NO ADVERTISING, GOVERNMENT OR CORPORATE FUNDING
DONATE TODAY

  $182,720


  January 27, 2014

Extreme Inequality Drags South Africa's Economic Growth


Leonce Ndikumana: 47 percent of South Africans live in poor conditions, inevitably leading to a drag on growth in the economy
Members don't see ads. If you are a member, and you're seeing this appeal, click here
   


Audio

Share to Facebook Share to Twitter



I support The Real News Network because they do not just parrot the 24 hour news cycle of the mainst - David Pear
Log in and tell us why you support TRNN


biography

Leonce Ndikumana is Professor of economics and Director of the African Development Policy Program at the Political Economy Research Institute (www.peri.umass.edu) at the University of Massachusetts at Amherst. He is a member of the United Nations Committee on Development Policy, Commissioner on the Independent Commission for the Reform of International Corporate Taxation, a visiting Professor at the University of Cape Town, and an Honorary Professor of economics at the University of Stellenbosch, South Africa. He has served as Director of Operational Policies and Director of Research at the African Development Bank, and Chief of Macroeconomic Analysis at the United Nations Economic Commission for Africa (UNECA).


transcript

Extreme Inequality Drags South Africa's Economic GrowthJESSICA DESVARIEUX, TRNN PRODUCER: Welcome to The Real News Network. I'm Jessica Desvarieux in Baltimore.

Goldman Sachs recently released a report which examines South Africa's post-apartheid economy and the nation's role as an economic engine in Africa. But despite progress and promise, the nation remains mired in poverty and income and wealth inequality and is one of the highest in the world.

We are now joined by Léonce Ndikumana. He's a professor of economics at the University of Massachusetts Amherst and the director of the African Policy Program at PERI.

Thank you so much for joining us.

L√ČONCE NDIKUMANA, DIRECTOR, AFRICAN POLICY PROGRAM, POLITICAL ECONOMY RESEARCH INSTITUTE: Thank you very much, and thanks for the opportunity.

DESVARIEUX: So, Léonce, can you just talk to us about South Africa's role as a growth engine in Africa?

NDIKUMANA: Thank you very much.

Yes. In fact, if you look at what's happening on the continent, there is plenty of things to celebrate in terms of renewed economic dynamism in the continent. We see a private sector expanding. And also growth rates are accelerating, and even poverty declining slowly in some countries.

Now, South Africa being the largest economy on the continent--about $300 billion, which is actually about one-fourth, 25 percent of the whole continent's economy--it can be an engine of growth in several ways. One, it's a major source of investment. If you look at many African countries, you see evidence of increasing foreign direct investment from South Africa. We typically think of foreign direct investment as coming from overseas, but there is plenty of potential of intra-Africa foreign direct investment. And South Africa is a major--they play a major role in that.

The other one is that South Africa is a large market. So for countries that can actually diversify their economies and produce exportable goods, that gives them a market where they can sell, especially to countries in the region.

Third is technology. One of the constraints to diversification and economic expansion in African countries is low technological content of their production system. And South Africa on that front is much ahead. So exchange and trade with South Africa can increase the technological content of production in African countries, and that could accelerate not just growth, but also increase resilience of the economies.

DESVARIEUX: But despite all this increasing growth, it doesn't mean that it's necessarily being spread around to different sections of society, 'cause according to The New York Times, only 47 percent of South Africans remain poor, and inequality is one of the highest in the world, as I noted before. And according to the IMF, South Africa's economy will grow much slower than the rest of sub-Saharan Africa in 2014.

What is responsible for South Africa's inequality? And could it undermine South Africa's role as an economic engine and a model worth emulating by other countries?

NDIKUMANA: That's a great question. And let me start with the last part of the question, which is that the negative impact of inequality on growth prospects, yes, in any economy where you have high inequality, that can be a drag on growth [incompr.] not even talking about the negative social impact in terms of social tensions, political instability, that can arise from inequality.

But in the case of South Africa, the high inequality is attributable to a number of things. The two main things is South African economy is your typical capitalist economy, where the proceeds and the gains from growth basically accrue mostly to capital. So the owners of capital get the maximum benefits of growth and the labor gets much less.

But in the case of South Africa, you have the legacy of history, where you have a large number of--the majority of the population has not been integrated in the modern economy. We're talking about a two-economy system, where you have the modern economy with high wages, high technology, which includes a small amount of a number of the population, which is the high-skilled labor, but then the second part of the economy is the informal sector, which employs a large number of the population, mainly the blacks, unemployed--I mean, unskilled, and those have very low wages, very fragile livelihood. And what you see is a difficulty making a transition from the apartheid regime to a more democratic, inclusive system where you have the blacks integrating in the modern sector. And here education is key to making the transition.

DESVARIEUX: Alright. Léonce Ndikumana, thank you so much for joining us.

NDIKUMANA: Thank you very much.

DESVARIEUX: And thank you for joining us on The Real News Network.

End

DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.



Comments

Our automatic spam filter blocks comments with multiple links and multiple users using the same IP address. Please make thoughtful comments with minimal links using only one user name. If you think your comment has been mistakenly removed please email us at contact@therealnews.com

latest stories

Only Six Days Left in Our Summer Fundraiser. Let's Make Real News!
Standing Rock Sioux Tribe Awaits Court Ruling On Dakota Access Oil Pipeline
Turkey's Incursion into Syria Will Escalate Conflict with the Kurds
How Disenchanted Democrats and Republicans Together Can Break the Two Party Duopoly
Time is Running Out - Help Us Expose the Koch Brothers' War on Climate Science
EpiPen Prices Soar Because Our Current System Can't Restrain Profit-Seeking Corporations
Baltimore Police Defend Secret Surveillance Program
Ending Segregation in Baltimore Will Take More Than Electing Black Politicians
The Real Scandal of Clinton's Emails: Conducting Foreign Policy In Secret
More Social Programs For Ex-Prisoners Would Lower Recidivism
How Ukrainian and Russian Elite Benefit From New Flare-ups at the Border
Standing Rock Sioux Tribe Fights North Dakota Oil Pipeline
Detroit Reverend: 'Electing a Democrat Doesn't Mean You Are Safe'
Baltimore Police Union Could Thwart Planned Civilian Oversight
Brazil Moving Towards Right-wing Foreign Policy
Paul Jay on What Makes The Real News Special
Why is Emma Thompson in the Arctic?
Saudi Arabia Bombing Yemen To Quell Demonstrations for Democracy
Feds Say Locking Up the Indigent Because They Can't Pay Bail is Unconstitutional
Green Party of Canada Leader Reaffirms Leadership Following Row Over BDS
Competing While Black: Rio 2016 Olympics and Racism
The False Equivalence of 'White Lives Matter'
The Corporate Arbiters of Opinion
Brazil: A State of Economic and Political Paralysis
Labor Rights Brazenly Violated In Global 'Corporate Utopias'
Afro-Colombians Place Hope in the Peace Process
The Empire Files: Chevron vs. the Amazon - The Environmental Trial of the Century
Rattling the Bars: U.S. Prison Strikes
Imperialism, the Refugee Crisis, and the EU
The Laura Flanders Show: Free the Land: Shirley Sherrod and Black Land Struggles in the South

TheRealNewsNetwork.com, RealNewsNetwork.com, The Real News Network, Real News Network, The Real News, Real News, Real News For Real People, IWT are trademarks and service marks of Independent World Television inc. "The Real News" is the flagship show of IWT and The Real News Network.

All original content on this site is copyright of The Real News Network. Click here for more

Problems with this site? Please let us know

Linux VPS Hosting by Star Dot Hosting