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2022 | Buch

The Future of the South African Political Economy Post-COVID 19

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This book examines the COVID-19 pandemic through socioeconomic lens that draw on history, approaches to state-market relations, and public policy perspectives In 2020, the world experienced the worst pandemic since the outbreak of the Spanish Flu of 1918, which continues to have far[1]reaching implications for the global economy and triggered macro-economic dislocations that severely affected the most vulnerable countries and segments of society. This book was conceived as a response to the disruptive shifts induced by the pandemic, with a particular focus on South Africa. International experience has shown that countries and societies that have gone through tough economic times, either as a consequence of wars or economic depressions, have responded to crises by enacting unpopular policy measures based on difficult tradeoffs, which often made way for innovation. The authors outline policy responses to the COVID-19 crisis and propose several interventions to mitigate its effects. These include developing innovative approaches to fiscal and monetary policies, labour market policies, industrial policies, as well as social policies. Building state capabilities, improving the governance and performance of state institutions, and managing digital change are some of the clear policy interventions that are laid out in this book.

Inhaltsverzeichnis

Frontmatter
Chapter 1. Introduction: Responding to Pandemics and Economic Challenges: Policy Choices Post Covid-19
Abstract
This research project was initiated at the beginning of the COVID-19 pandemic, a time marked by significant economic and social dislocations around the world. The project considers public policy responses to the social and economic dislocations spawned by the pandemic, and identifiers opportunities for implementation of reforms that will shape the future economic policy and growth trajectory. It studies the pandemic closely and does so through a socio-economic lens that draws on history, approaches to state-market relations, and public policy perspectives. International historical experience has shown that countries and societies that have gone through tough economic times, either as a consequence of wars or economic depressions, have enacted unpopular policy measures based on difficult trade-offs, and which yielded innovation.
Mzukisi Qobo, Mills Soko, Nomfundo Xenia Ngwenya
Chapter 2. Reconstruction in the Aftermath of Global Health and Economic Crises: Historical Lessons for South Africa
Abstract
Historically, the state has played a leading role in using crises to spur social and economic change. This chapter draws lessons from different countries’ experiences of responding to health and economic crises and reflects on South Africa’s own history of responding to adversity. It examines how, at various historical points, crises have strengthened some states and led to the creation of new institutional and economic arrangements. The central objective of the chapter is to identify and draw historical lessons that South African policymakers can deploy as a framework for shaping future economic policy and strategy. It argues that crises often create pressure for collective action, expressed in the state’s activities, to ameliorate social and economic ills. In undertaking this analysis, however, context matters in enabling decision-makers to translate lessons into useful policy actions. As such, not every lesson from the past is translatable to public policy action today.
Mzukisi Qobo, Mills Soko, Nomfundo Xenia Ngwenya
Chapter 3. Building State Capacities and Dynamic Capabilities to Drive Social and Economic Development: The Case of South Africa
Abstract
One of the biggest lessons of the COVID-19 pandemic is that public sector capacity to manage a crisis of this proportion is dependent on the cumulative investments that a state has made, especially to bolster dynamic capabilities. For South Africa, an array of institutional weaknesses and governance failures at the municipal and national levels have undermined the ability of the state to deliver on its developmental mandate. Tackling grand challenges requires strengthening institutional capabilities of the state across different spheres of government, especially at the coalface of public service delivery at the local level. Our approach in this chapter places an emphasis on a different type of state: one that is characterized by innovative institutions and that embodies public value and can catalyze new types of growth.
Mariana Mazzucato, Mzukisi Qobo, Rainer Kattel
Chapter 4. COVID-19 and Beyond: Rethinking Industrial and Competition Policy
Abstract
