Economic scenarios for South Africa: A business perspective

Daedalus

Volumn 130, Issue 1, 2001, Pages 71-98

  Boyd, Leslie ^a   Spicer, Michael ^b   Keeton, Gavin ^b  

^a ANGLO AMERICAN PLC   (United Kingdom)

^b Anglo American Corporation of South African Limited   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0005884560     PISSN: 00115266     EISSN: 15486192     Source Type: Journal    
DOI: None     Document Type: Review

References (23)

1. The October Household Surveys (Statistics South Africa, 1999 October Household Survey, August 2000) found an official unemployment rate in 1996 of 19.3 percent and an expanded unemployment rate (which includes those who have not looked for work in the past four weeks) of 33.0 percent. By 1999, official unemployment had risen to 23.3 percent and the expanded unemployment rate to 36.2 percent.
2. Martin Wolf, "Spreading South Africa's Wealth," Financial Times, 14 March 2000, 13.
3. See, for example, World Bank, The East Asian Miracle: Economic Growth and Public Policy (New York: Oxford University Press, 1993).
4. Mancur Olson, "Distinguished Lecture on Economics in Government - Big Bills Left on the Sidewalk: Why Some Nations are Rich, and Others Poor," Journal of Economic Perspectives 10 (2) (Spring 1996): 3-24.
5. Mancur Olson, Journal of Economic Perspectives Ibid., 20-21.
6. The South African government's formal response to these economic policy challenges was set out in its macroeconomic strategy document, Growth, Employment and Redistribution: A Macroeconomic Strategy (GEAR), published by the department of finance, June 1996, Johannesburg.
7. In terms of the EU agreement, tariffs on 86 percent of South Africa's industrial exports to the EU are to be fully liberalized on implementation and by year six only 1 percent will be subject to duties. Only 62 percent of agricultural exports will be duty-free by 2010. In turn, 89 percent of industrial imports from the EU will be liberalized over twelve years, with 62 percent reduced to zero on implementation. Tariffs on 81 percent of agricultural imports will be fully liberalized by 2012.
8. The current situation regarding exchange controls is as follows: No restrictions for nonresidents. Resident individuals may invest abroad a total of R 750,000 per adult, and foreign travel allowances have been raised to R 130,000 per annum per individual older than twelve years. Resident financial institutions may invest up to 15 percent (20 percent for unit trusts) of total assets offshore by means of asset swaps and 10 percent of their annual net inflow of funds up to the 20 percent limits. Companies may invest up to R 250 million per new investment in Southern African Development Community countries and R 50 million per new investment elsewhere. On application, corporates may finance up to 10 percent of approved new foreign investments where this exceeds the current limits.
9. Statistics South Africa, 1999 October Household Survey, August 2000.
10. RSA National Assembly, Medium Term Budget Policy Statement 2000, 30 October 2000.
11. Andrew Levy and Associates, Quarterly Wage Settlement Surveys. These surveys mainly measure settlements in larger unionized businesses.
12. Encouragingly, data from Statistics South Africa (Survey of Average Monthly Earnings, August 2000) suggest that average earnings were growing at a more modest 6.4 percent by the end of 1999.
13. Reducing inflation expectations after three decades of double-digit inflation is not easy. This is illustrated by a recent example in which the condition in a multiyear wage agreement that provided for wage negotiations to reopen if inflation fell below an agreed 8-5.5 percent band was triggered by the trade union concerned. Headline inflation was below 5.5 percent and the union used this to demand wage increases higher than had been agreed.
14. In August of 2000 the government announced some modest amendments to this legislation, including making easier the retrenchment of workers within the first six months of employment, ending double pay on Sundays, and allowing more flexibility in negotiating working hours. This package must, however, still be negotiated with business and labor. The government's determination in standing up to labor's already expressed hostility to changes will be a key test of its understanding and resolve in addressing the remaining constraints to higher economic growth and employment creation.
15. Statistics South Africa, Labor Statistics: Survey of Total Employment and Earnings, monthly.
16. Labor Statistics: Survey of Total Employment and Earnings Ibid.
17. National Association of Automobile Manufacturers of South Africa, Quarterly Review of Business Conditions, November 1999.
18. Arithmetically, the surplus/deficit on the current account of the balance of payments is the difference between what a country invests and what it saves. It is a truism that South Africa will have a current account deficit that must be funded by foreign capital inflows if its level of investment rises above its low level of domestic savings.
19. Bobby Godsell and Jim Buys, "Growth and Poverty: Towards Some Shared Goals," in Robert Schrire, ed., Wealth or Poverty? Critical Choices for South Africa (Cape Town: Oxford University Press, 1992), 635-656.
20. This section draws heavily upon our Anglo American colleagues, Godsell and Buys, "Growth and Poverty."
21. Joan M. Nelson, "Organized Labour, Politics and Labour Market Flexibility in Developing Countries," World Bank Research Observer 6 (1) (January 1991): 37-56.
22. Joan M. Nelson, World Bank Research Observer Ibid., 53.
23. Joan M. Nelson, World Bank Research Observer 53 Ibid.