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How to create a growth-oriented market constellation for South Africa

Arne Heise ()

No 22, Working Papers on Economic Governance from University of Hamburg, Department of Socioeconomics

Abstract: Post-apartheid South Africa is facing three major economic problems: (1) slack economic growth, (2) high and growing unemployment and (3) among the world's highest income inequality and poverty indices. South Africa is currently caught in a macro-economic straight-jacket of tight monetary, restrictive fiscal and a wage policy stance that raises NAIRU. The persistence of a sub-optimal 'market constellation' is created by an institutional setting of a non-accommodative Reserve Bank, a sectoral-regional and company level noncoordinated collective bargaining system, an austere 'sound finance regime' of public budgeting and the lack of any institution to co-ordinate macro-economic policy. To tailor a better fitting constellation, a social contract involving major reforms in macro-economic governance in South Africa is proposed.

Keywords: Monetary Policy; fiscal policy; wage policy; macro-economic co-ordination (search for similar items in EconPapers)
JEL-codes: E12 E24 E6 O1 O23 (search for similar items in EconPapers)
Date: 2007
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