Former World Bank chief economist and Nobel laureate professor Joseph Stiglitz has described the policies outlined in South Africa’s ‘New Growth Path (NGP)’ economic policy discussion document as providing a “vision” for the better integration of “the market and the State”, which could lead markets to become “more efficient and more accountable”.

“I hope that the world today has moved beyond false oppositions of States and markets to recognise that success requires a balance between, and better integration of, the market and the State,” Stiglitz wrote in a commentary entitled, ‘South Africa’s new growth path – globalisation on a sound footing’.

The analysis comes at a time when both business and labour have expressed grave reservations with the document, which was released by Economic Development Minister Ebrahim Patel in late November.

Some in the Congress of South African Trade Unions have described it as a mere repeat of the much-maligned ‘Growth Employment and Redistribution’ policy, or Gear, and have also rejected the NGP’s wage-restraint proposals.

Business, meanwhile, believes that too little emphasis has been given to the role of the private sector in stimulating growth, employment and development. Business Unity South Africa is also wary of a proposal to cap executive bonuses, suggesting that, in the context of a global ‘war for talent’, such a policy could have negative unintended results.

But Stiglitz, who is currently an economic professor at Columbia University, argues that the framework “correctly” places employment at its centre, while eschewing the “short-termism of unregulated markets”.

The NGP sets a target of five-million new jobs by 2020 and of lowering the official unemployment rate from 25% to 15%.

Stiglitz is also supportive of monetary policy interventions that move beyond a narrow mandate of containing inflation and argues that management of the country’s exchange rate in a way that is supportive of “an appropriate” currency level could “help the economy develop a diversified, productive base”.

“That’s why most of the more successful emerging economies have taken exchange-rate management seriously,” he writes, while also acknowledging that resource-rich countries face real challenges is lowering their exchange rates.

Still, he argues that it makes “little sense to base an economy on a value of the currency that simply reflects the short-term view of speculators about the local bond market, or to subject producers to the vagaries of exchange rates to which the changing sentiments of speculators may give rise”.

Also finding support is the NGP’s emphasis on direct government actions to stimulate investment into economic infrastructure, as well as industrial and competition policies oriented to “rewarding effort, innovation and entrepreneurship and ensuring effective competition”.

The NGP’s aspiration of encouraging further economic integration of the African continent and its “one billion consumers” is also lauded, as is the public discussion that has been stimulated by the release of the document.

“Inevitably, there will differences in views: both interests and perceptions of what constitutes good policy differ. Some will want to keep with the policies of the past, suggesting that if the country just sticks with them a little longer or tweaks them a little bit here or there, success is just around the corner. Others will want a still more radical departure from the past. Hopefully, out of a vigorous debate there will emerge a consensus around some of the critical policies put forward in the New Growth Path”, Stiglitz concludes.