South Africa in the 21st Century

My exchange semester at Auckland University of Technology is officially over! Now I am waiting on my exam results and I am also about to head back to Germany tomorrow for the summer break. This is why today’s post is not going to be a long one. Rather I would like to share one of my research essays that I completed in my Growth and Development Economics paper at AUT.

The task was to choose one of the BRICS economies and write a research essay on their growth and development performance in the last decade. In particular, we were supposed to analyse the extent to which institutional development supported or hindered the process of economic development. The essay should include four parts: an introduction to the country, a section on growth and development trends, a section on institutional development and lastly a summary including policy implications.

I chose to focus on South Africa and I have to say that it was a very interesting assignment and it helped me significantly in developing my research skills. Doing all this research on South Africa also changed my impressions on the current state of human and economic development in the country. It has been 22 years since the end of apartheid but South Africa continues to face significant obstacles as highlighted in the essay. Despite a range of headwinds identified in the essay there is however the possibility for South Africa to regain its strength and play up to the expectations of becoming one of the future drivers of world economic growth as part of the BRICS as argued in the last part of the essay.

I hope you enjoy reading my research! The abstract of the essay is included below and complete file is available from here.

Jasse


SOUTH AFRICA IN THE 21ST CENTURY

Abstract

South Africa joined the BRICS for their 3rd BRICS Summit in 2011 after being predicted to become one of the future drivers of world economic growth. However, both in the area of economic growth and development as well as governance South Africa continues to face substantial challenges. The aim of the essay is to assess the country’s performance in these areas over the past decade. After a brief overview on South Africa the essay analyses growth and development trends with the use of the Human Development Index (HDI), the inequality adjusted HDI and the Multidimensional Poverty Index. In the second part, the essay focuses on institutional development employing the World Governance and Doing Business Indicators, as well as the Index of Economic Freedom.

The main findings are that South Africa’s economic development is impeded by sluggish growth rates and a contracting economy as well as the rising burden in fiscal debt and its servicing costs. South Africa’s society still faces racial and gender inequality as well as multidimensional poverty. The country’s potential human development in all three areas of health, education and income remains dampened by inequality which persists after the transition to a more open society and economy under the post-Apartheid regime. The country has suffered from a deterioration of institutional quality over the last years, especially in corruption coupled with an on-going underperformance in political stability. Furthermore, the ease of doing business is impeded by constraints in getting electricity and a deterioration of conditions regarding the access to credit.  A major concern is that business freedom, labour freedom and investment freedom have seen a long-term deterioration in conditions.

The essay’s policy recommendations centre on a holistic reform of South Africa’s institutional system in order to reshape incentives to invest in physical and human capital and to establish incentives for innovation. The recommendations derive from the World Bank Growth Commission’s 5 common growth ingredients of market incentives, trade openness, future orientation, macroeconomic stability and good governance with a focus on inclusive growth.


Droege, J. (2016). South Africa in the 21st Century. Auckland University of Technology, Auckland. Retrieved from https://theaspiringeconomist.files.wordpress.com/2016/05/south-africa-in-the-21st-century-jasmin-droege.pdf 

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