Economic growth, rising inequality, and deindustrialisation
South Africa’s Kuznetsian tension
South Africa provides an interesting case for contextualising the ‘developer’s dilemma’. While the South African economy enjoyed growth-enhancing structural transformation and had shifted from being ‘structurally underdeveloped’ to ‘structurally developing’ by the 1980s, the post-apartheid shift toward services, or tertiarization, saw a period of growth-inducing structural transformation accompanied by rising inequality.
Thus, a strong Kuznetsian tension emerges, where South Africa missed an opportunity to undergo a period of inequality decreasing growth due in large part to oppressive race-based apartheid laws which hindered the economic advancement of black Africans.
As one of the most unequal societies in the world which also faces widespread poverty and high open unemployment, it is crucial that South Africa establishes a successful pro-poor growth path in order to generate sustainable livelihoods for those previously excluded from economic opportunities.