A critical analysis of South African economic policy / André Mellet

• Main Author: Mellet, André
• Language: en
• Published: North-West University 2014
• Subjects: Critical; Economic policy; South African
• Online Access: http://hdl.handle.net/10394/10152

The challenge of the South African government and economic policy is to achieve sustainable growth. Sufficient jobs are not being created after the political change that occurred in 1994. To address these challenges economic policy of government are analysed relative to theory, to lessons learned from East Asia (international best practice) and to recommendations of international economic organizations. This study is divided into 8 chapters. Chapter 1 comprises a general introduction to economic policy which addresses a particular economic phenomenon and explains the nature of the relationships between different economic variables, the research problem and the objectives of the study. Chapter 2 an overview of the theories of growth is described. The theories of economic policy are also described as well as a chronological outlay of all economic policies that influenced growth since the new political dispensation in 1994. In chapter 3 the first article analyses all the macroeconomic policies and reasons are sought why sufficient jobs are not being created after the 1994 political change that occurred. In chapter 4 the second article focuses on monetary policy. Against price stability as the primary objective of inflation targeting, the role of COSATU is analysed regarding the relation between inflation and growth. In chapter 5 the third article analyses the reasons for volatility and the macro prudential measures available to monetary authorities. The consequence of the 2008 financial crisis was reduced growth in the world and currency volatility. In chapter 6 the fourth article analyses the limitations in applying existing instruments to achieve financial stability. A new perspective is debated to reduce inflation to counter the negative impact of a volatile exchange rate towards economic growth. In chapter 7 the fifth article analyses the causes and challenges of high government debt created by counter cyclical fiscal policy. This high government debt neutralizes the sustainability of a stimulatory stance of fiscal policy which is needed in South Africa. In chapter 8 the conclusions and recommendations are presented about important policy aspects to ensure financial stability and sustained growth. Unemployment has always been a concern in less developed countries and the concern increased after the USA financial crisis of 2008. Probable reasons for unemployment in less developed countries are a lack of resources, a lack of capital and a lack of skills. The peculiar economic scenario of South Africa is analysed. South Africa possesses very high unemployment rates according to international standards. The probable solution is high sustainable growth. Before 1994 South Africa could not attract foreign capital to finance growth because of the prevailing political dispensation. After 1994 South Africa attracted substantial foreign capital (however volatile in nature) which did not create sustainable growth. Regardless of this bigger volatile capital inflow, national saving as a percentage of GDP continued to deteriorate. There exist numerous structural problems in the South African economy. A new and fresh viewpoint regarding the application of policies is debated to address imbalances in the economy and to create sustainable growth. The unacceptable low levels of growth and low levels of employment have to be addressed in a new manner to create long term solutions. The answer to these problems cannot be found in short term economic- and short term political activities of the authorities. The cornerstones for development are anchored in the new strategic plan of the Department of Planning. Elements of various theories, for example the Neoclassical growth model and elements of policy theories are addressed. The developments in East Asia are addressed as well as recommendations of international economic organizations. Answers are sought to create sustainable growth in South Africa. === Thesis (PhD (Economics))--North-West University, Vaal Triangle Campus, 2013