Foreign direct investment, institutions and economic growth in the selected Southern African Development Community (SADC) countries
- Authors: Onceya, Siyabulela
- Date: 2023-06
- Subjects: Investments, Foreign -- Africa, Southern , Southern African Development Community -- Economic conditions , Economic development -- Africa, Southern
- Language: English
- Type: Doctoral theses , text
- Identifier: http://hdl.handle.net/10353/28672 , vital:74497
- Description: Examining the relationship between economic growth and foreign direct investment (FDI) has been a subject of discussion for many researchers, economists, and policy analysts mainly in developing regions. It is important to note that, recent literature highlights that there are other country-specific conditions such as state of institutions which are important in attracting FDI inflows into a country. Given this, the study analysed the relationship between FDI, institutions and economic growth in the Southern African Development Community (SADC) for the period 1990- 2020. The analysis was carried out at both cross- country (2010 to 2018) and individual country level (1990 to 2018). The main objectives of the study were to review the trends of FDI inflow into the region, institutional framework, and trends economic growth in the region as well as member countries. Secondly, to analyse the impact of FDI inflow and institutions on economic growth in the selected SADC countries. Thirdly, to examine how institutions and other factors determine the amount of FDI inflow to the selected SADC countries an provide policy recommendations. Existing literature has documented the relationship between FDI and economic growth. However, the significance of this study is that it provides an analysis of the impact of FDI inflows on economic growth in the SADC region at both cross-country and country specific level. At cross- country level, the Generalized Methods of Moments (GMM) was utilized as the estimation technique. The empirical results revealed that there exists a positive relationship between FDI and economic growth both in the short run and long run. The results also revealed that institutions in combination with financial sector development have a positive effect on economic growth in the SADC region. This gives support to the complimentary view of the importance of institutions and financial sector development as important factors determining the extent to which FDI influences economic growth. Guided by economic theory which suggests that there is a two-way relationship between FDI and economic growth, granger causality tests were performed to check the direction of effect between the two variables. The empirical results revealed that there is a bi-directional relationship between FDI, institutions and economic growth. This in a way suggest that the past values of each of the variables, explains the current values of the other variables. On the other hand, at country level, utilising the Autoregressive Distributed Lag model, empirical results revealed that the effects of FDI and institutions on economic growth is positive and significant. However, this was not found to be the case for Mauritius and Namibia. Given the significant role played by FDI in promoting economic growth, the study also investigated the factors determining the inflow of FDI into the SADC region focusing on the role played by institutions and other factors utilising GMM technique. The empirical results revealed that, in addition to institutions, financial development, infrastructure, and education also play an important role in determining the inflow of FDI into these countries. To a greater extent the same findings were also established at country level. Of great importance the study recommends that at a country level, countries should develop and adopt policies that strengthen good governance and sound institutions. These policies must be implemented and monitored to attract more FDI both in the short-run and long-run. , Thesis (DCom) -- Faculty of Management and Commerce, 2023
- Full Text:
- Date Issued: 2023-06
- Authors: Onceya, Siyabulela
- Date: 2023-06
- Subjects: Investments, Foreign -- Africa, Southern , Southern African Development Community -- Economic conditions , Economic development -- Africa, Southern
- Language: English
- Type: Doctoral theses , text
- Identifier: http://hdl.handle.net/10353/28672 , vital:74497
- Description: Examining the relationship between economic growth and foreign direct investment (FDI) has been a subject of discussion for many researchers, economists, and policy analysts mainly in developing regions. It is important to note that, recent literature highlights that there are other country-specific conditions such as state of institutions which are important in attracting FDI inflows into a country. Given this, the study analysed the relationship between FDI, institutions and economic growth in the Southern African Development Community (SADC) for the period 1990- 2020. The analysis was carried out at both cross- country (2010 to 2018) and individual country level (1990 to 2018). The main objectives of the study were to review the trends of FDI inflow into the region, institutional framework, and trends economic growth in the region as well as member countries. Secondly, to analyse the impact of FDI inflow and institutions on economic growth in the selected SADC countries. Thirdly, to examine how institutions and other factors determine the amount of FDI