The determinants of economic growth challenge

by Stephen Hosking: Lecturer in the field of economics at NMMU, who has contributed academic economic papers for about 20 years.
There are many determinants and consequences of economic growth - the level of infrastructure being one. It is not generally true that South Africa's infrastructure is inappropriate for its level of economic development, but viewed as a determinant of growth, there may be infrastructure inadequacies that are binding constraints on economic growth.

In recent years the most obvious ones has been electricity generating infrastructure - not only in South Africa but within the whole SADC region. More generally, the infrastructure challenge is to identify all the infrastructure constraints and what parts of the economy they are holding back. Some may have more consequences than others - they should be addressed first. Care must be taken in this connection that the constraint is not of the government's own making, for instance, due to an inefficient tariff structure.

The term social inclusion lacks economic meaning, in the sense that all people are included in an economy by virtue of participating in it. Presumably, its author means something else, possibly under-subsidisation of utility services of some people. Seen in this light, this is more a challenge related to the consequence of growth - sharing in its benefits. But there are also spillovers into the determination of economic growth - this subsidisation should be done in such a way that the engines of economic growth are not undermined, viz. the generation of saving and creation of incentives for entrepreneurial activity.

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