Since 1980, South Africa recorded massive budget deficits except in 2007 and 2008 when the budget surpluses as a percentage of GDP respectively stood at 0.3 per cent and 0.7 per cent. This stirred a great debate on whether budget deficits in South Africa are a result of poor governance or are due to the magnitude of the economic problems that the government seeks to alleviate. Therefore, this study examines the economic determinants of budget deficits in South Africa for the period 1980 -2010. Specifically, the study seeks to ascertain if budget deficits in South Africa are a result of the fight against economic problems. The Vector Error Correction Model (VECM) was used to determine the impact of selected macroeconomic variables on budget deficits in South Africa. The results revealed that all the determinants have a positive impact on budget deficits except for foreign debt. However, foreign reserves explain the largest component variation of budget deficit followed by foreign debt, unemployment, economic growth and government investment, in that order.
Local Economic Development entered the development lexicon in South Africa in the 1990s and from that time it has become not just an "isolated local development initiative" but an obligation for all local authorities according to a plethora of government policies and the South African Constitution of 1996. While this paper explicates the Local Economic Development episteme in South Africa, it also seeks to explore reasons for the demise of local economic development in South Africa. The paper is exploratory and descriptive in design and relied on extensive literature review. It argues that LED in South Africa suffers from both conceptual imprecision and theoretical underdevelopment. The assumption of a local economy underpinning LED is also questioned in an era of globalisation. Moreover, other challenges confronting the success of LED in the country highlighted entail lack of local government capacity for implementation, funding for LED, lack of effective planning methodologies and failure to manage participation at the local level.
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