This chapter makes an observation that in South Africa industrial and competition policies have for the most part been considered separately rather than as complementary. The chapter argues that this approach has been counterproductive. It puts forward a case for closer coordination between the two. It suggests that industrial and competition policies can be mutually reinforcing in a number of important ways. The chapter further notes that, to a significant extent, large firms have maintained market power and access to rents through barriers to entry, abuse of dominance, and political influence, rather than through investment, innovation, and dynamism. These dynamics have had the effect of constraining growth in general and downstream manufacturing in particular. Reshaping the economy and rewriting its rules such that firms are incentivized to invest and innovate, will require an ambitious industrial policy strategy in which competition policy has an important supporting role to play.
Nishal Robb, Thando Vilakazi
Chapter 5. Monetary and Fiscal Policy Challenges Posed by South Africa’s Deepening Economic Crisis and the COVID-19 Pandemic
Abstract
This chapter examined monetary and fiscal policy challenges posed by South Africa’s deepening economic crisis and the impact of the COVID-19 pandemic. It showed that fiscal policy post-2009 has clearly not yielded the desired effects. The macro-economic stability as captured by output growth and employment growth has been elusive despite the persistent widening budget deficit, increasing government debt growth and the debt-to-GDP ratio. The highly accommodative countercyclical fiscal policy has existed alongside a persistently widening negative output-gap, a declining investment-to-GDP ratio and nominal GDP growth. Factors that drive fiscal sustainability have also performed badly. The chapter has put forward the argument that because \(R\) and \(G\) lie at the center of fiscal sustainability, a combination of structural reforms that lift \(G\) and tighter co-ordination between monetary and fiscal policy that lead to a decrease in \(R\) are necessary policy interventions going forward. For tighter co-ordination between monetary and fiscal policy to be successful, a low and stable inflation environment is necessary.
Nombulelo Gumata
Chapter 6. The Short-Term Labor Marketlabor market Effects of South Africa’s National COVID-19 Lockdown
Abstract
We use representative labor force data to conduct a descriptive, empirical analysis of labor market outcomes over time on both the extensive and intensive margins to obtain a nuanced overview of how the COVID-19 pandemic and lockdown affected the South African labor market. We show that aggregate employment reduced by 2.2 million (14%) in the second quarter of 2020, however, the distribution of job loss was heavily skewed toward vulnerable groups including the youth, those with lower levels of formal education, lower-skilled workers, union non-members, and informal sector workers. We also document notable changes in the distribution of working hours and a substantial increase in economic inactivity. This latter observation is characteristic of lockdown policy which induced an inability for both job-losers and jobseekers to participate in the labor market.
Timothy Kohler, Haroon Bhorat, Robert Hill, Benjamin Stanwix
Chapter 7. Social Security and Social Protection in South Africa
Abstract
This chapter examines the rationale for an overhaul of the system of social security in South Africa, and takes account of long-term social and economic factors resulting from the COVID-19 pandemic. The COVID-19 pandemic shone a spotlight to South Africa’s lack of a comprehensive social security system. It argues that government’s responses during the pandemic have been inadequate. Further, it is essential that the government implements support measures to keep employees in their jobs, or to provide temporary relief. In addition, the government should put in place registration processes that do not just cover beneficiaries but also contributors. The core argument of the chapter is that South Africa needs to prioritize the design and implementation of a comprehensive system of social security. It sets out several recommendations on how the country’s fragmented institutions could be reconfigured to ensure that they provide better service to the public, and those who need social security and protection the most.
Alex van den Heever
Chapter 8. Repositioning State-Owned Enterprises (SOEs) and Development Finance Institutions (DFIs)
Abstract
This chapter examines three cross-cutting themes: the nature and purpose of SOEs and DFIs in South Africa’s political economy; their performance, with reference to their efficacy and ability to deliver on their developmental mandates; and in view of these considerations, how they can become more adaptive, innovative, and competitive in addressing the country’s low-growth juncture. The role of SOEs and DFIs as strategic drivers of improving citizens’ welfare takes on added importance in addressing the racialized legacies of poverty, unemployment, and inequality. The chapter provides diagnostic assessments of their vulnerabilities, financial weaknesses, and management challenges and makes recommendations for how these could be addressed.
Garth le Pere
Chapter 9. Energy Transition for Post-COVID-19 South Africa
Abstract