inflow to the selected SADC countries an provide policy recommendations. Existing literature has documented the relationship between FDI and economic growth. However, the significance of this study is that it provides an analysis of the impact of FDI inflows on economic growth in the SADC region at both cross-country and country specific level. At cross- country level, the Generalized Methods of Moments (GMM) was utilized as the estimation technique. The empirical results revealed that there exists a positive relationship between FDI and economic growth both in the short run and long run. The results also revealed that institutions in combination with financial sector development have a positive effect on economic growth in the SADC region. This gives support to the complimentary view of the importance of institutions and financial sector development as important factors determining the extent to which FDI influences economic growth. Guided by economic theory which suggests that there is a two-way relationship between FDI and economic growth, granger causality tests were performed to check the direction of effect between the two variables. The empirical results revealed that there is a bi-directional relationship between FDI, institutions and economic growth. This in a way suggest that the past values of each of the variables, explains the current values of the other variables. On the other hand, at country level, utilising the Autoregressive Distributed Lag model, empirical results revealed that the effects of FDI and institutions on economic growth is positive and significant. However, this was not found to be the case for Mauritius and Namibia. Given the significant role played by FDI in promoting economic growth, the study also investigated the factors determining the inflow of FDI into the SADC region focusing on the role played by institutions and other factors utilising GMM technique. The empirical results revealed that, in addition to institutions, financial development, infrastructure, and education also play an important role in determining the inflow of FDI into these countries. To a greater extent the same findings were also established at country level. Of great importance the study recommends that at a country level, countries should develop and adopt policies that strengthen good governance and sound institutions. These policies must be implemented and monitored to attract more FDI both in the short-run and long-run. , Thesis (DCom) -- Faculty of Management and Commerce, 2023
- Full Text:
- Date Issued: 2023-06
Financial sector development, financial innovation and economic growth: case of a selected SADC countries
- Mpukumpa, Siphosethu https://orcid.org/0000-0001-7342-8751
- Authors: Mpukumpa, Siphosethu https://orcid.org/0000-0001-7342-8751
- Date: 2023-04
- Subjects: Financial services industry -- Africa, Southern , Investments -- Africa, Southern , Economic development -- Africa, Southern
- Language: English
- Type: Master's theses , text
- Identifier: http://hdl.handle.net/10353/26852 , vital:66036
- Description: The financial sector plays a pivotal role in an economy of a country; hence the importance of financial sector development cannot be underestimated. Financial sector development is widely regarded as another conduit through which financial innovation and economic growth can be alleviated. The study firstly empirically examines the effect of financial sector development on financial innovation and also the impact of financial sector development and financial innovation on economic growth in selected Southern African Development Community (SADC) countries, employing the Generalized Method of Moments (GMM) technique for the period 1990 to 2020. Empirical results revealed that financial sector development overall does have an impact on financial innovation in the selected SADC countries. And also, financial sector development together with financial innovation does have an impact on economic growth in the selected SADC countries. However, on the relationship between financial system stability, financial innovation and economic growth, results reveal that a stable financial system is beneficial to new technological advancement and improved economic growth. Therefore, the overall findings from the study indicate that financial access or financial inclusion and financial stability is what increases financial innovation and boosts economic growth instead of mere financial sector development at a broader level. , Thesis (MCom) -- Faculty of Management and Commerce, 2023
- Full Text:
- Date Issued: 2023-04
- Authors: Mpukumpa, Siphosethu https://orcid.org/0000-0001-7342-8751
- Date: 2023-04
- Subjects: Financial services industry -- Africa, Southern , Investments -- Africa, Southern , Economic development -- Africa, Southern
- Language: English
- Type: Master's theses , text
- Identifier: http://hdl.handle.net/10353/26852 , vital:66036
