Ewert P.J. Kleynhans

The governance of shale gas production in South Africa

The proper governance of shale gas mining in the Karoo region of South Africa is important. With an estimated 390 trillion cubic feet of recoverable shale gas, large economic gains are possible. This may dramatically change the South African energy sector; in the United States, similar explorations have led to what pundits term the ‘shale gas revolution’. The development and production of shale gas hold economic advantages, but also potential environmental costs, thus the regulation of fracking activities is an important consideration as the development of shale gas in the Karoo progresses. This study reviews the regulations imposed in other countries as well as the current regulatory framework of South Africa. This article analyses these regulations in terms of the content of fracking fluid, seismic activity and the pricing regime. Effective regulation will be key to maximise a positive impact, should shale gas development continue.

Fiscal policy and revenue management in resource-rich African countries: A comparative study of Norway and Nigeria

This study assesses ways in which oil-rich countries can escape the ‘resource curse’ through the implementation of effective fiscal and revenue management policies. A comparative study of the policies of Norway and Nigeria is conducted. The analysis suggests that a rule-based approach to fiscal policy together with a natural resource fund should be the benchmark policy framework in oil-producing countries. The analysis also suggests that Nigeria can learn from Norways experience. Nigeria can adopt a cautionary fiscal rule to ensure that consumption is limited to a stream of returns from accumulated financial assets to prevent volatility in the economy. In addition, Nigeria should enhance transparency of their oil fund through ethical policy guidelines. Accounting for the structural differences from Norway, Nigeria should direct a portion of oil revenues to finance expenditure on public goods and infrastructure that could serve as a platform for private investments, job creation and long-term growth.

Economic Freedom and Economic Growth in South Africa

The economic growth and economic freedom nexus is studied in this article and applied to South Africa in an empirical study. Economic freedom is founded on the free or private market economy, based on competition, where voluntary exchange occurs and a legislative framework ensures the safety of market agents and private property. As part of the literature study, the Index of Economic Freedom, the Economic Freedom of the World Index and the Freedom in the World Index were studied and applied to South Africa. An empirical analysis was conducted, cross-correlation functions were estimated, and Granger causality functions, regression analysis and finally a vector auto-regression model (VAR) were constructed and estimated. The research findings from South Africa support the literature, suggesting that there are indeed some indications that greater levels of economic freedom support higher rates of economic growth in a country.

Implications of foreign direct investment for national sovereignty: The Wal-Mart/Massmart merger as an illustration

The Wal-Mart/Massmart merger has caused concern about its possible influence on the South African economy, employment and the autonomy of the state. This study analyses strategic considerations for states that allow foreign corporations to engage in their domestic markets. Globalisation and transnational harmonisation have led to an impetus for corporations to extend their activities across national borders and foreign markets. Based on the theory of sovereignty, this is evaluated against a trilateral background of home country, host country and corporation. The outcome that emerges is that in some cases states have lost a significant share of sovereignty to multinational authorities. With the Wal-Mart/Massmart merger, role-players such as the government, competition commission and trade unions got involved early on and ensured maximum advantage to the country and its citizens. The final conclusion is that such partnerships between host, home governments and transnational corporations can minimise the loss of national sovereignty, but this can only be achieved against a backdrop of economic, societal and political stability and co-operation.

The quality of human capital in South Africa: evidence from a firm survey

This paper examines the restrictive nature of human capital in the South African economy, and the impact it has on productivity in the manufacturing sector. These restrictions include an inadequately educated workforce and inflexible labour regulations. Survey analysis along with regression and factor analysis examine the most likely causes of productivity increases. Factor analysis revealed that productivity is driven by three underlying dimensions, namely human capital development, management’s competitiveness and location. Human capital development was also shown to be inadequate in small and medium-sized establishments.