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2008 OECD Economic Surveys: South Africa 2008

image of OECD Economic Surveys: South Africa 2008
OECD's first review of South Africa's economy. After a general overview of recent economic developments and programmes, this survey examines key challenges including reforming goods and services markets and realising South Africa's employment potential. This publication includes StatLinks, URLs linking to Excel® spreadsheet versions of tables and graphs.

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Executive summary

The democratically elected government that came to power in 1994 inherited an economy wracked by long years of internal conflict and external sanctions. Against that backdrop, economic performance since 1994 has been impressive. In particular, the successive governments during that period have shown considerable prudence, refraining from resorting to economic populism in an effort to boost short-term growth. As a result, public finances were stabilised, inflation was brought down, foreign capital was attracted in growing amounts, and economic growth, after lagging for a time, improved. The awarding of the 2010 FIFA World Cup to South Africa is just one sign that South Africa is now seen as a stable, modern state, in many ways a model for the rest of the African continent. However, there have also been notable weaknesses in the economic record to date, especially as regards unemployment, inequality, and poverty. Social problems such as HIV/AIDS and crime have been prominent as well, and these twin scourges also have a strong negative economic impact. Indeed, there are strong bi-directional links between economic and social problems, as is shown by the recent attacks on immigrants, who are blamed for aggravating unemployment and downward pressure on wages. One challenge for the future will be to maintain the macroeconomic prudence which has fostered fiscal and external sustainability while dealing with these formidable problems. This will also make it easier to tackle more boldly some of the legacies of apartheid which are still holding back progress for many black South Africans. This is especially true as regards education, competition policy, and the functioning of labour markets. The in-depth chapters of this Assessment therefore focus on how to strengthen competition and improve labour market outcomes. Education is also discussed, though in somewhat less depth, in part because a separate OECD study of South Africa’s education system is forthcoming.

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