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Understanding South Africa's Economic Puzzles

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  • Rodrick, Dani

    (Harvard U)

Abstract

South Africa has undergone a remarkable transformation since its democratic transition in 1994, but economic growth and employment generation have been disappointing. Most worryingly, unemployment is currently among the highest in the world. While the proximate cause of high unemployment is that prevailing wages levels are too high, the deeper cause lies elsewhere, and is intimately connected to the inability of the South African to generate much growth momentum in the past decade. High unemployment and low growth are both ultimately the result of the shrinkage of the non-mineral tradable sector since the early 1990s. The weakness in particular of export-oriented manufacturing has deprived South Africa from growth opportunities as well as from job creation at the relatively low end of the skill distribution. Econometric analysis identifies the decline in the relative profitability of manufacturing in the 1990s as the most important contributor to the lack of vitality in that sector. [Jointly published as Center for International Development Working Paper No. 130 and KSG Faculty Research Working Paper Series RWP06-039.]

Suggested Citation

  • Rodrick, Dani, 2006. "Understanding South Africa's Economic Puzzles," Working Paper Series rwp06-039, Harvard University, John F. Kennedy School of Government.
    • Handle: RePEc:ecl:harjfk:rwp06-039
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    References listed on IDEAS

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    1. Abhijit Banerjee & Sebastian Galiani & Jim Levinsohn & Zoë McLaren & Ingrid Woolard, 2008. "Why has unemployment risen in the New South Africa?1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 16(4), pages 715-740, October.
    2. Lawrence Edwards & Robert Lawrence, 2006. "South African Trade Policy Matters: Trade Performance & Trade Policy," Growth Lab Working Papers 14m, Harvard's Growth Lab.
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    Cited by:

    1. Makino, Kumiko, 2008. "The Changing Nature of Employment and the Reform of Labor and Social Security Legislation in Post-Apartheid South Africa," IDE Discussion Papers 140, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    2. Philippe Aghion & Johannes Fedderke & Peter Howitt & Chandana Kularatne & Nicola Viegi, 2008. "Testing Creative Destruction in an Opening Economy : the Case of the South African Manufacturing Inudstries," Documents de Travail de l'OFCE 2008-23, Observatoire Francais des Conjonctures Economiques (OFCE).

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