Abstract:
At a time when the global economy is still recovering from the aftermath of the
Great Financial Crisis (“GFC”), the world is forced to pause and refl ect on the
global economic imbalances between the Eastern and Western economies and
the implications for emerging economies. Policy makers are questioning the
traditional wisdom of free markets, the role of government in facilitating the
development and growth of the economy, and the extent to which government
can intervene in the economy to address market failures.
In this article, while many emerging markets including South Africa (“SA”)
were not directly affected by the GFC, SA it did however feel the effects of the
European recession through a decline in trade exports. Notwithstanding the
global recession and the gloomy outlook for Europe and United States of America,
the economic outlook for the rest of the African continent and BRICS economies
remains strong, with many African economies set to enjoy growth rates of 7%. It
is recognised in this article that even though Governments cannot create wealth,
they nevertheless can play a key role in the process of economic development.
Economic growth represents an essential prerequisite for political stability in SA.
However, efforts aimed at stimulating growth rates can be hampered by a lack
of administrative capacity. The lack of administrative capacity can also impose
a dominate constraint on policy making in contemporary SA. This article fi nally
argues that a vibrant interventionist policy approach by governments will be the
right step and balance to address the issues of a developmental state and those of
skills acquisition.
