Season of Hope
With these words, economist Alan Hirsch, concludes his latest book, Season of Hope: Economic Reform under Mandela and Mbeki.
And not a moment too soon: South Africa has a relatively sound macroeconomic framework, underpinned by a sophisticated gamut of micro-economic policy interventions and is well on its way to its 6 percent growth target.
Turn the clock back to 1993 – a year before the country’s watershed democratic elections – and the picture looks starkly different. The average per capita income of whites was about 9,5 times higher than Africans. The distribution of wealth was even more unequal than income. The poorest 10 percent of the South African population received 1,1 percent of the population’s income, while the richest 10 percent received 45 percent.
In other words, the early 1990s showed the poorest economic performance since 1984.
In broad terms, it’s to the economic policy choices of the new democratic government during the first decade of democracy that Hirsch turns.
Unambiguously, the book is an appraisal rather than a critique of the development and implementation of policy decisions, or, in Hirsch’s own words, “the policy paradigm within which the ANC operates”.
Hirsch starts, typically, with an account of the evolution of economic policy, from the Reconstruction and Development Programme to the Growth, Employment and Redistribution (Gear) programme in 1996, arguing that rather than a policy shift, the push for Gear was a policy drift impelled by the objective weight of globalisation. Nothing new here.
We are then introduced more acutely to the nuances of what was evidently a homegrown rather than IMF-imposed economic policy. Again, the chapter breaks little ground other than to set the scene for yet another appraisal of the implementation of fiscal and monetary policy during the 1990s. The right policy choices, in Hirsch’s opinion, driven by considerations of sustainability and which allowed the more expansionary policies in the second five years of the ANC government. Nothing new here, too.
What follows in Chapter 4 and onwards is the subject of current policy discourse in South Africa. Hirsch ably tackles the complexity of the ANC government’s attempt to address the challenges of globalisation through trade and industrial policies and programmes. While the programmes appear to be right, leading to the desired growth rate, employment is lagging and Hirsch wonders whether this is a result of an economic restructuring process not sequenced enough to square up with real growth. Is it a question of timing, unskilled labour being too expensive, inadequate interventions to train people to meet the challenge? Or is it simply the sequencing of reforms that’s at issue?
The ANC’s push for a broad-based Black Economic Empowerment revolution is something with which Hirsch has no truck. Small business development, he contends, is critical to sustain the country’s growth and development objectives. However, the apparent impact of the country’s skills shortage and the persistence of the two-economies paradigm pose major challenges into the future. The final chapter ponders these challenges in more detail. But that’s the subject of analysis beyond this book and Hirsch might well consider a second volume to what is a deftly penned, brilliantly simple account of a rather complex issue.
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