This two-year research project aims to diagnose the causes of South Africa’s economic challenges and collaborate with government and beyond to accelerate growth and include more South Africans in the process.
Growth Through Inclusion in South Africa
South Africa had experienced more than a decade of weak and slowing economic growth at the onset of the COVID-19 pandemic. The South African economy has consistently lost economic diversity and complexity over time and has faced a stagnation in domestic demand alongside loss in international competitiveness. This compounds longer-term problems of extremely high inequality, widespread unemployment, and high prevalence of poverty that South Africa has struggled to overcome since the end of apartheid. As growth has slowed, fiscal challenges and macroeconomic risks have grown. South Africa has faced the evolving pandemic from a vulnerable macroeconomic position and with deep structural challenges in its labor market.
More About This Project
This two-year research project aims to diagnose the causes of South Africa’s economic challenges and collaborate with government and beyond to accelerate growth and include more South Africans in the process of economic growth. The project is a research collaboration centered with South Africa’s National Treasury and in coordination with the Centre for Development and Enterprise (CDE), one of South Africa’s leading think tanks. The research team is engaging with national and local governments and collaborating with the South African academic and business communities. This project builds upon earlier Growth Lab research on South Africa.
As of the end of 2022, project research has led to a deeper understanding of the role of spatial issues in the structure of South Africa’s labor markets and diagnosed critical constraints as well as promising opportunities for several economic sectors. In the remaining six months of the project, the focus is on developing innovative solutions to spatial problems (through housing and transport systems and markets that connect knowhow to new places), supporting adaptation of key growth strategies and reforms, and analytical assistance on navigating macroeconomic risks and challenges.
Growth Through Inclusion Report
Growth Through Inclusion
South Africa is facing severe economic and social challenges, including weak and declining economic growth and the world’s highest inequality and unemployment. This report is the result of a two-year applied research project by the Growth Lab that worked to understand why South Africa is struggling so mightily to grow its economy and to include more South Africans, now three decades since the end of apartheid. The report offers a path forward.
Download Full Report Download Report Summary Watch Video Summary
State Capacity as a Constraint to Growth
Economic growth in South Africa is constrained by the insufficient availability of critical public goods and services essential for production. The provision of electricity, transport infrastructure (including freight rail, ports, roads, and passenger rail), water and sanitation, and security have deteriorated substantially over the last generation. This chapter explores the crises of South Africa’s electricity system and municipal government performance in depth and identifies four interacting causes of widespread state collapse.
Spatial Exclusion as a Constraint to Growth
South Africa is exceptional in its spatial patterns of economic exclusion. South Africa’s employment and unemployment rates vary enormously across geographic space. In urban areas, including major metros and secondary cities, we find that current housing policies and urban planning inadvertently exacerbate exclusion. Meanwhile, rural former homelands have been effectively left behind from the modern economy. We identify key strategies for "bridging knowhow" with these areas, which must coincide with expanding infrastructure connectivity.
Growth Through Inclusion in Summary
To reach its true economic potential, South Africa must recover state capacity and include more of its citizens. South Africa has seen its economic capabilities erode over the last two decades as public goods and services have broken down. At the same time, state strategies to empower the black population and reverse past exclusion have not overcome deep structures of spatial exclusion. New green growth opportunities are substantial but will require new strategies.
South Africa's Green Growth Potential
South Africa has a role to play in a decarbonizing world, but not merely by reducing its own emissions. South Africa has the potential to supply many of the minerals, manufactured goods, services, and innovations that the world will need to decarbonize. This chapter discusses three strategies for capitalizing on South Africa's green growth potential to develop new comparative advantages.
Publications
- Growth Through Inclusion in South Africa
- What is South Africa’s Crop Production Potential?
- Scaling Partnerships to Activate Idle Community Land in South Africa
- Search, Transport Costs, and Labor Markets in South Africa
- The Long-Run Effects of South Africa’s Forced Resettlements on Employment Outcomes
- Diagnosing Drivers of Spatial Exclusion: Places, People, and Policies in South Africa’s Former Homelands
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Podcast
In this podcast series, Ricardo Hausmann and members of the research team discuss the challenges facings South Africa including collapsing state capacity, the electricity crisis, urban planning and spatial exclusion, and opportunities for green growth.
Guests include Nomvuyo Guma, Chief Director of Microeconomic Policy at the National Treasury; Saul Musker, Director of Strategy and Delivery Support of the private office of the President; Chris Yelland, Energy Analyst; Carel Kleynhans, CEO of Divercity Property Group, and Joanne Bate, Chief Operating Officer of South Africa's Industrial Development Corporation.
This podcast series can also be found on Simplecast and Apple.
Video / Development Talks
In this video series, Growth Lab director Ricardo Hausmann discusses some of the challenges facing South Africa; delving into collapsing state capacity, the electricity crisis, spatial exclusion, and how it can regain its comparative advantage.
In this CDE Conversation, Ann Bernstein, executive director of the Centre for Development and Enterprise, hosts Ricardo Hausmann for a discussion on why South Africa is not achieving its goals, and a new route to growth and inclusion in South Africa.
In this Development Talk seminar, Ann Bernstein, executive director of the Centre for Development and Enterprise, shares her insights on South Africa's economic and social challenges, its leadership, and the potential of the private sector in driving growth.
In this Development Talk seminar, Carel Kleynhans discusses Divercity's work in the affordable housing sector and why a new vision for pro-poor urban development that is scalable and commercially viable can be an instrumental part of addressing the UN Sustainable Development Goals.
On the Ground in South Africa | March 2022
News
- Growth through inclusion: the key to unlocking SA’s economic potential
- Harvard’s Hausmann Bemoans South Africa’s ‘Lousy’ Economic Performance
- SABC News: Harvard University Report finds that South Africa is heading towards a failed state
- SA's economy continues to perform poorly: Mbeki
- Report: South Africa is performing poorly, exacerbating problems such as inequality and exclusion (Radio)
- South Africa Defined by ‘Stagnation and Exclusion,’ Harvard Says
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Tools
Atlas of Economic Complexity
Metroverse: City Profiles
Team
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