The macroeconomic imperatives of growth, employment and redistribution [GEAR] : an analysis of investment and policy choice

• Published: 2012
• Subjects: Reconstruction and Development Programme (South Africa); South Africa - Economic policy; Economic development; Macroeconomics - South Africa
• Online Access: http://hdl.handle.net/10210/5737

M.Comm. === International studies have indicated that a high ratio of investment relative to Gross Domestic Product (GOP) is one of the most important preconditions for achieving sustainable high economic growth. For the South African economy to achieve a high employment and economic growth rate, it requires two further important factors, namely a sustained increase in productivity and an expansion of production capacity. Poor levels of investment performance, coupled with a lack of skilled labour, are the main reasons for restricted expansion in the country's growth potential and declining job opportunities. Keynes, (1936:30) argued that employment cannot increase without investment increasing, and strongly declared that the level of investment determines the level of employment. In his analysis, Keynes (1936:30) concluded that investment is a driving force for economic growth. Investment expenditure can be divided into four categories: - infrastructural investment in the public sector;- infrastructural investment in residential construction; - business fixed investment; and - the net change in the business inventories. This study examines Gross Domestic Fixed Investment and focuses mainly on private fixed investment as a driving force for economic growth for many years, GOP growth has been declining; unemployment has increased...