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Developmental State
Leon Louw25 July 2012
FW de Klerk
Foundation
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Background
RDP
GEAR
ASGISA
NEPAD
NGP
IDP
Provincial programmes
Local government programmes
etc
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• Pre-Polokwane (2007): NDR etc
• Not Freedom Charter
• Polokwane:
• Decent jobs (not jobs per se)
• Reducing poverty
• Spurring rural development
• Land reform
• Improving health, education, public service
delivery
• Cutting crime
• Creating economic growth
Background
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Zuma:
‘The key to achieving these priorities will be
the building of an effective, developmental
state.’
Background
• Proclaims monumental failure
• Curious references to Asian Tigers, BRIC
• Special Economic Zones (SEZs)
• Lack of reference to rapidly developing
countries, especially Africa
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Developmental State: Government “plays an
active role in guiding economic development
and using the resources of the country to meet
the needs of the people … tries to balance
economic growth and social development …
uses resources and state influence to attack
poverty and expand economic opportunities”.
Definitions
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Developmental State:
• ‘Greater role for government’
• More government ownership and control
• More:
• consumption of wealth
• Inefficiency
• corruption
• patronage
• Less:
• Wealth
• Efficiency
• freedom
Definitions
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• Some detailed, most amorphous
• Much is extreme
• NHI = NHN
• Land
• Mining
• Finance
• Dependency etc
• Intensely racial
• Related pernicious myths:
• Lack of transformation
• China
• Financial crisis
Developmental State
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• Development: Improvement in
welfare, quality of life, well-being; satisfying
needs and wants (socio-economic indicators)
• Socio-economic development: measured
with indicators such as GDP, life
expectancy, literacy, employment … and less-
tangible factors such as personal
dignity, freedom of association, personal
safety, participation in civil society.
• Economic growth: Increase in value of
goods and services produced (GDP)
Definitions
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Sustainable development: Development that
meets the needs of the present without
compromising the ability of future generations to
meet their own needs (mainly environmental
indicators)
Definitions
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Economic development: sustained concerted
actions of policymakers and communities that
promote the standard of living and economic
health … the quantitative and qualitative
changes in the economy … human
capital, infrastructure, competitiveness, environ
mental sustainability, social
inclusion, health, safety, literacy, and other
initiatives. Differs from economic growth …
policy intervention …
Definitions
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250 indices of conditions; 150 of policies eg:
• Access to safe water, housing, infrastructure
• Access to internet
• Cars, doctors etc p.c.
• Crime; Corruption
• Food and energy consumption
• Health, life expectancy, obesity etc
• Literacy and higher education
• Clean and safe environment
• Personal satisfaction and welfare
• Environmental sustainability
Development Indicators
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Wealth means ‘Everything' is better
0
10
20
30
40
50
60
70
80
90
100
1g 5g 10g 15g 20g 39g 35g 40g 45g
Wealth ($ GDP pc)
'Eve
ryth
ing
'
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Wealthier is more Literate
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Poor Rich
Illite
racy
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Wealthier is more Developed (UN-HDI)
0
0.2
0.4
0.6
0.8
1
Hu
man
develo
pm
en
t
Poor Rich
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Wealthier and Cleaner
20%
40%
60%
80%
100%
1 2 3 4 5 6 7 8 9 10% p
eo
ple
wit
h s
an
ita
tio
n
Poor Rich
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Wealth and Safer (purified water)
50%
60%
70%
80%
90%
100%
1 2 3 4 5 6 7 8 9 10
% p
eo
ple
wit
h s
afe
wa
ter
Poor Rich
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Wealthier is Healthier (life expectancy)
30
40
50
60
70
80
1 2 3 4 5 6 7 8 9 10
Lif
e e
xp
ecta
ncy
Poor Rich
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Wealthier is Happier
0
1
2
3
4
5
6
7
8
9
10
1g 5g 10g 15g 20g 39g 35g 40g 45g
Ha
pp
ine
ss
Poor Rich
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How to be wealthy?
