Ensure economic development - not just growth, panel hears
FIN24 / 17 OCTOBER 2018 - 13.11 / CARIN SMITH
It is important to distinguish between economic growth and economic development, according to an academic.
Amiena Bayat of the Department of Economics at the University of the Western Cape took part in a panel discussion on inclusive economic growth and the making of modern African cities at the Planning Africa 2018 conference taking place in Cape Town this week.
Bayat explained, whereas economic growth looks at the increase volume of production - economic development also looks at integrity and transparency and whether socio-economic change takes place in an economy over time.
"Inclusive growth is also referred to as shared growth and pro-poor growth. Growth is inclusive if it takes place in the sectors in which the poor work and in places where the poor live," explained Bayat.
"It uses the factors of production the poor possess and reduces the prices of consumption items used or needed by the poor."
Another aspect of inclusive growth would be creating employment opportunities that use the skills the poor might have. Inclusive growth helps to reduce poverty and is according to Bayat, imperative for long-term sustainable growth to take place.
In her view the low gross domestic product (GDP) growth in SA is due to a problem with the structure of the country's economic growth since the 1980s.
"We are moving into an era where more skilled workers are needed, while the semi-skilled and unskilled workers are not able to get employment in the economy," she said.
The poor performance of South Africa's education system has been the reason the country has not been able to improve the social mobility of the poor.
"The education system has failed to develop the kinds of skills for a more skills-intensive sector," she said.
"Looking at the drop-out rates in school, only about 40% of the children who enrol in grade one end up completing grade 12. This creates a shortage of the kinds of skills our economy needs. There is a growing mismatch between the jobs created in the country and the types of skills produced by our education system."
Andrew Boraine of the Western Cape Economic Development Partnership, said one should take a different approach to getting consensus on making the SA economy more inclusive than the way things have been done in the past 20 years. The concept of adaptive leadership becomes important. It means moving away from a traditional linear approach to an adaptive approach in which one can act as quickly as possible. It is about learning from what you are experiencing and adapting in real time, not working in terms of a three to five-year performance plan only to find out at the end if it worked or not.
Government and the private sector cannot solve these challenges on their own, he emphasised. It is about trying to create synergy between a top-down policy compared to also mobilising social movements and entrepreneurs and researchers. "The first thing to do is to get the right people in the room and identify the problem or issue. Get the practitioner community and the policy makers and the researchers together," said Boraine. "There is nothing more powerful than getting the right people on site to engage with the people on the ground. We cannot look at township economies in isolation. You have to start off by relating township economies to the broader economy otherwise you are just continuing exclusion."
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER