May 18

Analysis: Waking South Africa’s Economy Up Requires the Government and Businesses to Work Together

By Jacques Morisset

South Africa has lost its two main levers of economic development: public investment in physical and social infrastructure (think China, which invests almost 20% of its GDP per year) and a Schumpeter-like creative destruction process through which obsolete firms are replaced by innovative ones (think IBM and Microsoft). The economy, a sleeping giant on the African continent, can only achieve a faster and more inclusive trajectory of growth if the country rebuilds its public capital stock and dynamizes its businesses, especially by creating synergies between the public and private sectors. This simple lesson is derived from economic theory and empirical evidence in fast-growing countries.

Photo courtesy of martinaH79.

Source: World Bank Blogs (link opens in a new window)

Finance, Technology
business development, failure, public-private partnerships