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Why isn't South Africa growing faster? Microeconomic evidence from a firm survey

Author

Listed:
  • George Clarke

    (The World Bank, Washington, DC, USA)

  • James Habyarimana

    (Georgetown University, Washington, DC, USA)

  • David Kaplan

    (University of Cape Town, Cape Town, South Africa)

  • Vijaya Ramachandran

    (Georgetown University, Washington, DC, USA)

Abstract

The investment levels in South Africa have remained relatively low despite an overall picture of economic stability and good governance. This analysis looks at South Africa's investment climate, using data from an Investment Climate Survey (ICS) of over 800 firms conducted by the Department of Trade and Industry and the World Bank. It suggests that exchange rate instability and the cost of crime may be deterrents to investment. But more importantly, labour regulations may be discouraging firms from entering labour-intensive areas. Labour costs are also high, especially for skilled workers. Efforts to improve worker skills are crucial for raising human capital levels and reducing the cost of skilled labour. Copyright © 2008 John Wiley & Sons, Ltd.

Suggested Citation

  • George Clarke & James Habyarimana & David Kaplan & Vijaya Ramachandran, 2008. "Why isn't South Africa growing faster? Microeconomic evidence from a firm survey," Journal of International Development, John Wiley & Sons, Ltd., vol. 20(7), pages 837-868.
    • Handle: RePEc:wly:jintdv:v:20:y:2008:i:7:p:837-868
    DOI: 10.1002/jid.1417
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    References listed on IDEAS

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    1. Hinkle, Lawrence E. & Monteil, Peter J. (ed.), 1999. "Exchange Rate Misalignment: Concepts and Measurement for Developing Countries," OUP Catalogue, Oxford University Press, number 9780195211269.
    2. Johannes Fedderke & Yongcheol Shin & Prabhat Vaze, 2003. "Trade, Technology and Wage Inequality in the South African Manufacturing Sectors," Edinburgh School of Economics Discussion Paper Series 106, Edinburgh School of Economics, University of Edinburgh.
    3. Pencavel, John, 1995. "The role of labor unions in fostering economic development," Policy Research Working Paper Series 1469, The World Bank.
    4. Moll, Peter G., 1993. "Industry wage differentials and efficiency wages : A dissenting view with South African evidence," Journal of Development Economics, Elsevier, vol. 41(2), pages 213-246, August.
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    Cited by:

    1. Kevin S. Nell & Maria M. De Mello, 2015. "Testing Capital Accumulation-Driven Growth Models in a Multiple-Regime Framework: Evidence from South Africa," CEF.UP Working Papers 1501, Universidade do Porto, Faculdade de Economia do Porto.
    2. Clarke George R, 2011. "Are Managers' Perceptions of Constraints to Growth Reliable? Evidence from a Natural Experiment in South Africa," Journal of Globalization and Development, De Gruyter, vol. 2(1), pages 1-28, August.
    3. Florian Misch & Norman Gemmell & Richard Kneller, 2008. "Business Perceptions, Fiscal Policy and Growth," Discussion Papers 08/10, University of Nottingham, CREDIT.

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