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Policy Briefs

Has South Africa’s Investment in Public Healthcare Improved Health Outcomes?

Lucas Bidzha, Talita Greyling and Jugal Mahabir
Since 1994, the South African government has invested significantly in public healthcare. This invested intended to improve access to quality health services to the majority of the population that were previously disenfranchised under the apartheid regime. In addition, access to improved healthcare services would consequently improve health outcomes, which is not only a key social objective but also contributes to long term economic growth. South Africa’s total public health expenditure equate to around 9% of its gross domestic product, which is above the average of other countries classified as middle-income countries. However, when compared to these very same countries, South Africa’s indicators of health outcomes remain relatively lower. This holds true when one considers the country’s infant mortality rate and life expectancy at birth in 2014, which stands at 37% and 57 years respectively. Given these trends, one needs to question the actual impact of healthcare expenditure on health outcomes in South Africa. Given the current tight fiscal framework and the growing needs and priorities, the South African government needs to ensure that limited funds are prioritised in areas that are contributing to social and economic welfare. In addition, the success of the country’s investment in social services need to be scrutinised in order to assist policy makers in improving the effectiveness of spending priorities. This study answers these key questions by undertaking a panel data analysis for South Africa’s nine provinces over the period from 2005 to 2014 to ascertain the impact of healthcare spending on health outcomes.
Aug 2017
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Black living standards in South Africa before democracy

Bokang Mpeta, Johan Fourie and Kris Inwood
The history of living standards in South Africa is a complex and incomplete picture. We know much more about the pre-1994 living standards of white South Africans – the descendants of European immigrants since the 17th century – than of black South Africans, the indigenous, Bantu-speaking population that had inhabited most of modern-day South Africa before the arrival of Europeans and have since formed the majority of the population. The reason for this dearth of knowledge is the lack of source material: whereas meticulous records were kept on white living standards from the beginning of settlement, the colonial and apartheid-era records often neglected to record the wages or incomes of black South Africans at the individual level. A different approach is thus necessary to provide a more complete picture of the evolution of South Africa’s living standards before the advent of democracy.
Aug 2017
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Human capital inequality and electoral outcomes

Biniam Bedasso and Nonso Obikili
Inequality is a problem which has beset South Africa for a long time with the country being on record as having one of the highest levels of inequality in the world. However, little is known about horizontal inequality between different groups in South Africa. Given the level of racial and ethnic diversity in South Africa, it is important to have a good grasp of the dynamics of group inequality in the country.
Aug 2017
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The impact of Home and Host Country Institutions in the Internationalization of an African Multinational Enterprise

Johh M. Luiz, Dustin Stringfellow and Anthea Jefthas
We demonstrate that firms can exploit their knowledge of ‘weak’ institutional settings and turn it into a source of advantage as they internationalize into locations with similar institutional ‘weaknesses.’ Using the case of one Africa’s most successful multinational enterprises we illustrate the...
Aug 2017
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Shaping macroeconomic outcomes

Chris Loewald
By early 2016, financial market participants had become increasingly critical of unsustainable current account deficits and low, unbalanced growth in many emerging economies. In response, adjustments have occurred (or are in process) in a wide range of countries – including Russia, Brazil, Mexico, Colombia, Ghana – gradually guided by policy in some instances and much more abruptly forced by recession in others. South Africa’s trajectory lies somewhere between – with some decline in the current account deficit in late 2016 and into 2017, but few clear steps to shift the composition of economic growth to something more sustainable. The recent current account moderation has fallen on the private sector, resulting in very weak investment and economic growth.
Jul 2017
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Aid Volatility and Structural Economic Transformation in sub-Saharan Africa

Emmanuel Kumi, Muazu Ibrahim and Thomas Yeboah
To what extent does Official Development Assistance (ODA) volatility affect sectoral growth in developing countries? Interrogating this question is crucial as sustained economic growth is a necessary condition for poverty reduction and other development outcomes. To this end, many SSA countries are highly dependent on ODA and it therefore comes as no surprise that the sub-region is the largest recipient of ODA such as country programmable aid in the world.
Jul 2017
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The behaviour of the real effective rate of South Africa: is there a misalignment

