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Growth Policies
Carolyn Chisadza
University of Pretoria
February 2017
C Chisadza (University of Pretoria) February 2017 1 / 18
Introduction
Why are some countries rich and others poor?Growth models =) investment (physical and human) =)technology =) opennessWhy do some countries invest more than others? Why do peoplein some countries spend more time learning new technologies?Several explanations include geography, culture, historicaladvantages in technologyA key explanation is found in the quality of institutions =)growth policies
C Chisadza (University of Pretoria) February 2017 2 / 18
What’s the big fuss??
What are growth policies? Why should we care about policies?Lead to sustained growth =) alleviate povertyPromote macroeconomic stability (fiscal and monetary policies)Protects citizens =) intellectual property rightsEncourages industrialisation, opennessMakes administrative governments accountable and so on...
C Chisadza (University of Pretoria) February 2017 3 / 18
Policy ingredients of Growth Strategies (M. Spence -World Bank Report ’08)
There is no right model for policy making because each country isdifferent.BUT there is a general framework with guidelines to formulatingpolicies (it is not a question of simply copying the characteristicsof high-growth countries)Policy ingredients of growth strategies in a country -accumulation, innovation, allocation, stabilisation and inclusion.
C Chisadza (University of Pretoria) February 2017 4 / 18
Policy ingredients of Growth Strategies
Accumulation - public investment (infrastructure, education,health), capital flows, FDI, productivityInnovation / imitation - adopt and learn to use new technologiesAllocation - efficient distribution of resources (capital and labour)Stabilisation - macroeconomic stability (fiscal and monetarypolicies =) taxes, inflation, interest rates, debt)Financial developmentInclusion - equal opportunity across gender, race, minorities.
C Chisadza (University of Pretoria) February 2017 5 / 18
13 success economies identified in the report that had highsustained growth in postwar period6 continued to high income levelsOthers lost growth momentum
C Chisadza (University of Pretoria) February 2017 6 / 18
C Chisadza (University of Pretoria) February 2017 7 / 18
What should policymakers be targeting
-50
510
gdpg
r
1960 1970 1980 1990 2000 2010t
EU SSA
GDP growth (annual)
010
000
2000
030
000
gdpc
ap
1960 1970 1980 1990 2000 2010t
EU SSA
GDP per capita
01.
0e+1
22.0
e+12
3.0e
+12
inve
stm
ent
1960 1970 1980 1990 2000 2010t
EU SSA
Investment (% of Gdp)10
1520
25
savi
ngs
1960 1970 1980 1990 2000 2010t
EU SSA
Savings (% of GDP)
4050
6070
8090
trade
1960 1970 1980 1990 2000 2010t
EU SSA
Trade (% of GDP)
5060
7080
9010
0
prim
aryt
otal
1960 1970 1980 1990 2000 2010t
EU SSA
Primary completion
C Chisadza (University of Pretoria) February 2017 8 / 18
What should policymakers be targeting (M. Spence -World Bank Report ’08)
C Chisadza (University of Pretoria) February 2017 9 / 18
What should policymakers be targeting (M. Spence -World Bank Report)
C Chisadza (University of Pretoria) February 2017 10 / 18
What should policymakers be targeting (M. Spence -World Bank Report ’08)
C Chisadza (University of Pretoria) February 2017 11 / 18
What should policymakers be targeting
Continued support in education attainments.Diversifying primary exportsIncreasing investments in infrastructure to support agriculturalproductivity growthRethink channeling of aid into AfricaEncourage savings across classes of citizensAdopt best practices in exploitation of natural resources tochannel rents into growth promoting activities (The ExtractiveIndustries Transparency Initiative).
C Chisadza (University of Pretoria) February 2017 12 / 18
Policy syndromes that mitigate growth (Fosu 2012)
state controlsstate breakdown (conflict)adverse redistribution - favour gvt leaderssub-optimal resource allocation
C Chisadza (University of Pretoria) February 2017 13 / 18
South African government policies since 1994
RDP - Reconstruction and development programme (inception1994)GEAR - Growth, Employment and Redistribution framework(inception 1996)AsgiSA - The Accelerated and Shared Growth Initiative for SouthAfrica (inception 2004)NGP - The New Growth Path (inception 2010)NDP - The National Development Plan 2030 (inception 2010)
C Chisadza (University of Pretoria) February 2017 14 / 18
National Development Plan 2030
Demographic trends (demographic dividends, migration,mortality)Economy and employment (challenges and creation)Economy infrastructure (access to water, electricity, sanitation,housing, public transport)Environmental sustainabilityFighting corruption, building a capable state
C Chisadza (University of Pretoria) February 2017 15 / 18
NDP contd.
Integrated and inclusive rural economyPositioning S.A in the world economy (regional, BRICS)Education, innovation and trainingHealthTransformation and uniting country
C Chisadza (University of Pretoria) February 2017 16 / 18
Group presentation - Outline
contributes to the 10% class work indicated on study guideOne week to prepare 20 min presentation on selected growthstrategies in South AfricaHighlight challenges / issues raised with regards to the sectorHighlight solutions suggestedPolicy(ies) implemented to target / address the problemIs policy working or not? Why? What would be your suggestion?Formulate your own policy recommendation if necessary?Be prepared to answer questions from mock Parliament?
C Chisadza (University of Pretoria) February 2017 17 / 18
Group presentation - Topics
Youth unemploymentEducationHealthRural developmentAccess to housing, electricity, transport, water and sanitationGlobal integrationGovernance and transparencyBBBEE policy (who is brave enough to tackle this??)
C Chisadza (University of Pretoria) February 2017 18 / 18