Changing factor market conditions in South Africa: The capital market – a sectoral description of the period 1970–97

Fedderke, Johannes; Kayemba, John S; Henderson, Simon; Mariotti, Martine; Vaze, Prabhat

doi:10.1080/03768350120083914

Cited by 28 publications

(23 citation statements)

References 6 publications

(6 reference statements)

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“…Distorted factor costs and particularly rising black wages over the 1980s are the most common explanations (e.g. Business South Africa, Fallon and Pereira de Silva, 1994;Fallon and Lucas, 1998;Fedderke et al, 1999;South African Foundation, 1996). A newer argument, emerging over the 1990s, has attributed much of this problem to globalization and the increasing openness of the SA economy (Bell and Cattaneo, 1997;Bhorat and Hodge, 1999).…”

Section: The Unemployment Problem In South Africamentioning

confidence: 98%

Employment promotion in a minerals economy

Altman

2001

J of Intl Development

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There is a sense of mystery and frustration that the SA economy has not grown as much as expected nor generated employment in the 1990s. GEAR incorrectly assumed that growth would be premised on foreign direct investment, which was meant to spur new value-adding industries and related clusters. It is not surprising that this did not occur. The SA economy can be characterized as a minerals economy, with a small market and low skill levels. Hence, most foreign investment is attracted to resource extraction, basic beneficiation or government-generated opportunities. There are many indications that SA suffers from the 'resource curse'. The dominance of basic minerals and metals in SA's export profile contributes to business cycle volatility, making it difficult for more employment-generating domestic market-oriented firms to expand. How can a resource-based economy shift its competitive advantage so that the composition of its domestic production and export profile reflect a higher value added? Why and how is this relevant to employment generation? Some authors argue that the promotion of higher value-added, higher productivity tradeables is inappropriate in a labour surplus economy. This paper argues that a sustainable industrial strategy in SA must rely on the development of a core of higher productivity or higher value industries: these industries are reflective of SA's cost structure and would support a dynamic or virtuous development cycle. It is the incomes and demand from these industries that support employment multipliers in the low productivity, job-creating industries. In a context of extremely high household dependency ratios and low wage elasticities, it is argued that the incomes from the high productivity core would have a more important impact on household welfare, and direct and indirect employment generation, than would a strategy that relies on a core of low wage, low productivity industries. Job creation is more likely to be found in the promotion of low productivity non-tradeables and non-traded goods and services, but the expansion of these activities will rely on the stable generation of incomes and foreign exchange from higher value tradeables. Domestically, this (or any) strategy relies on improved coordination of 'markets'. It is argued that the main supply constraints in South Africa lie in under-developed and poorly coordinated contingent markets, namely for labour and finance: this is not simply a problem related to price flexibility, but rather to the orientation of embedded institutions. In this context, an 'equilibrium' could be achieved at relatively low levels of employment. To unblock these supply constraints, and promote an integrated industry strategy, a number of policy levers are identified. In addition to improving the general investment environment, the movement from the minerals base will require a targeted technology policy and the use of 'second-best' policy tools where government leverages-in new forms of investment and behaviour. Low-productivity mass employment is suppor...

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Section: The Unemployment Problem In South Africamentioning

confidence: 98%

Employment promotion in a minerals economy

Altman

2001

J of Intl Development

View full text Add to dashboard Cite

show abstract

“…Distorted factor costs, and particularly rising black wages over the 1980s is the most common explanation (e.g. Business South Africa, Fallon and Pereira de Silva 1994, Fallon and Lucas 1998, Fedderke et al 1999, South African Foundation 1996. A newer argument, emerging over the 1990s, has attributed much of this problem to globalisation and the increasing openness of the SA economy (Bell andCattaneo 1997, Bhorat andHodge 1999).…”

Section: The Unemployment Problem In South Africamentioning

confidence: 98%

Paths to employment expansion in a minerals economy

Altman

2001

Urban Forum

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“…In the short run, real wages had a negative impact on labour productivity but not for the reverse case (Hall, 1986;Alexander, 1993 andWakeford, 2004). Fedderke and Mariotti (2002) alludes that during 1990 there was evidence of a structural break in their analysis at sectorial level. This phenomenon accrued from changes in employment and an accumulating skills intensity of production.…”

Section: Literature Reviewmentioning

confidence: 99%