P16

Capitalist Systems: Political Economy

The Impact of Political Competition on Economic Growth: Evidence from Municipalities in South Africa

This paper examines the impact of political competition on economic growth. Using results from the 1994 and 1999 elections I show that municipalities with a decisive vote either for or against the dominant national party have grown faster than municipalities with more voter competition amongst various political parties.

A Dream Deferred: the Microfoundations of Direct Political Action in Pre- and Post-democratization South Africa

Persistent protests might endanger the stability of young democracies because the economic legacies of the old autocratic regimes tend to outlive their political structures. This paper seeks to explore the micro-level predictors of protest potential in South Africa before and after the end of apartheid. The results of the cohort analysis reveal that the political consciousness of the anti-apartheid struggle has a lasting effect. The gap between actual income and expected returns to education explains protest potential better than comparison of one’s income with that of a reference group.

The social and political case for promoting economic growth and broad-based innovation in South Africa

Biniam Egu Bedasso

Popular protest in South Africa has increased sharply in recent years to the extent that it now seems to have pervaded the floor of parliament. In post-apartheid South Africa, economic slowdown is found to be a precursor of a rise in public protest. Young people are more ready than other age groups to take direct political action. Micro-level evidence shows that ‘unfulfilled expectations’ with respect to one’s own perceived income potential is the strongest predictor of propensity to protest. Limiting protest action to a ‘healthy’ level that does not lead to a downward spiral of instability requires framing the growth agenda as a political imperative. Medium-term remedies may include raising the quality of education, entrenching a meritocratic system of remuneration and promoting broad-based innovation.

Addressing structural change issues in the context of South Africa's political dispensation

Biniam E. Bedasso

The current structure of South Africa’s economy is partly a product of the terms of the country’s political dispensation. The availability of capital mobility as an exit option is a key aspect of South Africa’s negotiated democracy. As long as inequality remains high, capital continues to gravitate towards sectors emendable for expedient capital mobility such as finance. Promoting manufacturing investment in a high inequality environment may require tailor-made policy innovations that are compatible with existing political constraints. Such policies include weaving industry-specific property rights provisions with the industrial policy framework and creating a sizable political constituency for industry-led development.

Political transition in a small open economy: Retracing the economic trail of South Africa’s long walk to democracy

This paper seeks to offer an economic explanation for the emergence of democracy in societies with high income inequality and narrow middle-class such as Apartheid South Africa. The presence of a credible threat of capital flight is shown to render democracy less unpleasant to the elites by making future tax concessions possible. However, inequality should be sufficiently low for the poor to have enough incentive to concede less redistribution to avoid capital flight.

Is Democracy Eluding Sub-Saharan Africa?

This paper analyses the modernisation hypothesis in the sub-Saharan African region. Using a sample of 48 countries from 1960 to 2010 and dynamic panel data analysis, we find a significant and negative relationship between income and democracy, an indication that the hypothesis may not hold in the region. We also investigate further by distinguishing between exogenous and endogenous democracy. The former explains whether external factors, such as the end of the Cold War, as well as regional influence, play a role in the process of democratisation in sub-Saharan Africa.

Does Education Promote Stable Property Rights?

This paper sets out to establish an empirical link between education and property rights. The analysis is based on a new index of property rights derived from a set of commonly used indicators. As expected, education has a generally positive impact on property rights. But the relationship is not linear. The effect also depends on level of income. More education might not always be good for property rights in lowincome countries.

Don’t Make War, Make Elections. Franchise Extension and Violence in XIXth-Century Colombia

This paper studies the effect of strengthening democracy, as captured by an increase in voting rights, on the incidence of violent civil conflict in nineteenth-century Colombia. Empirically studying the relationship between democracy and conflict is challenging, not only because of conceptual problems in de ning and measuring democracy, but also because political institutions and violence are jointly determined.

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