On Tuesday StatsSA announced that South Africa’s economy had slipped into recession, with two consecutive quarters of negative economic growth this year. During the second quarter of 2018, South Africa’s economy shrank by 0.7%. This shrinkage follows 2018’s first quarter contraction of 2.6%.
On the other hand, South Korea’s economy has grown by 0.6 percent in the second quarter of 2018, following a one percent expansion in the previous quarter. Singapore has also had a good 2018, with economic growth of 4.4% and 3.8% in the first and second quarters of 2018 respectively.
In 2017 Western Cape Premier and former leader of the opposition party Democratic Alliance (DA) Helen Zille wrote a controversial op-ed for The Daily Maverick detailing the lessons that South Africa could learn from Singapore’s economic development. Zille argues that Singapore’s economic development was the result of its post-colonial rulers taking advantage of the benefits bequeathed to them by the British Empire and utilising them for the benefit of society at large. Through this enterprising outlook, Singapore managed to transform itself from extreme poverty to the cutting edge of modernity with its current focus on developing Society 5.0, i.e. the super-smart society.
Zille also mentions that Singaporeans demonstrate a level of self-sufficiency that South Africans should wish to emulate. Of course Zille was lambasted for her insensitive and over-simplified detailing of South Africa and Singapore’s post-colonial developmental trajectories. But the question remains; what can we learn from the Asian Tigers (South Korea and Singapore) and how can we implement these lessons for the benefit of all South Africans?
A spike in demand for residential development land in Singapore.
In the 1990’s South Korea was regarded as an industrialisation miracle. It managed to transform its economy, shifting from a heavy reliance on agricultural to, within thirty years, being at the forefront of industrial innovation. Many economists have attributed South Korea’s structural transformation to policy reforms that encourage international trade and innovation.
South Korea has been successful in incentivising innovation in their industries and has also fostered a positive business environment that is highly protective of nascent industries. Singapore, on the other hand, had managed to achieve phenomenal economic growth despite its lacking territories and natural resources. Many have argued that its leading position in global commerce is the result of its embracing globalisation, free-market capitalism, education, and strict pragmatic policies. It is after all a benevolent dictatorship which sentences people to death for drug smuggling. It also embarked on a massive roll-out of wealth redistribution which lifted its GDP per capita from US $320 in the 1960s to US $60,000 today.
Can South Africa learn something from these two powerhouses? Post-apartheid South Africa has tried to embrace globalisation through courting foreign investment. However, despite the glory days of our economic growth in the late 1990s/ early 2000s, inequality has continued to increase. South Africa has one of the highest Gini coefficients in the world, with income inequality increasing by 2% in 2018. Earlier this year, the World Bank stated that South Africa’s extreme inequality undermined policy certainty and depressed investment, greatly constraining economic growth.
Grahamstown, Eastern Cape, South Africa
This inequality is reflected in our education system, with household income increasingly determining an individual’s access to quality education. In the long run South Africa needs to address the extreme inequalities within its wealth distribution and education access. As South Africa grapples with land redistribution, another conversation needs to be had around the redistribution of opportunities and income - through the dispensation of the basic income grant - that will ensure that poorer South Africans get the opportunity to live a more dignified life.
South Africa cannot attempt to directly emulate the developmental trajectories of post-colonial South Korea and Singapore. We do need to become more innovative in how we approach addressing our economic woes and the accompanying inequalities that have become a part of post-apartheid South Africa’s socio-politico-economic landscape. If we do not do more to address our structural challenges, then we will encounter a socio-politico-economic crisis that will require a solution akin to a miracle.
32 views0 comments