- Description: The financial sector plays a pivotal role in an economy of a country; hence the importance of financial sector development cannot be underestimated. Financial sector development is widely regarded as another conduit through which financial innovation and economic growth can be alleviated. The study firstly empirically examines the effect of financial sector development on financial innovation and also the impact of financial sector development and financial innovation on economic growth in selected Southern African Development Community (SADC) countries, employing the Generalized Method of Moments (GMM) technique for the period 1990 to 2020. Empirical results revealed that financial sector development overall does have an impact on financial innovation in the selected SADC countries. And also, financial sector development together with financial innovation does have an impact on economic growth in the selected SADC countries. However, on the relationship between financial system stability, financial innovation and economic growth, results reveal that a stable financial system is beneficial to new technological advancement and improved economic growth. Therefore, the overall findings from the study indicate that financial access or financial inclusion and financial stability is what increases financial innovation and boosts economic growth instead of mere financial sector development at a broader level. , Thesis (MCom) -- Faculty of Management and Commerce, 2023
- Full Text:
- Date Issued: 2023-04
Effectiveness of monetary policy transmission mechanism: the case of selected SADC countries
- Tengwa, Anakho https://orcid.org/0000-0002-0700-8668
- Authors: Tengwa, Anakho https://orcid.org/0000-0002-0700-8668
- Date: 2022-12
- Subjects: Monetary policy -- Africa, Southern , Transmission mechanism (Monetary policy) -- Africa, Southern , Economic development -- Africa, Southern
- Language: English
- Type: Master's theses , text
- Identifier: http://hdl.handle.net/10353/26863 , vital:66037
- Description: Monetary policy plays a significant role in countries economic development. The variability in inflation in the SADC region provides room to question the Effectiveness of the transmission of monetary policy as these countries experience inflation in different ways. The study analyses the effectiveness of monetary policy transmission mechanism on the selected 5 SADC countries, South Africa, Botswana, Mauritius, Tanzania, and Zambia. The selection of the countries was mainly based on data availability. To answer the study hypothesis, the study used secondary data from different data sources, employing the Vector Autoregression Regression. The different channels analysed include the exchange rate, interest rates as well as credit channel to measure monetary policy tools. The main variables are, Gross Domestic Product (GDP), Consumer Price Index (CPI)cpi and money supply. Panel unit root was tested to test the stationarity of the variables and the appropriate lag length was determined. Panel VAR model was estimated where the focus was mainly on variance decomposition and impulse response. Then lastly the stability of the model was tested using diagnostic test. The results revealed that interest rates channel and exchange rate channel have a more significant effect in explaining the transmission of macroeconomic shock to the rest of the economy through gpd and cpi. While the credit channel mostly transmits to the rest of the economy through money supply and cpi, its effects from GDP are rather insignificant. It is also noted that interest rates serve as the dominant channel in transmitting monetary policy shocks to the rest of the economy. When central banks decrease prime lending rates for commercial banks, this is passed to consumers making it less expensive to borrow. In the long run, attracts foreign investors which harms the domestic currency. The author has noted that future research could focus on how asset price channel affects the economy. , Thesis (MCom) -- Faculty of Management and Commerce, 2022
- Full Text:
- Date Issued: 2022-12
- Authors: Tengwa, Anakho https://orcid.org/0000-0002-0700-8668
- Date: 2022-12
- Subjects: Monetary policy -- Africa, Southern , Transmission mechanism (Monetary policy) -- Africa, Southern , Economic development -- Africa, Southern
- Language: English
- Type: Master's theses , text
- Identifier: http://hdl.handle.net/10353/26863 , vital:66037
- Description: Monetary policy plays a significant role in countries economic development. The variability in inflation in the SADC region provides room to question the Effectiveness of the transmission of monetary policy as these countries experience inflation in different ways. The study analyses the effectiveness of monetary policy transmission mechanism on the selected 5 SADC countries, South Africa, Botswana, Mauritius, Tanzania, and Zambia. The selection of the countries was mainly based on data availability. To answer the study hypothesis, the study used secondary data from different data sources, employing the Vector Autoregression Regression. The different channels analysed include the exchange rate, interest rates as well as credit channel to measure monetary policy tools. The main variables are, Gross Domestic Product (GDP), Consumer Price Index (CPI)cpi and money supply. Panel unit root was tested to test the stationarity of the variables and the appropriate lag length was determined. Panel VAR model was estimated where the focus was mainly on variance decomposition and impulse response. Then lastly the stability of the model was tested using diagnostic test. The results revealed that interest rates channel and exchange rate channel have a more significant effect in explaining the transmission of macroeconomic shock to the rest of the economy through gpd and cpi. While the credit channel mostly transmits to the rest of the economy through money supply and cpi, its effects from GDP are rather insignificant. It is also noted that interest rates serve as the dominant channel in transmitting monetary policy shocks to the rest of the economy. When central banks decrease prime lending rates for commercial banks, this is passed to consumers making it less expensive to borrow. In the long run, attracts foreign investors which harms the domestic currency. The author has noted that future research could focus on how asset price channel affects the economy. , Thesis (MCom) -- Faculty of Management and Commerce, 2022
