Institutions, market constellations and growth: The case of South Africa

Arne Heise

Annals of Economics and Finance, 2007, vol. 8, issue 2, 313-340

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 coordination (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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Persistent link: https://EconPapers.repec.org/RePEc:cuf:journl:y:2007:v:8:i:2:p:313-340

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