Business churn is usually the sign of a healthy, growing economy. South Africa compares well globally in terms of firm turnover. The puzzle, though, is why these shifts have not been accompanied by more dynamic economic growth and job creation.

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Pippa Green
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Business churn is usually the sign of a healthy, growing economy. South Africa compares well globally in terms of firm turnover. The puzzle, though, is why these shifts have not been accompanied by more dynamic economic growth and job creation.

By leveraging closed and abandoned coal mines as assets rather than liabilities, it may be

South Africa has significant export potential that it is not fully realising. Our analysis of the country’s trade markets reveals opportunities for increased exports through better market intelligence and strategic initiatives. This analysis investigates South Africa’s export performance by market, identifies gaps between the actual and potential exports, and highlights key opportunities for growth. This article explores these opportunities and the challenges that need to be addressed to enhance the country’s export performance.

South Africa’s finance minister tabled a Budget on 21 May with the support of the Government of National Unity partners. VAT will remain at 15 per cent and Cabinet is agreed that reviews of expenditure should be intensified. The revised budget protects frontline services though several provisional spending proposals have been withdrawn. But the problems of sluggish growth and high debt levels remain. Substantial spending cuts will be needed if the Treasury’s fiscal consolidation goals are to be achieved. More rapid growth will require far-reaching structural and fiscal reforms.
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In this opinion piece on South Africa’s unemployment crisis, Andrew Donaldson argues that while structural reforms are needed to raise growth and broaden development over the longer term, an employment-oriented economic strategy is the central challenge in present times.
Viewed through an elementary growth accounting lens, South Africa’s frontiers of labour-intensive production should be steadily moving out, bringing unemployed human resources into economically useful occupations. We have abundant physical and mental human capabilities searching for work.
However imperfect the adjustment (“tâtonnement”) process, economic theory implies that there should be progress towards full employment, and higher output should flow from the mobilisation of otherwise unutilised capacity. And if markets don’t generate this result, it is a policy coordination function.
It is not that constructive applications are hard to identify. Houses need to be built, roads repaired, food markets expanded, clothing and furniture supplied, safety and security improved, water sources protected, children cared for.
It is not that we lack the know-how or technological capabilities required: these are activities in which knowledge is readily available and there is clear evidence of under-utilised productive capacity. To put unskilled labour to work, we do not need to overcome technological barriers in artificial intelligence, biosciences or big data processing.
It is not that higher production to meet domestic consumption needs might have unsustainable fiscal or balance of payments effects: in horticulture, timber and related products, light manufacturing, and a wide swathe of commercial and hospitality services there are growth opportunities in tradeable goods and tax revenue will flow from expanded activity.
Of course, there are complementarities in the resource combinations required to expand economic activity: engineering skills accompany artisanal capabilities and physical effort on building sites and floor managers oversee the organisation of work in restaurant kitchens and clothing assembly lines.
But the best available theories of skills development suggest that it is the application of learning by “doing” that is the proximate driver of productivity and skills acquisition.