Abstract
Economic dualism in South Africa has mutated from the original modem vs. traditional sector conception to one of poverty vs. non-poverty. Globalisation provides opportunities to reduce poverty, but government policies determine the outcome. The South African government's sound macroeconomic policies have not been matched on the micro side. The labour market has not been liberalised, employers are loath to increase staff numbers, and foreign investment in labour-intensive industries is not being attracted. The policy choice is one of lower real wages and more jobs or higher real wages and fewer jobs. The unemployed and those in absolute poverty would opt for the former, unionised labour for the latter. Policy reforms will be politically difficult, but without them the dual economy will persist.
Highlights
This is a discursive paper, exploring, at the request of the editors, the implications of globalisation for economic dualism in South Africa
The paper argues that the nature of the dual economy has changed over the years, that openness and economic growth are necessary for poverty reduction, that it is government policies which determine whether or not a country and its people are able to use globalisation to improve their welfare, and that South Africa could have done better than it bas to take advantage of the opportunities for faster growth and poverty reduction
The Governor of the South African Reserve Bank recently stated that "even the staunchest critics must agree that globalisation is inevitable and that it can be a strident force for generating wealth and reducing poverty''''
Summary
This is a discursive paper, exploring, at the request of the editors, the implications of globalisation for economic dualism in South Africa. The paper argues that the nature of the dual economy has changed over the years, that openness and economic growth are necessary for poverty reduction, that it is government policies which determine whether or not a country and its people are able to use globalisation to improve their welfare, and that South Africa could have done better than it bas to take advantage of the opportunities for faster growth and poverty reduction
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