Fiscal expansion is not only crucial to serve as an economic stabiliser during downturns -- exactly what South Africa is experiencing -- but is also critical for longer-term growth, for example, through 'human capital development' via education. Gradually, the global consensus is shifting back to this recognition.
The United Nations' Congress on Trade and Development (UNCTAD) recently released its flagship annual Trade and Development Report, subtitled "Financing a Global Green New Deal". The South African launch was at the South African Reserve Bank.
The 2019 report holds a number of salutary lessons for South Africa, relating directly to current policy debates -- in particular, to issues raised in the National Treasury's much-debated "discussion document".
The private sector won't save us
First, the report cautions us that, while it has a role to play, relying on the private sector to overcome our economic woes is misguided. It notes that global structural economic challenges actually stem from "unrealistic expectations on the part of policymakers about the private sector's ability to deliver sustainable growth and development". It goes on to highlight that "the evidence shows that the strategy has failed to deliver on its promises".
More specifically, it puts paid to notions that...