Nationalising South African mines: Back to a prosperous future, or down a rabbit hole?
AbstractNationalisation is high on the policy agenda in South Africa. This paper considers the case for nationalising the local mining sector from an evidence-based perspective. The relevant evidence is derived from theoretical considerations and related to the known features of the South African mining sector and economy. A strong case against nationalisation emerges, which can be summarised as follows: The mining sector is competitive and therefore a poor candidate for public ownership. Further, the resources sector does not dominate the South African economy nor does it create the risk of Dutch Disease. Nationalising the mining sector will cost the government more than it receives. This is not only a bad idea in itself, but it will limit the scope for distributive policies on the national budget. The contemporary international experience demonstrates the risks of fiscal imprudence. Finally, nationalising the resources sector will undermine support for those very market-based institutions required to achieve a higher long-run growth trajectory.
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Bibliographic InfoPaper provided by Stellenbosch University, Department of Economics in its series Working Papers with number 17/2011.
Date of creation: 2011
Date of revision:
Nationalisation; South Africa; mining sector;
Find related papers by JEL classification:
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
- L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
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