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Institutions, market constellations and growth: The case of South Africa

  • Arne Heise

    (University of Hamburg Faculty of Economic and Social Sciences Department of Economics and Politics)

Post-apartheid South Africa is facing three major economic problems: (1) slack economic growth, (2) high and growing unemployment and (3) among the world¡¯s highest income inequality and poverty indices. South Africa is currently caught in a macro-economic straight-jacket of tight monetary, restrictive fiscal and a wage policy stance that raises NAIRU. The persistence of a sub-optimal ¡®market constellation¡¯ is created by an institutional setting of a non-accommodative Reserve Bank, a sectoral-regional and company level noncoordinated collective bargaining system, an austere ¡®sound finance regime¡¯ of public budgeting and the lack of any institution to co-ordinate macro-economic policy. To tailor a better fitting constellation, a social contract involving major reforms in macro-economic governance in South Africa is proposed.

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Article provided by Society for AEF in its journal Annals of Economics and Finance.

Volume (Year): 8 (2007)
Issue (Month): 2 (November)
Pages: 313-340

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Handle: RePEc:cuf:journl:y:2007:v:8:i:2:p:313-340
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  1. Arne Heise, 2006. "Market Constellations and Macroeconomic Policymaking: Institutional Impacts on Economic Performance," Intereconomics: Review of European Economic Policy, Springer, vol. 41(5), pages 272-281, September.
  2. Janine Aron & John Muellbauer, 2002. "Interest rate effects on output: evidence from a GDP forecasting model for South Africa," CSAE Working Paper Series 2002-04, Centre for the Study of African Economies, University of Oxford.
  3. Jeffrey Frankel & Ben Smit & Federico Sturzenegger, 2008. "South Africa: Macroeconomic challenges after a decade of success," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 16(4), pages 639-677, October.
  4. Aron, Janine, 2000. "Growth and Institutions: A Review of the Evidence," World Bank Research Observer, World Bank Group, vol. 15(1), pages 99-135, February.
  5. Stephen P. Dunn, 2000. "Wither Post Keynesianism?," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 22(3), pages 343-364, April.
  6. Kevin S. Nell, 2000. "Is Low Inflation a Precondition for Faster Growth? The Case of South Africa," Studies in Economics 0011, School of Economics, University of Kent.
  7. Robert Pollin & Gerald Epstein & James Heintz & Léonce Ndikumana, 2006. "An Employment-targeted Economic Programme for South Africa," Country Study 1, International Policy Centre for Inclusive Growth.
  8. Arne Heise, 2002. "Optimal Public Debts, Sustainable Deficits, and Budgetary Consolidation," Empirica, Springer, vol. 29(4), pages 319-337, December.
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