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Thu. August 18, 2022
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Interview: Professor Haroon Bhorat - South African Economy
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IA-Forum:  In the course of your research, what have you found about post-apartheid inequality’s impact on the South African economy?   How is the issue affecting South Africa’s current capabilities to strengthen its economy?

Professor Haroon Bhorat:  The data will show that South Africa, after its democratic era started in ’94, is one of the most unequal societies in the world, with Brazil and the other Latin American economies not far behind.  In the post-’94 period, you see consistent but a fairly low, by emerging market standards, growth rate of 2.5-3.5% for the whole period before the recession.  With those tepid levels of growth, we saw marginal changes in poverty levels.  Depending on the data set and time period, you might see some reduction in poverty, but if there are, they are fairly small and in most cases, a fairly minor reduction in poverty level.

On the other hand, there has been a significant increase in income inequality, measured by the Gini coeffient as well as other similar measures of inequality that show the same arc.  In sum total, tepid growth met by low responses in terms of poverty reduction, but with a fairly sharp rise in income inequality has South Africa becoming the most unequal country in the group of middle income countries.  Certainly in the G20, it is the most unequal country and in the BRICS context, when it is compared to the economy in Brazil, we’ve seen a decline.

IA-Forum:  Do you feel it is the greatest threat to the economy currently?

Prof. Bhorat:  Yes and no.  Certainly we know that with growth comes inequality.  Some households and some individuals get ahead relative to others, so you may see some inequality with growth.  However, at some point, exorbitantly high levels of inequality will be bad for growth.  I think that is the context in which inequality is bad for growth in South Africa.  Wealth, education, net worth, and all other endowments necessary for realizing the benefits of growth are too heavily concentrated amongst a small group of people.

Read the rest of the interview and more in our biannual publication, International Affairs Forum

 

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