The growth, poverty and inequality nexus in South Africa: Cointegration and causality analysis

Akanbi, Olusegun Ayodele

doi:10.1080/0376835x.2015.1120654

Cited by 18 publications

(14 citation statements)

References 25 publications

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“…Capital spending is a common tool used to achieve the functions of the government, although it is rather vulnerable to economic shocks, it does nonetheless serve a prominent purpose in amplifying the forces at work in the growth of government spending (Oladele et al, 2017). Akanbi (2016), argues that investment spending contributes immensely towards unemployment, poverty and inequality eradication. Government has increased spending post-apartheid in order to address the injustices of apartheid.…”

Section: Government Spending Overview In South Africamentioning

confidence: 99%

Examining Factors That Drive Government Spending in South Africa

Mdluli¹,

Mncayi²,

Camel³

2019

Proceedings of the 52nd International Academic Conference, Barcelona

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The structure of budgets has changed drastically in the past three decades both globally and locally. Most economies have consistently had growing government spending, some spending way more than what they earn especially following the aftermath of the global financial crisis. Literature shows that government spending in high-income countries has been more on social protection, while public servants compensation has dominated spending in many low-income countries, especially in Africa. In South Africa, a weak investment climate, established years of slow economic progress, rising unemployment and poverty levels which have negatively affected the tax base and therefore revenue collection. The country has been spending more money than it earns, to an enormous degree raising worries to research the drivers of this growth in expenditure, subsequently the essential objective of this study was to pinpoint the key factors that have added to this situation. The study adopted a quantitative research approach through the use of quarterly time series data spanning from 1995 through to 2018. An autoregressive distributed lag (ARDL) model was utilized so as to determine the long-and short-run impacts of the chosen variables on government spending. The findings of the study show that government spending in South Africa, particularly after 1994 has been driven more by current spending than capital spending which presents significant economic effects in the long-run. Among the most significant factors, explicitly in the short run, incorporate unemployment levels, rising debt and inflation. Results further revealed that political instability, low economic growth as well as a growing public size and bailouts of unproductive state owned entities (SOEs) induced significant long term consequences on spending. The continued worsening of spending patterns suggests the presence of fundamental obstacles including the country's high unemployment levels, for both adults and youth, inferring that the revenue base keeps on narrowing, while the growing poverty levels forces spending towards current spending such as the growing social welfare needs rather than productive activities such as investment spending. The study recommends that the size of the public wage bill be reduced and many unproductive SOEs be privatized to relieve spending. Additionally, a multidimensional approach is needed which entails the reduction of debt accumulation to have low interest repayments, restructuring the labour market to improve outcomes, expanding the revenue base, creating an environment conducive to private spending and economic growth and promoting a stable and transparent political climate.

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Section: Government Spending Overview In South Africamentioning

confidence: 99%

Examining Factors That Drive Government Spending in South Africa

Mdluli¹,

Mncayi²,

Camel³

2019

Proceedings of the 52nd International Academic Conference, Barcelona

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“…Ngepah (2010) found that production was negatively affected by the between-group inequality during the study period. More recently, Akanbi (2016) examined the growth, poverty and inequality relationship in South Africa at provincial level, using causality and cointegration techniques. Regarding the effects of inequality on growth, Akanbi (2016) found bidirectional causality effects between the two variables.…”

Section: Introductionmentioning

confidence: 99%

“…More recently, Akanbi (2016) examined the growth, poverty and inequality relationship in South Africa at provincial level, using causality and cointegration techniques. Regarding the effects of inequality on growth, Akanbi (2016) found bidirectional causality effects between the two variables. Notwithstanding the efforts made by these two studies in revealing the nature and direction of the relationship between inequality and growth, a review of existing empirical research indicates that the role of space has not yet been explored in South Africa, and to our knowledge, the inequality-productivity relationship has not been systematically investigated.…”

Section: Introductionmentioning

confidence: 99%

The effects of inequality on total factor productivity across districts in South Africa: a spatial econometric analysis

Espoir

Ngepah

2020

GeoJournal

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This study builds on the fundamentals of the new economic geography and the skill-biased technological change argument, to empirically investigate whether increasing income/earning inequality enhances total factor productivity in South Africa. In so doing, panel data of district-municipalities and spatial econometric techniques are used for the period between 1995 and 2015, to gain a better understanding of the role of location and distance in the effects of income inequality on total factor productivity. The results from the analysis and empirical estimations indicate that: (1) there is strong support for the existence of positive spatial interactions in the effects of income inequality on total factor productivity; (2) the estimated direct effect of income inequality on TFP in local district-municipalities is negative and statistically significant, while the indirect effect is positive and statistically significant as well. These findings suggest that district-municipalities with moderate levels of inequality and high economic opportunities, attract more businesses, investments and important stocks of skilled labour from districtmunicipalities with high inequality. Furthermore, the finding of negative effects supports previous research suggesting that high levels of inequality set the stage for the adoption of distortionary policies which adversely influence the investment climate and produce political instability, thereby stifling the level of productivity and growth. Keywords Income inequality Á Total factor productivity Á Spatial econometric Á Spillover effects JEL classification C21 Á C23 Á D31 Á D62 Á O47

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“…A holistic approach recognises that the local communities, where engagement programmes take place, influence the learning and transformative processes for students in important ways (Kiely, 2005;Strain, 2005;Thomson, Smith-Tolken, Naidoo & Bringle, 2011). This person-in-environment approach, in a diverse society such as South Africa, with its apartheid history and pervasive socio-economic inequalities (Akanbi, 2016;Statistics South Africa, 2018), means the CE context poses various challenges regarding engagement for students and community participants. In cross-cultural engagements, some students are faced with language and cultural differences, exposure to widespread poverty and deprivation, overwhelming crime in communities, and their own positionality in this broader context (Constandius et al, 2014;Naudé, 2012Naudé, , 2015.…”

Section: Introductionmentioning

confidence: 99%

We Can’t Be Here Forever”: University Students’ Reflections on Terminating Community-Engagement Relationships

Fluks

Naidoo

2019

SWORK

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Studies on community engagement (CE) focus on its benefits but not enough on termination and difficulties experienced at the personal level with exiting projects. A study on CE with service-learning students and volunteers at a South African university identified issues and themes pertaining to termination as systematic process, emotional responses to termination, and the need to find closure. This paper argues that termination should be more integral to CE processes, and considering that CE experiences can influence further involvement, it is important to end engagement processes more conscientiously than currently happens.

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The growth, poverty and inequality nexus in South Africa: Cointegration and causality analysis

Cited by 18 publications

References 25 publications

Examining Factors That Drive Government Spending in South Africa

Examining Factors That Drive Government Spending in South Africa

The effects of inequality on total factor productivity across districts in South Africa: a spatial econometric analysis

We Can’t Be Here Forever”: University Students’ Reflections on Terminating Community-Engagement Relationships

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