- Full Text:
- Date Issued: 2022-12
Financial liberalisation and economic growth in SADC countries
- Authors: Moyo, Clement Zibusiso
- Date: 2015
- Subjects: Southern African Development Community , Economic development -- Africa, Southern
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/5748 , vital:20995
- Description: Attaining high levels of economic growth and development has been one the goals of the Southern African Development Community (SADC). This paper investigates the relationship between financial liberalisation and economic growth in SADC countries. Annual data for the 15 SADC countries for the period 1985-2011 was used to develop a fixed effect model, generalised method of moments (GMM) as well as the fully-modified OLS (FMOLS) cointegration test. The results revealed that there is a positive relationship between financial liberalisation and economic growth in SADC but there is no long-run relationship between the two variables. It is recommended that the SADC adopt measures to increase the level of financial openness in the region in order to increase economic growth but this policy should be supplemented by other growth enhancing policies in order to increase economic growth over the long-term. However, prior to the increase in the level of financial openness, well-defined property rights and a sound regulatory framework should be in place to monitor the financial liberalisation process in order to avoid financial crises.
- Full Text:
- Date Issued: 2015
- Authors: Moyo, Clement Zibusiso
- Date: 2015
- Subjects: Southern African Development Community , Economic development -- Africa, Southern
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: http://hdl.handle.net/10948/5748 , vital:20995
- Description: Attaining high levels of economic growth and development has been one the goals of the Southern African Development Community (SADC). This paper investigates the relationship between financial liberalisation and economic growth in SADC countries. Annual data for the 15 SADC countries for the period 1985-2011 was used to develop a fixed effect model, generalised method of moments (GMM) as well as the fully-modified OLS (FMOLS) cointegration test. The results revealed that there is a positive relationship between financial liberalisation and economic growth in SADC but there is no long-run relationship between the two variables. It is recommended that the SADC adopt measures to increase the level of financial openness in the region in order to increase economic growth but this policy should be supplemented by other growth enhancing policies in order to increase economic growth over the long-term. However, prior to the increase in the level of financial openness, well-defined property rights and a sound regulatory framework should be in place to monitor the financial liberalisation process in order to avoid financial crises.
- Full Text:
- Date Issued: 2015
The impact of economic freedom on economic growth in the SADC
- Authors: Gorlach, Vsevolod Igorevich
- Date: 2014
- Subjects: Free enterprise -- Africa, Southern , Economic development -- Africa, Southern , Africa, Southern -- Economic conditions
- Language: English
- Type: Thesis , Doctoral , DCom
- Identifier: vital:9030 , http://hdl.handle.net/10948/d1020786
- Description: The role of institutions – economic freedom – is a critical determinant of economic growth, yet the global distribution of economic freedom is skewed. Economic freedom focuses on personal choice, the ability to make voluntary transactions, the freedom to compete and the security of property rights. The SADC is attempting to alleviate poverty and achieve sustainable development and economic growth. This thesis illustrates that economic freedom, in aggregate, and on an individual component basis, drives economic growth. The annual data for the 12 SADC counties from 2000 to 2009 are used to construct a panel data model to conduct the empirical analyses. Cross-sectional effects, as well as time (period) effects, are valid; and thus, a two-way error-component model is estimated. The Hausman test showed the regressors to be endogenous and correlated with the error term. The Pesaran CD test, suitable for dynamic panels, determined that cross-sections are interdependent; and the cross-correlation coefficient indicated a relatively weak, yet substantial, correlation. The LSDV two-way error-component model is re-estimated using the Driscoll and Kraay standard errors and time-demeaned data to correct for cross-sectional dependence. Given the endogeneity between the idiosyncratic disturbance term and the regressors, the presence of heteroskedasticity and serial correlation, as well as the interdependence amongst the cross-sections, the econometric model is then estimated using the two-step system general method of moments with forward orthogonal deviations – instead of differencing. The results meet all the post-estimation diagnostic requirements: the Arellano and Bond test for second-order serial correlation fails to reject the null hypothesis of no