Melvin M. Khomo and Meshach J. Aziakpono
The debate about the equilibrium level of the South African rand and the factors driving the currency is ongoing, with a concomitant lack of consensus on the most appropriate level of the exchange rate. The New Growth Path Framework (2011), which provided government’s blueprint for economic growth and job creation, calls for a more competitive exchange rate that should support government’s initiatives, indicating that policymakers have a vested interest in seeing the exchange rate at a level that would support South Africa’s economic growth. Against this background, the aim of this study was to determine the extent to which the rand’s real effective exchange rate (REER) is misaligned from its equilibrium level. Cointegration techniques in the behavioural equilibrium exchange rate (BEER) framework of Clark and MacDonald (1988) were applied to estimate the equilibrium value of the rand consistent with economic fundamentals, and to interpret the deviation of the observed exchange rate from this level as REER misalignment. This study adds to the literature in the following aspects: firstly, we apply more recent data to estimate the equilibrium REER and exchange rate misalignment. Secondly, the subject of exogeneity in the equilibrium exchange rate model is addressed to ensure a proper specification is obtained. Finally, the study uses non-linear regime switching methodology to model the misalignment behaviour.
Jul 2017
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National minimum wage in South Africa: A Computable General Equilibrium Model Analysis

Jean Luc Erero
The introduction of a national minimum wage is an important current national policy issue in South Africa. The national minimum wage is aimed at providing a national wage floor, beyond which no employee can fall. There are two key points of dispute: the level of the national minimum wage and whether there should be a single minimum wage or a differentiated system. Our paper focuses on the second point. Gains made by the labour organisations on these issues are perpetually under conflict and face setbacks (Coleman, 2014), however it is yet to be established what the impact would be on the macro-economy, industries, tax and social security. A topic with such cross – cutting impacts is ideal for a collaborative examination such as the practicum advises.
Jul 2017
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Does Infrastructure Really Explain Economic Growth in Sub-Saharan Africa

Odongo Kodongo and Kalu Ojah
Given the well-known public infrastructure deficit in Sub-Saharan African (SSA) countries, it’s speculated constraint on economic growth and development, and the many programs (especially at the regional level) that have been put forth in attempts to address these, we set out to explore the true nature of the relation between economic/public infrastructure and economic growth in more comprehensive ways than have hitherto been done. We mapped, at both the aggregate as well as individual infrastructure scopes, the evolution of public infrastructure in SSA; and confirmed the extent to which the region substantially lags behind most other developing regions in public infrastructure endowments. The preliminary outcome of our detailed mapping amply made a compelling case for further investigation of the relation between infrastructure and economic growth and development in SSA.
Jul 2017
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Path Dependence and Interdependence between Institutions and Development

David Fadiran and Mare Sarr
This study investigates incidences of path dependence and the persistence of institutions. The availability of a long time-series makes this exercise feasible, which was not a possibility in the past. Time-series data on characteristics of institutions in SSA (Nigeria included) further allows for the examination of long-run co-movement between economic institutions, political institutions and economic development; that is, which influences the other the most, and which is more influential on economic development. The policy question in this regard being, what this could imply for the institutional environment in the present time. In attending to these questions, we use Nigeria as a case study, and employ a newly constructed data set of institutional indices for Nigeria for this purpose. This study embarks on an area of inquiry which was quite impossible in the past, due to paucity of data such as the newly constructed institutional data used in this study. In many African countries, the struggle is often to find the balance between pushing for economic progress and political progress simultaneously, in order to achieve economic development. In addition, many also struggle to identify which institutional changes are more pertinent for development, because of the lack of the ability to decipher whether or not such institutions have persisted over time.
Jun 2017
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