This chapter contends that there needs to be careful coordination and appropriate funding of the required manufacturing operations for South Africa to further increase growth. When renewable sector manufacturing is ramped up, through solar panels and all related accessories, the country has much potential to generate growth and create jobs. Importantly, such enterprises and their associated benefits could be spread across the country. Seen in this light, this sector has considerable potential for underpinning the growth revival. The chapter argues for rapid liberalization of the power generation sector, and makes some specific recommendations on the need for state institutions to coordinate better to create more value in the economy, especially to build manufacturing capacity for solar panels. The core of the chapter sets out a clear strategy for a just energy transition that delivers employment in green industries.
Iraj Abedian, Nthabiseng Tsoanamatsie
Chapter 10. Future of Energy in South Africa and Prospects for Building Regional Value Chains
Abstract
Africa is rich in energy resources but poor in its ability to exploit and use them. Many African countries face an energy crisis. Power is inaccessible, unaffordable, and unreliable for most people, trapping them in perpetual poverty. In addition, the COVID-19 pandemic has increased the triple challenges of unemployment, poverty, and inequality. The central argument of this chapter is that the problem of poverty, unemployment, and inequality in South Africa can be solved partly by a transition to renewable energy (RE). It asserts that RE policy has been ineffective and makes seven sets of recommendations: investing in energy infrastructure; technology transfers; improving access to electricity on a large scale; boosting cross-border power trade; improving the performance of existing utility companies; creating regional energy value chains; and helping countries chart low-carbon growth paths.
Hany Besada
Chapter 11. The Digital Divide in South Africa: Insights from the COVID-19 Experience and Beyond
Abstract
The COVID-19 pandemic has placed digitalization firmly on the development agenda. Although the pandemic has caused enormous social and economic devastation, it presents developing countries—particularly in Africa—with an opportunity to fast-track their plans toward a digital transition. There are binding constraints that make it harder for many developing countries to undertake this transition. These include lack of infrastructure, networks, technologies, and related skills. South Africa also finds itself in a similar bind. The digital uptake is driven by several factors such as affordability, digital literacy, and fit for purpose content as discussed in the chapter. These factors impact the pace of progress in South Africa’s digitalization efforts. The assessment of South Africa’s internet users’ profile also provides insights on why the factors impact uptake. The chapter concludes by laying out recommendations for increased connectivity and onboarding onto the broadband platforms.
Benno Ndulu, Nomfundo Xenia Ngwenya, Matlala Setlhalogile
Chapter 12. From “Crisis Compacting” to Resilient Social Contracts: Emerging Lessons from COVID-19
Abstract
This chapter unpacks the question of how COVID-19 and the crisis-driven responses to address the pandemic can contribute to wider national goals relating to forging or strengthening national social contracts—that tie bold new policy visions to robust and resilient systems and institutional arrangements. It also explores social contracts that transform harmful structural legacies and strengthen social contracts. Such social contracts are adaptive, evolve, and sustain in the face of crisis. They also hold promise for ever-greater levels of well-being for all in society. The chapter first introduces the discussion of building back better from crisis, and how social contract framing can support these aims. Two sets of cases and evidence are then considered: what drives resilient social contracts on the one hand, and what drives successful COVID-19 responses on the other. A synthesis analysis of how the two can be pursued simultaneously is then put forth.
Erin McCandless
Chapter 13. Conclusion: Building a Resilient State and Inclusive Society
Abstract
There are several global historical lessons that South African policymakers can deploy as a framework for shaping the future economic policy and growth trajectory. The most significant lesson is that the state has a central role to play in tackling health and economic crises, and in laying the foundation for post-crisis reconstruction. The South African government can exploit the COVID-19 emergency to enact long-delayed structural reforms to reverse the country’s economic stagnation and propel a new post-COVID-19 growth path. To do this, however, will require significant improvements in state capacities across the different spheres of government. There are policy options that are open to the South African state today in the realms of public health, national innovation, institutional capabilities, economic reform as well as community interventions.
Mzukisi Qobo, Mills Soko, Nomfundo Xenia Ngwenya
Backmatter
Metadaten
Titel
The Future of the South African Political Economy Post-COVID 19
herausgegeben von
Mzukisi Qobo
Mills Soko
Nomfundo Xenia Ngwenya
Copyright-Jahr
2022
Electronic ISBN
978-3-031-10576-0
Print ISBN
978-3-031-10575-3
DOI
https://doi.org/10.1007/978-3-031-10576-0

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