Sustainable, Equitable and Decent Job Creation in South Africa: The Crucial Role of the ‘Local Developmental State’
68 Pages Posted: 2 Dec 2016
Date Written: November 14, 2016
There is a growing consensus that the historical evidence shows that development and growth require the impetus provided by a functioning developmental state. Originally conceived through East Asian examples (Japan, South Korea and Taiwan) as a ‘top-down’ intervention undertaken by a pilot Ministry, state development bank or development agency, this paper points out that much of the argument in favor of the developmental state has actually overlooked the very important role and functioning of local state institutions. This paper points out that there exists a ‘local developmental state’ model that has worked very successfully alongside the institutions of the ‘top-down’ development state, has sometimes overshadowed the central state institutions in promoting sustainable development, and has sometimes even been forced to work in opposition to the central state but has nevertheless been very successful. Especially in view of major changes in markets, technologies and cultures associated with the emergence of Post-Fordist development in the 1980s, the argument is made that the local developmental state increasingly provides one of the best possible institutional interventions for development and growth involving sub-national governments. The paper examines what role the local developmental state might play in promoting development and ‘decent work’ creation in todays South Africa, where the post-apartheid model of development and employment creation foisted upon the South African government of Nelson Mandela in 1994 by the World Bank, US government and others, centrally involving microfinance and the expansion of the informal sector, has manifestly failed. With poverty, unemployment and inequality now significantly higher than even under apartheid, there is a mountain to climb for policy-makers, but a focus on ‘the local’ and building the institutions of the local developmental state might be one of the proximate solutions.
Keywords: local economic development, SME, microfinance, South Africa, development
JEL Classification: H70,B2, B52,J21, C12, L52
Suggested Citation: Suggested Citation