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Developmental State
Leon Louw25 July 2012
FW de Klerk
Foundation
Background
RDP
GEAR
ASGISA
NEPAD
NGP
IDP
Provincial programmes
Local government programmes
etc
• Pre-Polokwane (2007): NDR etc
• Not Freedom Charter
• Polokwane:
• Decent jobs (not jobs per se)
• Reducing poverty
• Spurring rural development
• Land reform
• Improving health, education, public service
delivery
• Cutting crime
• Creating economic growth
Background
Zuma:
‘The key to achieving these priorities will be
the building of an effective, developmental
state.’
Background
• Proclaims monumental failure
• Curious references to Asian Tigers, BRIC
• Special Economic Zones (SEZs)
• Lack of reference to rapidly developing
countries, especially Africa
Developmental State: Government “plays an
active role in guiding economic development
and using the resources of the country to meet
the needs of the people … tries to balance
economic growth and social development …
uses resources and state influence to attack
poverty and expand economic opportunities”.
Definitions
Developmental State:
• ‘Greater role for government’
• More government ownership and control
• More:
• consumption of wealth
• Inefficiency
• corruption
• patronage
• Less:
• Wealth
• Efficiency
• freedom
Definitions
• Some detailed, most amorphous
• Much is extreme
• NHI = NHN
• Land
• Mining
• Finance
• Dependency etc
• Intensely racial
• Related pernicious myths:
• Lack of transformation
• China
• Financial crisis
Developmental State
• Development: Improvement in
welfare, quality of life, well-being; satisfying
needs and wants (socio-economic indicators)
• Socio-economic development: measured
with indicators such as GDP, life
expectancy, literacy, employment … and less-
tangible factors such as personal
dignity, freedom of association, personal
safety, participation in civil society.
• Economic growth: Increase in value of
goods and services produced (GDP)
Definitions
Sustainable development: Development that
meets the needs of the present without
compromising the ability of future generations to
meet their own needs (mainly environmental
indicators)
Definitions
Economic development: sustained concerted
actions of policymakers and communities that
promote the standard of living and economic
health … the quantitative and qualitative
changes in the economy … human
capital, infrastructure, competitiveness, environ
mental sustainability, social
inclusion, health, safety, literacy, and other
initiatives. Differs from economic growth …
policy intervention …
Definitions
250 indices of conditions; 150 of policies eg:
• Access to safe water, housing, infrastructure
• Access to internet
• Cars, doctors etc p.c.
• Crime; Corruption
• Food and energy consumption
• Health, life expectancy, obesity etc
• Literacy and higher education
• Clean and safe environment
• Personal satisfaction and welfare
• Environmental sustainability
Development Indicators
Wealth means ‘Everything' is better
0
10
20
30
40
50
60
70
80
90
100
1g 5g 10g 15g 20g 39g 35g 40g 45g
Wealth ($ GDP pc)
'Eve
ryth
ing
'
Wealthier is more Literate
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Poor Rich
Illite
racy
Wealthier is more Developed (UN-HDI)
0
0.2
0.4
0.6
0.8
1
Hu
man
develo
pm
en
t
Poor Rich
Wealthier and Cleaner
20%
40%
60%
80%
100%
1 2 3 4 5 6 7 8 9 10% p
eo
ple
wit
h s
an
ita
tio
n
Poor Rich
Wealth and Safer (purified water)
50%
60%
70%
80%
90%
100%
1 2 3 4 5 6 7 8 9 10
% p
eo
ple
wit
h s
afe
wa
ter
Poor Rich
Wealthier is Healthier (life expectancy)
30
40
50
60
70
80
1 2 3 4 5 6 7 8 9 10
Lif
e e
xp
ecta
ncy
Poor Rich
Wealthier is Happier
0
1
2
3
4
5
6
7
8
9
10
1g 5g 10g 15g 20g 39g 35g 40g 45g
Ha
pp
ine
ss
Poor Rich
How to be wealthy?