= grow!
20:20 Analysis
How?
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Economic freedom and wealth
0
5,000
10,000
15,000
20,000
Unfree 2 4 Free
GD
P p
er
cap
ita (
US
$)
Quintiles3
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Economic freedom and growth
-2%
-1%
0%
1%
2%
3%
Unfree 2 3 4 Free
GD
P g
row
th p
er
cap
ita
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Economic freedom and ‘poverty’
10
15
20
25
30
35
40
45
Unfree 2 3 4 Free
Hu
ma
n P
ov
ert
y In
de
x
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Economic freedom and equality(0 = equality; 100 = inequality)
35
37
39
41
43
45
Unfree 2 3 4 Free
‘Gin
i’ c
oeff
icie
nt
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Freedom and corruption
1
2
3
4
5
6
7
8
Low 4 3 2 High
Co
rru
pti
on
10
= c
orr
up
t, 0
= n
ot
co
rru
pt
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Freedom and investment
$0
$1,000
$2,000
$3,000
$4,000
$5,000
Low 2 3 4 High
Rule of law
Investm
en
tp
er
ca
pit
a
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Freedom and child labour
0
3
6
9
12
15
18
21
Low 4 3 2 High
Pe
rce
nta
ge
of c
hild
ren
(10
-14
)
in la
bo
ur
forc
e
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Freedom and political stability
-1.5
-1.0
-0.5
0
0.5
1.0
1.5
Low 4 3 2 High
Po
liti
calS
tab
ilit
y(2
00
4)
-2.5
=lo
w;
2.5
=h
igh
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Freedom and unemployment
5
6
7
8
9
10
11
12
13
Low 4 3 2 High
Un
em
plo
ym
en
t(%
of
tota
l la
bo
ur
forc
e, 2
00
0-2
00
2)
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Predicted values
Ob
serv
ed
va
lues
-0.1
-0.06
-0.02
0.02
0.06
0.1
0.14
-0.06 -0.04 -0.02 0 0.02 0.04 0.06
Growth vs. freedom + change
Freedom
and
Change
Change
Freedom
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-0.091-0.083-0.074-0.065-0.057-0.048-0.039-0.031-0.022-0.013-0.0050.0040.0130.0210.0300.038
Gro
wth
0.14
0.1
0.06
0.02
-0.02
-0.06
2.5
1.5
0.060.02
-0.02
-0.0623
45
67
89
10
Growth vs. freedom + change
Growth & changeGrowth & EFW
0%
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NDP
All-embracing; ambitious
‘South Africa can eliminate poverty and
reduce inequality by 2030’
440 pages; 15 Chapters
Development Indicators
Diagnostic Overview
Requires big changes, lacks specifics
(to be addressed in submissions)
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Obtuse references to labour policy reform
5,4% growth needs ‘very low-income
employment, survivalist activities and
public employment schemes’
Bargaining that’s ‘conducive to
investment’
Employment
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Poverty and Inequality
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Chapters
1. Key drivers of change
2. Demographic trends
3. Economy and employment
4. Economic infrastructure
5. Transitioning to a low carbon economy
6. Inclusive rural economy
7. Positioning South Africa in the world
8. Human settlements
9. Improving education, innovation and
training
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Chapters
10. Promoting health
11. Social protection
12. Building safer communities
13. Building a capable state
14. Promoting accountability and fighting
corruption
15. Transforming society and uniting the
country
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Confused responses
‘Zille gives NDP the nod’
‘NPC to ignore DA's statement’
NGP vs NDP vs DS!
No reference to key global
indices/determinants
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‘The longer-term solution to
skewed ownership is to grow
the economy rapidly enough to
focus on spreading
opportunities for black people’
NDP ‘Transformation’
Eg ‘financial inclusion’
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Hayek: Government can do more
for the people by doing less
Louw: When things are in the
hands of the state they’re in a hell
of a state
Conclusion
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End