autocorrelation; theSargan test for over-identification fails to reject the null hypothesis that the over-identification restrictions are valid, and the difference-in-Hansen test fails to reject the null hypothesis that the instrument subsets are strictly exogenous. The empirical results confirm the a priori expectations. Economic freedom is a positive and significant driver of economic growth. Investment and economic openness are positively related to growth, whereas government debt decreases growth. Government consumption is an insignificant driver of a country’s growth. The Granger causality test confirmed the direction of causality; economic freedom precedes economic growth; and it is possible for the SADC to improve their growth rates by becoming economically freer. The coefficient of adjustment derived from the error-correction model indicates that the dynamic system takes approximately two years to adjust to the long-run structural level. The Koyck Transformation indicates that the relationship between economic freedom and growth is intertemporal, requiring a lag structure. An impulse-response function shows that a permanent, positive ‘shock’ to economic freedom results in an increase in economic growth, although the extent differs for each country, as well as for the different freedom components. The five individual economic freedom components are all highly significant and positive drivers of growth; however, the magnitude of the elasticity parameters varies. The causality amongst the components indicates that bidirectional causality is present. Therefore, improving economic freedom in one area improves economic freedom in another, creating a multiplier effect.
- Full Text:
- Date Issued: 2014
- Authors: Gorlach, Vsevolod Igorevich
- Date: 2014
- Subjects: Free enterprise -- Africa, Southern , Economic development -- Africa, Southern , Africa, Southern -- Economic conditions
- Language: English
- Type: Thesis , Doctoral , DCom
- Identifier: vital:9030 , http://hdl.handle.net/10948/d1020786
- Description: The role of institutions – economic freedom – is a critical determinant of economic growth, yet the global distribution of economic freedom is skewed. Economic freedom focuses on personal choice, the ability to make voluntary transactions, the freedom to compete and the security of property rights. The SADC is attempting to alleviate poverty and achieve sustainable development and economic growth. This thesis illustrates that economic freedom, in aggregate, and on an individual component basis, drives economic growth. The annual data for the 12 SADC counties from 2000 to 2009 are used to construct a panel data model to conduct the empirical analyses. Cross-sectional effects, as well as time (period) effects, are valid; and thus, a two-way error-component model is estimated. The Hausman test showed the regressors to be endogenous and correlated with the error term. The Pesaran CD test, suitable for dynamic panels, determined that cross-sections are interdependent; and the cross-correlation coefficient indicated a relatively weak, yet substantial, correlation. The LSDV two-way error-component model is re-estimated using the Driscoll and Kraay standard errors and time-demeaned data to correct for cross-sectional dependence. Given the endogeneity between the idiosyncratic disturbance term and the regressors, the presence of heteroskedasticity and serial correlation, as well as the interdependence amongst the cross-sections, the econometric model is then estimated using the two-step system general method of moments with forward orthogonal deviations – instead of differencing. The results meet all the post-estimation diagnostic requirements: the Arellano and Bond test for second-order serial correlation fails to reject the null hypothesis of no autocorrelation; theSargan test for over-identification fails to reject the null hypothesis that the over-identification restrictions are valid, and the difference-in-Hansen test fails to reject the null hypothesis that the instrument subsets are strictly exogenous. The empirical results confirm the a priori expectations. Economic freedom is a positive and significant driver of economic growth. Investment and economic openness are positively related to growth, whereas government debt decreases growth. Government consumption is an insignificant driver of a country’s growth. The Granger causality test confirmed the direction of causality; economic freedom precedes economic growth; and it is possible for the SADC to improve their growth rates by becoming economically freer. The coefficient of adjustment derived from the error-correction model indicates that the dynamic system takes approximately two years to adjust to the long-run structural level. The Koyck Transformation indicates that the relationship between economic freedom and growth is intertemporal, requiring a lag structure. An impulse-response function shows that a permanent, positive ‘shock’ to economic freedom results in an increase in economic growth, although the extent differs for each country, as well as for the different freedom components. The five individual economic freedom components are all highly significant and positive drivers of growth; however, the magnitude of the elasticity parameters varies. The causality amongst the components indicates that bidirectional causality is present. Therefore, improving economic freedom in one area improves economic freedom in another, creating a multiplier effect.
