Johannes Fedderke

Economic Growth and Social Indicators: An Exploratory Analysis*

Abstract What are the connections between social and political conditions and economic growth? This paper explores the uses and misuses of statistical analysis of cross-national data in addressing this question. It shows that social, political and economic indicators are linked by “webs of association”. Such webs of association suggest the possibility of distinct groupings of social indicators with differentiated impacts on economic growth. But such correlations also make it difficult to disentangle causal relationships, especially when theorizing is weak, data are badly behaved, and the number of observations is small. Although under such conditions statistical techniques can help preclude premature generalizations, they are easily overinterpreted. Nonetheless, data analysis can help identify countries that seem exceptions to the general patterns, where careful case studies may be especially valuable.

Competition and Productivity Growth in South Africa

This article shows that mark-ups are significantly higher in South African manufacturing industries than they are in corresponding industries worldwide. We test for the consequences of this low-level of product market competition on productivity growth. The results of the paper are that high mark-ups have a large negative impact on productivity growth in South African manufacturing industry. Our results are robust to three different data sources, two alternative measures of productivity growth, and three distinct measures of the mark-up. Controlling for potential endogeneity of regressors does not eliminate the findings.

Modelling the determinants of capital flows and capital flight: with an application to South African data from 1960 to 1995 ☆

Abstract This paper examines the relative sensitivity of four alternative measures of capital flows or flight to their determinants. We find that all capital flow measures prove to be sensitive to a range of uncertainty measures, as well as to standard measures of the rate of return on assets. While there is evidence to suggest that one of the capital flight measures is more sensitive to risk measures than capital flows as reported in the balance of payments, this is not true of all the flight measures. The policy implications in favour of a stable and transparent policy environment as a means of attracting capital flows is thus invariant between balance of payments and alternative capital flight measures.

Uneducating South Africa: The Failure to Address the 1910-1993 Legacy.

This paper analyses various data on the South African schooling system since 1910. The data collected for the study cover a wide range of education indicators, from pupil enrolments, pupil teacher ratios, real expenditure (aggregate and per capita), matriculation pass rates, to some indicators of the quality of matriculation passes. The authors provide an indication of both inputs into and outputs of the educational system. In broad terms, the data indicate that from an educational perspective South Africa followed a modernisation trajectory that, although it drew ever larger numbers of pupils into the schooling system, was partial, distorted and fundamentally dysfunctional. The educational process was strongly affected by racial factors. To the extent that education is an important determinant of long run growth performance of economies, this implies that South Africas educational policies were inimical to its long run growth.

The Political Economy of Institutions, Stability and Investment: A Simultaneous Equation Approach in an Emerging Economy. The Case of South Africa

Abstract The modern theory of investment identifies the importance of uncertainty to investment. A number of empirical studies have tested the theory on South African time series, employing political instability measures as proxies for uncertainty. This paper verifies that political instability measures are required in the formulation of the investment function for South Africa. It also establishes that there are distinct institutional factors that influence the uncertainty variable such as property rights and crime levels. We find that rising income and property rights lower political instability, and that rising crime levels are positively related to political instability. The inference is that political instability in South Africa may not represent uncertainty directly, since it is systematically related to a set of determinants. Instead, uncertainty would have to be understood as being related to a broader institutional nexus that in concert may generate uncertainty for investors. The paper highlights the significance of getting institutions right to ensure that uncertainty is kept to a minimum by providing a predictable long-term environment. Stability at a systemic level appears crucial if investment rates are to rise in South Africa and this paper demonstrates that stability in turn is driven by a sound institutional environment that has multiple dimensions.

International Benchmarking of South Africa's Infrastructure Performance

The paper provides a first systematic, comprehensive benchmarking of South Africas infrastructure performance in four major sectors--electricity, water and sanitation, information and communication technology, and transportation--against the relevant group of comparator countries using a new World Bank international data base with objective and perception-based indicators of infrastructure performance from over 200 countries. Specifically, the paper seeks to answer a number of relevant questions: How does South Africa compare on major indicators of infrastructure sector performance against the relevant country groups? What do outcome indicators tell us about the relative strengths and weaknesses of South Africas infrastructure compared with various income and geographical comparator groups of countries? Where are the largest deviations-positive and negative-from the benchmarks and other comparators? And how does one interpret some of these comparisons to be useful for policy purposes?

Production of Educational Output: Time‐Series Evidence from Socioeconomically Heterogeneous Populations—the Case of South Africa, 1927–1993*

A number of competing reasons have been advanced for this divergence of findings. Since standardized test scores and earnings are two distinct outcomes, school quality may simply have different impacts on the two outcome measures; earnings studies are frequently argued to have insufficient controls for family background variables, the effects of local labor market conditions, and self-selection effects present in samples; and earnings studies and school achievement studies tend to employ different types of data, with earnings studies tending to rely on historical information and school achievement studies on contemporaneous data. The last of these reasons for divergent results between earnings and standardized test score studies is potentially important in pointing to the significance of lags in the impact of schooling inputs on outputs. 2 This article furthers understanding of the link between inputs and outputs of the educational production process. In contrast to earlier studies, our article employs time-series data in order to investigate the link between educational inputs and outputs and does so over a relatively long time run, from 1910 to 1993. Strong results emerge from our analysis. We find that educational inputs matter in the determination of educational outputs in the case of South Africa.

Economic Growth in South Africa

ABSTRACT This paper provides an overview of South African economic growth and employs modern growth theory to structure the historical record. The recent literature on growth is large and investigates the impact of a great many variables on economic growth. Constraints of space and information confine this analysis to the following core issues: the relative contributions of employment, capital stock and technological change on growth; the determinants of investment and hence of the trajectory of capital accumulation; the contribution of the financial sector and foreign capital flows; the contribution of human capital; the impact of monetary and fiscal policy; growth consequences of governance and institutions; and the functioning of the labour market and its impact on growth.

Changing factor market conditions in South Africa: The capital market - a sectoral description of the period 1970-97

This article explores changing conditions in South African real capital markets. Noteworthy is the evidence of strong restructuring in this market during the 1990s. Whereas the 1970s and 1980s showed the best investment performance among primary commodity sectors and sectors with strong parastatal involvement, the highest investment rates of the 1990s have been associated with the manufacturing industry. We show that the real user cost of capital and capital productitivity contribute plausible determinants of investment rates in South Africa. The extent to which market forces are allowed to bring in line marginal cost and marginal return on capital appears to influence the sustainability of investment.

An analysis of industry concentration in South African manufacturing, 1972–2001

This article examines industry concentration for the South African manufacturing sector over the 1972–2001 period, for the three-digit industry classification. The article notes both the high level of industry concentration in South African manufacturing and a rising trend in concentration across a wide range of industries as measured by the Gini and Rosenbluth coefficients. The article examines the impact of concentration on investment rates using a dynamic heterogeneous panel estimation methodology. We find that increased concentration unambiguously lowers investment rates.