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The Structural Change Emergency in South Africa

Author

Listed:
  • Calumn Hamilton

    (Faculty of Economics and Business, University of Groningen and Development Economics Group, Wageningen University & Research)

  • Emmanuel Mensah

    (South African Research Chair in Industrial Development, University of Johannesburg, South Africa and School of Economics, Utrecht University)

Abstract

In the decade up to 2019, South Africa underwent what may reasonably be described as a structural change emergency. Aggregate annual labour productivity growth was negative on average across the decade; this was accounted for by negative or negligible efficiency gains within all major sectors, and by growth-reducing structural change overall. Growth-reducing structural change implies that labour moved on average from more-to-less productive sectors. The underwhelming structural change and sectoral productivity growth performance of South Africa in this period stand out when compared with earlier periods in post-apartheid South Africa and in international comparison with Africa and the BRICS. Since 2020, there are green shoots of recovery, implying that the structural change emergency may be over. Nevertheless, this recovery is both non-transformative and highly unbalanced sectorally, although it is quite balanced geographically across the provinces of South Africa. The recovery is driven entirely by productivity growth or labour reallocation within, and reallocation of labour towards, the services sector. Recent evidence in the academic literature suggests that services can drive rapid growth through structural transformation, but the current situation in South Africa where non-services sectors are still acting as a drag on growth remains clearly sub-optimal. Hamilton, C., & Mensah, E. (2026). The structural change emergency in South Africa (ERSA Policy Paper No. 46). Economic Research Southern Africa. https://doi.org/10.71587/7tgeja02

Suggested Citation

  • Calumn Hamilton & Emmanuel Mensah, 2026. "The Structural Change Emergency in South Africa," ERSA Working Paper Series 300, Economic Research Southern Africa.
    • Handle: RePEc:rza:ersawp:300
    as

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    File URL: https://ersawps.org/index.php/working-paper-series/article/view/300/193
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    References listed on IDEAS

    as
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    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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