Growth through re­dis­tri­bu­tion

Finweek English Edition - - Openers - Eco­nomic growth in it­self a blunt in­stru­ment against poverty re­duc­tion

THE PAN AFRICAN­IST CONGRESS’S elec­toral pledge to cit­i­zens is es­sen­tially the broad­en­ing and deep­en­ing of the own­er­ship and util­i­sa­tion of pro­duc­tive eco­nomic re­sources to pro­mote eco­nomic growth that en­sures eq­uity, the eradication of poverty and in­equal­ity and the re­duc­tion of un­em­ploy­ment. That pol­icy stance rep­re­sents the so­cial­i­sa­tion of eco­nomic own­er­ship by all cit­i­zens.

We ad­vo­cate that stance be­cause we be­lieve the fun­da­men­tal pur­pose of eco­nomic man­age­ment is the at­tain­ment of sus­tain­able hu­man de­vel­op­ment. Our eco­nomic pol­icy is cou­pled with so­cial de­vel­op­ment, as it’s taken as a crit­i­cal el­e­ment in the quest to trans­form the en­tire South African so­ci­ety into a more hu­mane one.

The party’s eco­nomic pol­icy ac­knowl­edges the fol­low­ing tru­isms: sibil­i­ties for eco­nomic growth and de­vel­op­ment (hence a re­dis­tribu­tive econ­omy). fi­cult for eco­nomic growth to trans­late to poverty re­duc­tion. ties for op­ti­mum eco­nomic growth. It’s thus taken as a fun­da­men­tal truth that eco­nomic growth per se is a blunt in­stru­ment against the re­duc­tion of poverty and in­equal­ity. As things stand, SA’s econ­omy is char­ac­terised by: em­ploy­ment growth. That’s to say, eco­nomic growth doesn’t ex­pe­ri­ence cor­re­spond­ing em­ploy­ment growth. de­clin­ing in im­por­tance (in­clud­ing the man­u­fac­tur­ing sec­tor, which has been over­taken by the ter­tiary sec­tor) and the grow­ing ex­port-ori­en­tated sec­tors are vul­ner­a­ble to in­ter­na­tional com­pe­ti­tion and be­com­ing in­creas­ing more skill-and cap­i­tal-in­ten­sive. skills cat­e­gories with no chance of im­prov­ing their lot be­cause labour- in­ten­sive sec­tors are de­clin­ing and re­trench­ing labour. The grow­ing sec­tors are be­yond their reach be­cause of their lev­els of pos­sessed skills. With such struc­tural prob­lems in mind, the PAC’s eco­nomic pol­icy pro­poses to ad­dress the struc­tural changes in the South African econ­omy through an econ­omy un­der­pinned by a growth strat­egy that will be aimed at stim­u­lat­ing and ex­pand­ing do­mes­tic de­mand, in­creas­ing op­por­tu­ni­ties for em­ploy­ment and pro­mot­ing in­dige­nous en­trepreneur­ship.

Our eco­nomic strat­egy has sev­eral com­po­nents to it. First, we also be­lieve gov­ern­ment sup­port is nec­es­sary for the de­vel­op­ment of light man­u­fac­tur­ing in­dus­tries that are labour-in­ten­sive, meet do­mes­tic de­mand and also lend them­selves to ex­ports (es­pe­cially to de­vel­op­ing coun­tries in Africa). Pro­mo­tion of free trade re­la­tions among re­gional mem­bers of SADC. Sec­ond, it’s nec­es­sary to re­po­si­tion agri­cul­tural de­vel­op­ment so it fo­cuses on the de­vel­op­ment of linked sec­tors, such as agro-pro­cess­ing and tourism and ter­tiary sub-sec­tors that sup­port agro-pro­cess­ing and tourism.

Third, we pro­pose the ef­fec­tive re­dis­tri­bu­tion of pro­duc­tive as­sets (es­pe­cially to the poor) to en­gage in eco­nom­i­cally pro­duc­tive ac­tiv­i­ties. In that re­gard we sup­port an au­dit that pro­files the as­sets of the poor and the pro­vi­sion of as­sis­tance for the poor to ir­re­versibly exit poverty and to con­trib­ute to eco­nomic pros­per­ity.

Fourth, we rec­om­mend an as­sault against mo­nop­o­lists and oli­gop­o­lists in SA’s econ­omy so as to re­move the en­try bar­rier and to in­crease com­pe­ti­tion and open up op­por­tu­ni­ties for par­tic­i­pa­tion by all, in­clud­ing new brick and mor­tar for­eign di­rect in­vest­ment.

Fifth, we sup­port cap­i­tal-in­ten­sive com­pa­nies linked to other do­mes­tic en­ter­prises – es­pe­cially small ones – in or­der to spread the ben­e­fits of up­graded tech­nol­ogy.

Sixth, we pledge sup­port for and the pro­mo­tion of net­work re­la­tion­ships among small firms and be­tween large and small firms through ap­pro­pri­ate in­cen­tives and sup­port.

Sev­enth, the pro­mo­tion and sup­port of ed­u­ca­tion be­yond pri­mary and secondary lev­els, with an em­pha­sis on tech­ni­cal skills ac­qui­si­tion.

Eight, we ad­vo­cate an ag­gres­sive in­vest­ment in so­cial and phys­i­cal in­fra­struc­ture, in con­junc­tion with the pri­vate sec­tor.

Fi­nally, the pro­vi­sion of tax in­cen­tives for job cre­ation to small and medi­um­sized firms as well as large cor­po­ra­tions.

We be­lieve the main driv­ers of eco­nomic growth in the con­text of such a re­dis­tribu­tive strat­egy should be the fol­low­ing: agrar­ian re­form, do­mes­tic man­u­fac­tur­ing, small and medium en­ter­prises, in­fra­struc­ture de­vel­op­ment, and for­eign di­rect in­vest­ment.

In a nut­shell, eco­nomic growth is ad­vanced with dis­tri­bu­tional out­comes be­ing taken into ac­count. There’s a need to en­sure the par­tic­i­pa­tion of the poor in any eco­nomic growth tra­jec­tory and an em­pha­sis on the en­hance­ment of the elas­tic­ity of poverty eradication and em­ploy­ment growth to eco­nomic growth through the use of both mar­ket and non-mar­ket ef­forts.

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