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Understanding South Africa's Economic Puzzles

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  • Dani Rodrik

Abstract

South Africa has undergone a remarkable transformation since its democratic transition in 1994, but economic growth and employment generation have been disappointing. Most worryingly, unemployment is currently among the highest in the world. While the proximate cause of high unemployment is that prevailing wages levels are too high, the deeper cause lies elsewhere, and is intimately connected to the inability of the South African to generate much growth momentum in the past decade. High unemployment and low growth are both ultimately the result of the shrinkage of the non-mineral tradable sector since the early 1990s. The weakness in particular of export-oriented manufacturing has deprived South Africa from growth opportunities as well as from job creation at the relatively low end of the skill distribution. Econometric analysis identifies the decline in the relative profitability of manufacturing in the 1990s as the most important contributor to the lack of vitality in that sector.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12565.

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Date of creation: Oct 2006
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Publication status: published as Dani Rodrik, 2008. "Understanding South Africa's economic puzzles ," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 16(4), pages 769-797, October.
Handle: RePEc:nbr:nberwo:12565

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  1. Ricardo Hausmann & Jason Hwang & Dani Rodrik, 2005. "What You Export Matters," NBER Working Papers 11905, National Bureau of Economic Research, Inc.
  2. Murray Leibbrandt & James Levinsohn & Justin McCrary, 2005. "Incomes in South Africa Since the Fall of Apartheid," NBER Working Papers 11384, National Bureau of Economic Research, Inc.
  3. Abhijit Banerjee & Sebastian Galiani & Jim Levinsohn & Zo� McLaren & Ingrid Woolard, 2008. "Why has unemployment risen in the New South Africa?," The Economics of Transition, The European Bank for Reconstruction and Development, The European Bank for Reconstruction and Development, vol. 16(4), pages 715-740, October.
  4. Hausmann, Ricardo & Rodrik, Dani, 2003. "Economic development as self-discovery," Journal of Development Economics, Elsevier, Elsevier, vol. 72(2), pages 603-633, December.
  5. Geeta Kingdon & John Knight, 2004. "Unemployment in South Africa: the nature of the beast," Labor and Demography, EconWPA 0409003, EconWPA.
  6. Rodrik, Dani, 2004. "Industrial Policy for the Twenty-First Century," Working Paper Series, Harvard University, John F. Kennedy School of Government rwp04-047, Harvard University, John F. Kennedy School of Government.
  7. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output Per Worker Than Others?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 114(1), pages 83-116, February.
  8. Robert Pollin & Gerald Epstein & James Heintz & Léonce Ndikumana, 2006. "An Employment-targeted Economic Programme for South Africa," Country Study, International Policy Centre for Inclusive Growth 1, International Policy Centre for Inclusive Growth.
  9. Lawrence Edwards & Robert Lawrence, 2008. "South African trade policy matters," The Economics of Transition, The European Bank for Reconstruction and Development, The European Bank for Reconstruction and Development, vol. 16(4), pages 585-608, October.
  10. Lawrence Edwards & Robert Z. Lawrence, 2006. "South African Trade Policy Matters: Trade Performance and Trade Policy," NBER Working Papers 12760, National Bureau of Economic Research, Inc.
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Cited by:
  1. Ronald Ravinesh Kumar & Radika Kumar, 2012. "Exploring sectoral elasticity vis-�-vis per worker income with a focus to agriculture: a study of Sub-Saharan Africa," African Journal of Economic and Sustainable Development, Inderscience Enterprises Ltd, vol. 1(1), pages 27-48.
  2. Go, Delfin S. & Kearney, Marna & Korman, Vijdan & Robinson, Sherman & Thierfelder, Karen, 2009. "Wage subsidy and labor market flexibility in south Africa," Policy Research Working Paper Series 4871, The World Bank.
  3. Jørn Rattsø & Hildegunn E. Stokke, 2009. "Trade barriers to growth in South Africa: Endogenous investment-productivity-trade interaction," DEGIT Conference Papers, DEGIT, Dynamics, Economic Growth, and International Trade c014_010, DEGIT, Dynamics, Economic Growth, and International Trade.
  4. Duncan Hodge, 2012. "The Exchange Rate, Dutch Disease and Manufacturing in South Africa: What do the Data Say?," Working Papers 281, Economic Research Southern Africa.
  5. Kucera, David & Roncolato, Leanne & von Uexkull, Erik, 2012. "Trade Contraction and Employment in India and South Africa during the Global Crisis," World Development, Elsevier, Elsevier, vol. 40(6), pages 1122-1134.
  6. Tsangyao Chang & Beatrice D. Simo-Kengne & Rangan Gupta, 2013. "The Causal Relationship between Exports and Economic Growth in the Nine Provinces of South Africa: Evidence from Panel-Granger Causality Tests," Working Papers 201319, University of Pretoria, Department of Economics.
  7. Pauw, Karl & Leibbrandt, Murray, 2012. "Minimum Wages and Household Poverty: General Equilibrium Macro–Micro Simulations for South Africa," World Development, Elsevier, Elsevier, vol. 40(4), pages 771-783.
  8. Asjaha, T.A. & Jooste, Andre, 2007. "The Effect of Monetary Changes on Relative Agricultural Prices," Agrekon, Agricultural Economics Association of South Africa (AEASA), Agricultural Economics Association of South Africa (AEASA), vol. 46(4), December.
  9. Makino, Kumiko, 2008. "The Changing Nature of Employment and the Reform of Labor and Social Security Legislation in Post-Apartheid South Africa," IDE Discussion Papers, Institute of Developing Economies, Japan External Trade Organization(JETRO) 140, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  10. Bhattacharya, Rudrani & Patnaik, Ila, 2013. "Credit constraints, productivity shocks and consumption volatility in emerging economies," Working Papers, National Institute of Public Finance and Policy 13/121, National Institute of Public Finance and Policy.
  11. Francesca Giubilo, 2010. "What Could be the Future of South Africa After National Elections on 22 April 2009?," Transition Studies Review, Springer, Springer, vol. 16(4), pages 948-961, February.
  12. Kucera, David & Roncolato, Leanne & von Uexkull, Erik, 2010. "Trade contraction in the global crisis : employment and inequality effects in India and South Africa," ILO Working Papers, International Labour Organization 459401, International Labour Organization.
  13. Rattsø, Jørn & Stokke, Hildegunn E., 2012. "Trade policy in a growth model with technology gap dynamics and simulations for South Africa," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 36(7), pages 1042-1056.
  14. Isaacs, Gilad, 2014. "The myth of “neutrality” and the rhetoric of “stability”: macroeconomic policy in democratic South Africa," MPRA Paper 54426, University Library of Munich, Germany.
  15. Rudrani Bhattacharya & Ila Patnaik, 2013. "Credit Constraints, Productivity Shocks and Consumption Volatility in Emerging Economies," IMF Working Papers 13/120, International Monetary Fund.
  16. Alice Fabre & Stéphane Pallage, 2013. "Child Labor, Idiosyncratic Shocks, and Social Policy," Working Papers, HAL halshs-00913666, HAL.
  17. Johannes Fedderke, 2012. "The Cost of Rigidity: The Case of the South African Labor Market," Working Papers 290, Economic Research Southern Africa.

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