Stiglitz calls for new ideas on development
‘Doing all the things that bring about export-led growth at the same time in one sector won’t work any more’, the Nobel Prize-winning US economist says
Nobel Prize-winning economist Joseph Stiglitz has warned that African economies will in coming years find that the prospects for job creation in the manufacturing sector are modest.
Stiglitz was delivering an address on Wednesday at the Growth Summit hosted by the Bureau for Economic Research, Economic Research Southern Africa and the Research Project on Employment, Income Distribution and Inclusive Growth.
Stiglitz won the Nobel Prize for Economic Sciences in 2001 and is a prominent critic of the International Monetary Fund and the World Bank.
He said that governments in Africa and global bodies had to look at the continent’s economic development differently.
“Doing all the things that bring about export-led growth at the same time in one sector won’t work anymore. We need a degree of openness, the constraint awareness and taking inequality into account.
“Manufacturing will play a role, but will be more limited and more directed,” said Stiglitz.
While some had argued that boosting agriculture would be the easiest way to stimulate industrialisation and that it could be a successful strategy for Africa, Stiglitz said these considerations would be influenced by larger economies that interacted with the continent.
“Exports remain highly dependent on commodities. Trade with China has increased enormously and many countries have become highly dependent on China,” he said.
Automation presented a poser about pegging employment growth on the manufacturing sector.
After his address, he told Business Day SA should start thinking creatively how to lay the foundation for free higher education. “From an economic point of view, it’s clear that resources are required and ... once you recognise resources are limited, as always there must be an intense debate about the trade-offs and the general principle of the need to ensure accessibility of education.
“Accessibility must be consistent and take budget constraints into account. One way of squaring that particular circle has been income-contingent loans that Australia has used.
“It is a way of having students who will be better off than the average South African borrow, but in a way that does not excessively burden them.
“It says if you are successful and the economy works well, you will pay back more. If we fail you and the economy doesn’t grow, we will bear the burden,” he added.
He also cited Norway as a country whose state oil operations supports a “massive sovereign fund” which it uses for public benefit, including financing higher education.