- Full Text:
- Date Issued: 2014
The development of the stock market and its effect on economic growth: the case of SADC
- Authors: Elliott, Kevin Andrew
- Date: 2009
- Subjects: Stocks -- Africa, Southern , Stock exchanges -- Africa, Southern , Economic development -- Africa, Southern , Stocks -- Economic aspects -- Africa, Southern
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:967 , http://hdl.handle.net/10962/d1002701 , Stocks -- Africa, Southern , Stock exchanges -- Africa, Southern , Economic development -- Africa, Southern , Stocks -- Economic aspects -- Africa, Southern
- Description: Using a pooled panel data set from nine developing countries within the SADC region from 1992 to 2004, this paper empirically examines; firstly, the relationship between stock market development and long-term economic growth, and secondly, the macroeconomic determinants of stock market development, particularly market capitalisation as a percentage of GDP. The results suggest that there is a strong link between stock market development and economic growth, particularly through the liquidity provided by the market. The evidence obtained lends support to the view that a well-developed and functioning stock market can boost economic growth by enhancing faster capital accumulation and allowing for better resource allocation, particularly in developing countries. In terms of the macroeconomic determinants of stock market development, the results support those of Garcia and Liu (1999), in that we found the indicators of financial intermediary development, the value of shares traded as a percentage of GDP and the macroeconomic instability variable to be important determinants of stock market development.
- Full Text:
- Date Issued: 2009
- Authors: Elliott, Kevin Andrew
- Date: 2009
- Subjects: Stocks -- Africa, Southern , Stock exchanges -- Africa, Southern , Economic development -- Africa, Southern , Stocks -- Economic aspects -- Africa, Southern
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:967 , http://hdl.handle.net/10962/d1002701 , Stocks -- Africa, Southern , Stock exchanges -- Africa, Southern , Economic development -- Africa, Southern , Stocks -- Economic aspects -- Africa, Southern
- Description: Using a pooled panel data set from nine developing countries within the SADC region from 1992 to 2004, this paper empirically examines; firstly, the relationship between stock market development and long-term economic growth, and secondly, the macroeconomic determinants of stock market development, particularly market capitalisation as a percentage of GDP. The results suggest that there is a strong link between stock market development and economic growth, particularly through the liquidity provided by the market. The evidence obtained lends support to the view that a well-developed and functioning stock market can boost economic growth by enhancing faster capital accumulation and allowing for better resource allocation, particularly in developing countries. In terms of the macroeconomic determinants of stock market development, the results support those of Garcia and Liu (1999), in that we found the indicators of financial intermediary development, the value of shares traded as a percentage of GDP and the macroeconomic instability variable to be important determinants of stock market development.
