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... How did South Africa use these supply- and demand-side policies? ... Examples of demand- and supply-side issues in other countries (USA, Malaysia and Korea) 6
4. ... Economic Development 6
4. ... What is Economic Growth? ... What is Economic Development? ... Economic Growth vs Economic Development 7
4. ... Factors that influenced the South African Socio-Economic ailments 8
5. ... Major issues 8
5. ... Targets set by Government in addressing the past economic imbalances 12
6. ... Recommendations on improving the prevailing economic conditions 14
7. Remedies to overcome the Socio-economic disorders in South Africa 14
7. ... Introduction
It is the goal of this assignment to try and establish the role of supply- and demand-side actions in International Economics, with reference to a few countries that applied these policies. In this analysis an attempt will be made to show how supply- and demand-side actions were used by Governments and Central / Reserve Banks as policy instruments to achieve certain Macro and Micro economic goals. ...
In the analysis specific socio-economic elements and remedies were used as policy instruments to enhance the South African economy’s growth and development. ... Economists are notorious for their tendency to differ on important issues. There are a lot of reasons why economists tend to disagree on important issues, never the less, economists agree on many issues. ... The Austrian view is that the economic process consisted of the original factors of production in capital goods of greater or lesser length of life that then yielded value or utility as they were consumed. ... The theory recommends fiscal policy as a vehicle for stimulating economic growth. ...
New Classical economists are opposed to attempts to fine-tune the economy by using fiscal and monetary policies. They prefer steady and predictable policies as opposed to quick solutions to economic problems.
Marxist Theory blames features and structures of capitalism for modern economic problems. ... Schiller in his text The Economy Today defines fiscal policy as, “The use of government taxes and spending to alter macro-economic outcomes”, and monetary policy as, “The use of money and credit controls to influence macro-economic outcomes”. ...
Supply side action is the opposite of demand side action in that it involves shifting the aggregate supply curve to influence macro-economic outcomes, through the use of supply-side policy. ... How did South Africa use these supply- and demand-side policies? ...
This is an example of how fiscal policy was used to address imbalances in the economy, similarly monetary policy and supply-side policy can be used to leverage macro-economic equilibrium. ... Examples of demand-/supply-side issues in other countries (USA, Malaysia and Korea)
USA
During the 1980s, President Reagan championed the free market, attempted to roll back government regulation of business, and reduced taxes sharply over a period. The supply-side policies of the Reagan administration glorified entrepreneurship and vilified the role of government and left it to the market to address economic problems. ... ) (Samuelson and Nordhaus, 1989)
Malaysia and Korea
Malaysia’s (1971) new economic policy (NEP) “bumiputera unit trust scheme” and Korea’s (1987) “People’s Shares program” public offerings of State Owned Enterprises (SOE) at deeply discounted prices for lower income groups and probably the most successful precedent for spreading ownership through collective investment vehicles. ... Economic Development
4. ... What is Economic Growth? ... The definition has to be qualified into the following:
· Production or income to be measured in real terms at constant prices on an annual basis
· Figures to be expressed as per capita (figures to be adjusted for the effect of inflation)
At macroeconomic level, economists use economic growth to measure the performance of the economy in relation to the growth target, using domestic product (real GDP) or gross national product (real GNP) as the yardstick. ... What is Economic Development? ... Economic development entails an improvement of living conditions in the LDC. It also refers to the improvement of quality of life in the majority of the population as a result of economic growth, reduction of inequalities and eradication of poverty. ... Economic Development vs. Economic Growth
The distinction between economic development and growth is relatively new. ... It’s true that foreign direct investment has grown since 1994 but not good enough to promote economic growth desirably. ...
· Established policies for delivery of social services. ... Factors that influenced the South African Socio-Economic ailments
5. ... The Major issues
5. ...
Economic growth in South Africa (post the Second World War) can be classified into two phases: 1946-1974 - A rapid economic growth where real GDP grew at an average annual rate of 5% implying a significant increase in real GDP per capita. ... Political developments such as the apartheid system and the imposition of trade and financial sanctions against the apartheid regime were blamed for the plummeting average annual economic growth rate. ... New programmes for socio-economic improvements had begun to touch the lives of millions. ... Competition
The concentration of economic power in the hands of a few conglomerates has been detrimental to balance economic development in South Africa. As early as 1992, the African National Congress introduced anti-monopoly, anti-trust and merger policies in accordance with international norms and practices to curb continued domination of the economy by a minority and to promote greater efficiency in the private sector. (Competition Competitiveness and Development Policy, Dept of Trade and Industry, Pretoria)
For South Africa to compete efficiently for economic rivalry, it must posses domestic economic growth, which is an overall performance of the domestic economy. No investor will invest in a country in which economic basis is fundamentally weak, unemployment and inflation are spiraling out of control. ...
The nature of government policies is important in determining what helps or hinders competitiveness. ... It’s a result of previous political and economic policies that led to inadequate labour capital investment. ...
Investment spending is a major injection into the income stream, therefore high interest rates has been a factor that has contributed to South Africa’s negative socio-economic ailments. ... This has not been good for the South African socio-economic atmosphere because as it stands, our income inequality is very high and high inflation widens this gap between rich and poor. ... Poverty
The decline in economic growth in South Africa contributed to an increase in unemployment, and hence poverty. ... Many studies identified skill shortages as the key constraint to further economic development. Skills development linked very closely to economic need, is essential to effective participation in knowledge-intensive activities. ... As per the World Bank’s discussion document “Policies to promote Growth and Employment in South Africa” the following steps can be implemented. ... Targets set by government in addressing the past economic imbalances
Government plays a crucial role both in macro- and micro-economic issues affecting the socio-economic well being of its citizens. ... html )
The government also came up with important policies and strategies in an effort to speed up service delivery. ... New issues that arise and were not planned for during the three year term cannot be accommodated. ... Recommendations on improving the prevailing Economic Conditions
There are still positive inputs that can go along way in addressing economic issues facing the country, and these are:
· Banks need to reform in order to accommodate those on the lower income bracket to save them from being victims of the poorly regulated micro-lending industry with its exorbitant interest rates. ...
· Revisit approaches used for Black Economic Empowerment and spread benefits to wide range of South Africans not the privileged few especially, the rural areas.
Approximate Word count = 6161
Approximate Pages = 24.6
(250 words per page double spaced)
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