= grow!
20:20 Analysis
How?
Economic freedom and wealth
0
5,000
10,000
15,000
20,000
Unfree 2 4 Free
GD
P p
er
cap
ita (
US
$)
Quintiles3
Economic freedom and growth
-2%
-1%
0%
1%
2%
3%
Unfree 2 3 4 Free
GD
P g
row
th p
er
cap
ita
Economic freedom and ‘poverty’
10
15
20
25
30
35
40
45
Unfree 2 3 4 Free
Hu
ma
n P
ov
ert
y In
de
x
Economic freedom and equality(0 = equality; 100 = inequality)
35
37
39
41
43
45
Unfree 2 3 4 Free
‘Gin
i’ c
oeff
icie
nt
Freedom and corruption
1
2
3
4
5
6
7
8
Low 4 3 2 High
Co
rru
pti
on
10
= c
orr
up
t, 0
= n
ot
co
rru
pt
Freedom and investment
$0
$1,000
$2,000
$3,000
$4,000
$5,000
Low 2 3 4 High
Rule of law
Investm
en
tp
er
ca
pit
a
Freedom and child labour
0
3
6
9
12
15
18
21
Low 4 3 2 High
Pe
rce
nta
ge
of c
hild
ren
(10
-14
)
in la
bo
ur
forc
e
Freedom and political stability
-1.5
-1.0
-0.5
0
0.5
1.0
1.5
Low 4 3 2 High
Po
liti
calS
tab
ilit
y(2
00
4)
-2.5
=lo
w;
2.5
=h
igh
Freedom and unemployment
5
6
7
8
9
10
11
12
13
Low 4 3 2 High
Un
em
plo
ym
en
t(%
of
tota
l la
bo
ur
forc
e, 2
00
0-2
00
2)
Predicted values
Ob
serv
ed
va
lues
-0.1
-0.06
-0.02
0.02
0.06
0.1
0.14
-0.06 -0.04 -0.02 0 0.02 0.04 0.06
Growth vs. freedom + change
Freedom
and
Change
Change
Freedom
-0.091-0.083-0.074-0.065-0.057-0.048-0.039-0.031-0.022-0.013-0.0050.0040.0130.0210.0300.038
Gro
wth
0.14
0.1
0.06
0.02
-0.02
-0.06
2.5
1.5
0.060.02
-0.02
-0.0623
45
67
89
10
Growth vs. freedom + change
Growth & changeGrowth & EFW
0%
NDP
All-embracing; ambitious
‘South Africa can eliminate poverty and
reduce inequality by 2030’
440 pages; 15 Chapters
Development Indicators
Diagnostic Overview
Requires big changes, lacks specifics
(to be addressed in submissions)
Obtuse references to labour policy reform
5,4% growth needs ‘very low-income
employment, survivalist activities and
public employment schemes’
Bargaining that’s ‘conducive to
investment’
Employment
Poverty and Inequality
Chapters
1. Key drivers of change
2. Demographic trends
3. Economy and employment
4. Economic infrastructure
5. Transitioning to a low carbon economy
6. Inclusive rural economy
7. Positioning South Africa in the world
8. Human settlements
9. Improving education, innovation and
training
Chapters
10. Promoting health
11. Social protection
12. Building safer communities
13. Building a capable state
14. Promoting accountability and fighting
corruption
15. Transforming society and uniting the
country
Confused responses
‘Zille gives NDP the nod’
‘NPC to ignore DA's statement’
NGP vs NDP vs DS!
No reference to key global
indices/determinants
‘The longer-term solution to
skewed ownership is to grow
the economy rapidly enough to
focus on spreading
opportunities for black people’
NDP ‘Transformation’
Eg ‘financial inclusion’
Hayek: Government can do more
for the people by doing less
Louw: When things are in the
hands of the state they’re in a hell
of a state
Conclusion
End