), the UTIP-UNIDO data set has the virtue of providing dense, consistent, accurate measures, and it has the limitation of being restricted to the inequality of inter-industrial pay. Its principal direct interest for economists is the study of common trends and of common factors affecting inequality, such as interest rates, debt crises, changing financial regimes, technology and trade. It has also proved to be a sensitive measure of major political events. Perhaps most important, the UTIP-UNIDO measures prove to be an effective instrument for estimating Gini coefficients for gross household income inequality, and this permits the construction of a dense and consistent panel of such estimates, complementing and extending the direct measurements available from other sources.
The Standardized World Income Inequality Database (SWIID) provides estimates of inequality for South Africa for 1965 which are simply not plausible. Indeed the entire 95 % confidence interval is outside the plausible range. An examination of this case suggests that the SWIID’s promise to capture the “noise” associated with any estimate is unlikely to be warranted. The procedures will provide accurate confidence intervals only in cases where the original measurements are unbiased and the imputation model is reasonable.
Focusing more on South Africa's international cultural‐political‐economic strengths and weaknesses than on current domestic affairs, as it moves away from apartheid, this article examines the new South Africa's chances for ascent (development) or descent (underdevelopment) within the world system. Politically, the State will remain weak by international standards. Economically, it is in decline, largely because it is uncompetitive internationally; and these negative trends well pre‐date the unrest and sanctions of the mid‐1980s. It is concluded that the new South Africa will be fortunate to maintain its present position in the medium‐term.
This paper summarizes a comprehensive revision and update of UTIP's work on the inequality of pay and incomes around the world, covering the years 1963 to 2008. The new UTIP-UNIDO data set of industrial pay inequality has 4054 country-year observations over for 167 countries, while the updated and revised EHII data set of estimated gross household income inequality has 3871 observations over 149 countries. The paper also provides comparisons of the EHII data set with a wide range of measures and estimates drawn from other work. They show in general that EHII is a reliable reflection of trends, and a reasonable, though not perfect, estimator of the levels of inequality found in surveys. These updates, revisions and quality checks were supported by a grant from the Institute for New Economic Thinking. The paper will be presented at the IEA/World Bank Roundtable on Inequalities, IEA 17 th World Congress, 6-10 June 2014, Dead Sea, Jordan.
Points out that it would be naïve to believe that democracy in itself will solve all South Africa’s problems. Also that the legacy of apartheid lives on and will continue to do so for many generations to come. Examines the socio-economic restructuring of South Africa, looking at whether it will be possible to make amends for past injustices while not harming future economic development. Emphasizes the role of the welfare system in improving the quality of life of black South Africans and examines whether the welfare state is a feasible option.
The recent advent of political democracy in South Africa has brought into sharp focus those macroeconomic and labour policies designed to combat unacceptably high unemployment levels, that have escalated steadily to present estimates of approximately 40 per cent of the Economically Active Population. The continuing implementation of neo-liberal orthodox policies, the authors maintain, will aggravate the problem. An alternative theoretical framework containing elements of a neo-Ricardian, post-Keynesian approach and based on research work of the Macroeconomic Research Group (MERG) is advocated. This approach focuses on State-led, demand-inducing policies, while not neglecting the supply side of the labour market in South Africa.
This article examines the impact of public enterprise reform on employment, wages, and measures of productivity in South Africa. Most analyses of the process of enterprise reform have, to date, focussed mainly on the agency problem between managers and owners, changes in management organisation, and incentives. However, these studies have largely ignored the labour market. Accordingly, we use a conventional labour market model (Brown and Medoff 1988, Litchenberg and Siegel 1992, and Haskel and Szymanski 1993) to examine the effects on employment, wages, and measures of productivity when government-owned enterprises in South Africa were commercialised and regulatory reforms introduced. Using data from 1980-1996 and time series/across sectional tests for changes in objectives and increased competition, three principal results emerge for the labour market. First, employment fell following commercialisation and deregulation. Second, both commercialisation and deregulation appear to be associated with increases, and not decreases, in wages per worker. Finally, commercialisation is linked to improved productivity, perhaps due to the efficiency effects of a commercial management culture within the enterprise. By contrast, deregulation is correlated with reduced productivity, perhaps due to adverse competition effects.
Human development is the beginning of economic growth. The main purpose of wealth should be to enrich people’s lives, to broaden people’s choices and to enable every citizen, every child, every woman and every man to reach her or his full potential. Yet, as the experience of many countries has shown, economic growth does not automatically translate into human development. Human capital refers to the stock of productive skills and technical knowledge embodied in country’s population. A well-educated, innovative and skilled population is the foundation as well as the goal of development. It is also the surest way to eradicate poverty. The education and training systems of all the nations jeopardizes the future of millions of children and of the nation itself. This paper analyses the importance of human being resources in general and economic development in North East African States (NEAS) in particular. The study focuses that the Human capital as both the goal and the engine of economic growth, because 40 to 60 per cent of growth rates in per capita GDP can be attributed to investment in human capital and the increased productivity that results. Sustainable development cannot occur in the absence of human resource. It is also concluded that major portion of means goes for middle man and upper classed families.
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This article presents a new data set on inequality in the distribution of income. The authors explain the criteria they applied in selecting data on Gini coefficients and on individual quintile groups' income shares. Comparison of the new data set with existing compilations reveals that the data assembled here represent an improvement in quality and a significant expansion in coverage although differences in the definition of the underlying data might still affect intertemporal and international comparability. Based on this new data set the authors do not find a systematic link between growth and changes in aggregate inequality. They do find a strong positive relationship between growth and reduction of poverty. Copyright 1996 by Oxford University Press.
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