- Full Text:
- Date Issued: 2009
The Rural poor, the private sector and markets: changing interactions in southern Africa
- University of the Western Cape, Programme for Land and Agrarian Studies
- Authors: University of the Western Cape, Programme for Land and Agrarian Studies
- Date: 2003-08
- Subjects: Economic development -- Africa, Southern , Africa, Southern -- Economic Policy , Poor -- Africa, Southern , Sustainable development -- Africa, Southern
- Language: English
- Type: text , book
- Identifier: http://hdl.handle.net/10962/74448 , vital:30303 , 1868085783
- Description: One of the central tenets of much current development thinking in southern Africa is that market-oriented strategies and private sector involvement must be the basis for future economic growth. This has underpinned structural adjustment and economic policy reform policies in the region over the last decade or more. It also underlies the argument for encouraging external foreign direct investment (FDI) as a motor for growth. However growing evidence suggests that such a strategy has not paid off. Economic growth rates have been disappointing, private, and particularly foreign, investment has been limited, and employment in the formal sector has fallen dramatically.1 Structural adjustment and market liberalisation have clearly not delivered the developmental benefits claimed of them, and people's livelihood opportunities have, ft seems, declined over the same period and their levels of vulnerability have increased. The increasing recognition that the standard neo-liberal prescriptions were not having the expected benefits, especially for poor people, has resulted in some rethinking about how best to redirect the benefits of globalisation and economic reform towards the poor, and how to offset some of the losses. Thus ‘pro-poor growth strategies’, ‘making markets work for the poor’ and ‘growth for redistribution' have become well-worn slogans. However, the practical and policy measures required, whereby the benefits of an engagement with a globalised economy, investment by the private sector and liberalisation privatisation measures can result in poverty reduction, remain vague.A number of issues arise. For the sceptics, questions are raised about the degree to which the turn to a 'pro-poor' markets approach is simply rhetorical gloss, added to the discredited neo-liberal paradigm, or actually a genuinely new policy perspective in its own right. It is important to differentiate between broad economic policy reform objectives (which, with some nuances, remain largely in the standard neo-liberal form) and sectoral policies which contain explicitly pro-poor elements. While retaining the argument that market liberalisation and external investment are key, such policies may include some strategic elements of state- directed intervention which boost the access of the poor to new markets and investment opportunities. It is this stance, where the state intervenes to improve access and for particular groups of people, redressing to some extent the imbalances caused by the lack of level playing fields of existing markets, which potentially sets a pro-poor perspective apart.
- Full Text:
- Date Issued: 2003-08
- Authors: University of the Western Cape, Programme for Land and Agrarian Studies
- Date: 2003-08
- Subjects: Economic development -- Africa, Southern , Africa, Southern -- Economic Policy , Poor -- Africa, Southern , Sustainable development -- Africa, Southern
- Language: English
- Type: text , book
- Identifier: http://hdl.handle.net/10962/74448 , vital:30303 , 1868085783
- Description: One of the central tenets of much current development thinking in southern Africa is that market-oriented strategies and private sector involvement must be the basis for future economic growth. This has underpinned structural adjustment and economic policy reform policies in the region over the last decade or more. It also underlies the argument for encouraging external foreign direct investment (FDI) as a motor for growth. However growing evidence suggests that such a strategy has not paid off. Economic growth rates have been disappointing, private, and particularly foreign, investment has been limited, and employment in the formal sector has fallen dramatically.1 Structural adjustment and market liberalisation have clearly not delivered the developmental benefits claimed of them, and people's livelihood opportunities have, ft seems, declined over the same period and their levels of vulnerability have increased. The increasing recognition that the standard neo-liberal prescriptions were not having the expected benefits, especially for poor people, has resulted in some rethinking about how best to redirect the benefits of globalisation and economic reform towards the poor, and how to offset some of the losses. Thus ‘pro-poor growth strategies’, ‘making markets work for the poor’ and ‘growth for redistribution' have become well-worn slogans. However, the practical and policy measures required, whereby the benefits of an engagement with a globalised economy, investment by the private sector and liberalisation privatisation measures can result in poverty reduction, remain vague.A number of issues arise. For the sceptics, questions are raised about the degree to which the turn to a 'pro-poor' markets approach is simply rhetorical gloss, added to the discredited neo-liberal paradigm, or actually a genuinely new policy perspective in its own right. It is important to differentiate between broad economic policy reform objectives (which, with some nuances, remain largely in the standard neo-liberal form) and sectoral policies which contain explicitly pro-poor elements. While retaining the argument that market liberalisation and external investment are key, such policies may include some strategic elements of state- directed intervention which boost the access of the poor to new markets and investment opportunities. It is this stance, where the state intervenes to improve access and for particular groups of people, redressing to some extent the imbalances caused by the lack of level playing fields of existing markets, which potentially sets a pro-poor perspective apart.
- Full Text:
- Date Issued: 2003-08
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