Inequality and Economic Inclusion

Second Economy Strategy Project (36)

The 2007 Annual Report of the Accelerated Shared Growth Initiative of South Africa (AsgiSA) identified a need to focus on what was then called ‘the second economy’, and on mechanisms to ensure shared growth reaches the margins of the economy. The Second Economy Strategy Project was initiated in this context. It reported to the AsgiSA High Level Task Team in the Presidency, but was located outside government in TIPS.

A review of the performance of government programmes targeting the second economy was completed in early 2008. The project then commissioned research and engaged with practitioners and policymakers inside and outside government. A strategic framework and headline strategies arising from this process were approved by Cabinet in January 2009, and form part of the AsgiSA Annual Report tabled on 16 April 2009.

In South Africa, people with access to wealth experience the country as a developed modern economy, while the poorest still struggle to access even the most basic services. In this context of high inequality, the idea that South Africa has ‘two economies’ can seem intuitively correct, and has informed approaches that assume there is a structural disconnection between the two economies. The research and analysis conducted as part of the Second Economy Strategy
Project highlighted instead the extent to which this high inequality is an outcome of common processes, with wealth and poverty in South Africa connected and interdependent in a range of complex ways. The different emphasis in this analysis leads to different strategic outcomes. 

Instead of using the analytical prism of ‘two economies’, the strategy process placed the emphasis on the role of structural inequality in the South African economy, focused on three crucial legacies of history: 
• The structure of the economy: its impacts on unemployment and local economic
development, including competition issues, small enterprise, the informal sector, value chains and labour markets.
• Spatial inequality: the legacy of the 1913 Land Act, bantustans and apartheid cities, and the impacts of recent policies, looking at rural development, skewed agriculture patterns, and the scope for payment for environmental services to create rural employment.
• Inequality in the development of human capital: including education and health.

TIPS’s work around inequality and economic marginalisation is built on the outcomes of this strategy process. The research continues to be relevant today as government explores policy options to reduce inequality and bring people out of the margins of the economy.

See project

  • Year 2008
  • Organisation TIPS
  • Publication Author(s) Mark Misselhorn and Tanya Zack For Urban LandMark
  • Countries and Regions South Africa
CONTEXT This document is a response to the aspiration of National Treasury to define practical mechanisms which will enable emergency relief for informal settlements and associated urban economy interventions to rapidly occur on a national basis. This aspiration flows largely from a draft urban strategy for the second economy formulated…

  • Year 2008
  • Organisation TIPS
  • Publication Author(s) Sarah Charlton For Urban LandMark
  • Countries and Regions South Africa
This paper contributes to the urban component of the forthcoming ‘second economy’1 strategy. The brief called for a reflection on the issue of urban land use management (LUM), and extraction of the implications for the urban poor. For the most part the task involved a secondary analysis of work undertaken…
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  • Year 2008
  • Organisation TIPS
  • Publication Author(s) FEIKE
  • Countries and Regions South Africa
Presently, deep-sea vessels fishing Hake under-catch their annual allocation by nearly 10,000 tons and it is claimed that this is because there is no basis on which to target by-catch once the allowable Hake quota has been caught. The following policy and regulatory issues would permit Horse Mackerel, which is…
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  • Year 2008
  • Organisation TIPS
  • Publication Author(s) Sandy Lowitt
  • Countries and Regions South Africa
This executive summary is not presented in the usual manner of summarising the findings of each chapter of the report. The complexity and detail covered in the report, and the nuances in the debates, makes such an option impossible. Rather, a brief overview of the key issues and approaches is…

  • Year 2008
  • Organisation TIPS
  • Publication Author(s) FEIKE
  • Countries and Regions South Africa
In the 1980s, aquaculture, or fish farming, was in its infancy, globally. Today, it accounts for close to 50 million tons annually, making up nearly half of all fish products consumed. Of this, Africa has a 1% market share and South Africa accounts for about 1% of the African slice.…

  • Year 2008
  • Organisation TIPS
  • Publication Author(s) Claire Vermaak; Marcel Kohler; Dr Bruce Rhodes
  • Countries and Regions South Africa
Since 1994 the South African government has identified poverty alleviation as a key policy goal. This objective was formulated under the auspices of the Growth, Employment and Redistribution (GEAR) policy which has arguably had limited success (Hassan, 2001). In 2004 the Accelerated and Shared Growth Initiative for South Africa (AsgiSA)…
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