Zach Dubrof - South African Economic Policies

In this blog I would like to focus on recent economic policies instituted in South Africa. Following the end of apartheid in South Africa, many had high hopes for a successful economic and cultural transformation. Instead, twenty years after reforms were implemented, the country’s economic progress has disappointing. Income inequality is among the highest in the world, education is one of the worst in the world, unemployment is around 25% and real GDP growth is stagnate at around 1%. This has been the result of severely contradictory economic policies. The first contradiction is South America’s institution of multiple economic policy doctrines at the same time. The majority of these policies are interventionist, not market friendly, and supportive of a developmental state, while others, such as the National Development Plan, are market friendly and emphasize and efficient delivery state.

The other key policy contradiction is that many of these doctrines are built on assumptions that are not necessarily true. For example, some of the industrial and trade policies instituted in South Africa make proposals about development without accounting for the country’s severe deficiency in electricity supply. On a similar note, part of the country’s industrial policy looks to stop commodities trading in favor localized resources. However, this proposal completely ignores how energy intensiveness of harvesting local resources. For a country with a serious energy shortage, this is a troublesome oversight. For South Africa to get back on track, its policymakers must create policies based on more realistic assessments of its situation. Current policies were almost based on a dreamlike conception of what South Africa could have been following apartheid. This must change for South Africa to regain its position as Africa’s number one economy.