What kind of economy do you want?

28th August 2009 By: Seeraj Mohamed

There is a desperate need for a public discussion on South Africa’s future growth path. It requires that we draw on our collective imagination as a nation. We have to start thinking about the type of country we want and the economic and industrial 
development paths that can take us there.

We have to take a long-term view of the economy and agree on what can be done to ensure that we meet our major socioeconomic 
developmental goals, which include creating more decent work opportunities and reducing inequality in South Africa. The debate about South Africa’s growth path and a longer-
term perspective of our economy could make a huge difference to all of us and 
future generations.

We can imagine a peaceful democratic country with a high ‘happiness index’ – 
society with less violence, crime, hunger and sickness, and with much less unemployment and inequality; a country where we all have access to the types of education and life 
opportunities that draw on our full potential as human beings, not as human capital.

Unfortunately, the media seem to focus on day-to-day events and are missing out on an 
opportunity to be part of creating a meaningful social dialogue about the economic future of South Africa and the growth path that can take us there. The media seem obsessed with the day-to-day performance of the share 
indices of the stock market and the exchange rate of the rand. Long-term economic development issues seem to be piled into stories dealing with failure to deliver and capacity constraints. Reporting on macroeconomic and industrial policies is done without considering an economic growth path and the type of economy we want to build.

The growth path is really important 
because incorrect policy choices will not allow us to achieve our goals.

Further, there are many trade-offs and choices to be made. Incorrect choices could leave us with hopes and dreams, but without the means to get there. 
Economic policies are important because they shape the institutional framework within which civil society, including private business, works and operates.

The policy choices made will determine the role of the State and the market in the eco-
nomy. It is understood now that there can be failure by both the State and the market that has huge impacts on an economy. The economic debate has to move beyond State versus market to one where we decide how to manage potential failures by the State and the market and find the correct balance in our economy.

The macroeconomic environment and the role of financial institutions are really 
important for shaping the environment 
within which economic activity takes place. Our macroeconomic and financial policies have not supported long-term productive 
investment and have left us exposed to financial contagion.

The way in which we open up or expose our 
economy to international capital movements and global financial activity has a huge impact on foreign direct investment, but can also play havoc on domestic economic stability. 

Industrial and trade policies and approaches to small and medium-sized businesses will also be very important in the debate as we think of the types of economic sectors that we want to support in order to build a new growth path towards decent work and a sustainable competitive economy.

These policies will have to take account of the skills we have available today and be 
coordinated with education and training policies to shift our skills and industries towards a more knowledge-intensive path. 

There are many more economic and other areas of policy that we, as a society of stakeholders in the future of our country, have to discuss. 
Not everyone will agree on a future vision and a growth path. 
However, we have to begin the discussion and, hopefully, the media will begin to play a role in this dialogue.