A research report submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, Johannesburg, In partial fulfilment of the requirements for the degree of Master of Management (Finance and Investment), March 2016 / DFIs play a very important role in economic development of most countries. In South Africa (SA), they have an additional role of addressing socio-economic development and transformation problems that were created by the previous Apartheid system. In particular, DFIs in SA address unemployment, redistribution of income, private sector development and manufacturing sector growth. However, it is not clear whether these DFI’s are having a positive impact on the socio-economic transformation as they are expected to, given the amount of money that the government budget for them each year. The aim of this research is to investigate whether SA DFI’s have significant impact on the country’s socio-economic development and transformation. DFI credit extension is found to have positive and significant impact on economic growth in in both South African and in emerging markets. Also, in both South Africa and in emerging markets, government consumption has negative impact on economic growth. An additional analysis further shows that DFI credit extension promotes increase in manufacturing-toGDP in SA and in other emerging markets. DFI has significantly positive impact on HDI in South Africa but not in emerging markets. There is a positive (albeit not significant) impact of DFI credit extension on poverty in South Africa, worse still, the relationship is significantly negative in other emerging countries. The results show that the government should bolster the DFI funding as these DFIs play a significant role in the economic development of the country. / GR2018

Research presented for the degree of Masters of Management in Public Policy to the Faculty of Commerce, Law and Management of the University of the Witwatersrand, School of Public and Development Management. March 2016 / The purpose of this study is to analyse the changing nature of South Africa’s Macroeconomic policy in the post-apartheid era for the period 1994-2010. The key focus of the study is to uncover the factors that are a direct cause or have contributed to the paradigm shifts in policy during the specified period; supplementary to this, the study will look at how the changing paradigms have contributed in ridding the South African economy of its apartheid legacy, characterised by the triple challenges of poverty, unemployment and inequality. This study has a strong qualitative approach, comprising a comprehensive document review process, as well as 8 in-depth interviews with relevant experts in the field. This is further complemented by a supplementary quantitative analysis of key socio-economic data and statistics. The findings are that the observed paradigm shifts in macroeconomic policy during the period under review are a result of a number of key factors, namely: the changing domestic political discourse; the global and domestic economic climate; and the influence of domestic institutional arrangements, all of which have a direct impact on the policy discourse. Despite these paradigm shifts, South Africa continues to be faced with the triple challenge of poverty, unemployment and inequality; macroeconomic policy in the democratic dispensation has failed to deliver the core aims of South Africa’s economic development strategy. With the failures of orthodox neo-liberal macroeconomic policy, and the apparent shortcomings of Keynesian influenced redistributive macroeconomic policy, the key question facing policy makers is what direction South Africa’s Macroeconomic paradigm should follow. The idea of the developmental state, and its success in building emerging economies in South East Asia, is considered a viable option for South Africa to achieve an inclusive growth path. / MT 2018

This research report discusses the nature of local economic development (LED) in South Africa and how the pursuit of tourism and tourism related initiatives can potentially contribute to its achievement. The subsector of the East London bed and breakfast industry is the key focus area of this report as little has been written about B&Bs’ contribution to tourism- driven LED despite their dramatic growth in number over the past two decades. This research is important as it explores the assumption that any tourism-related development is good for a community and it shows that in many cases the alleged benefits of tourism are found wanting. This report uses in depth interviews, surveys and questionnaires to gather data from B&B owners, staff and guests in order to formulate a comprehensive picture of the B&B industry in East London and thus try to understand it within a broader LED context. Cross-references are completed to better understand the revenue stream classifications of the different B&B owners while income spending analyses are also conducted on B&B workers to unpack the wealth flow patterns of their salaries. The results of these analyses indicate the B&B sector does not significantly contribute to the achievement of LED and that enforced regulation is needed for it to be more economically helpful in the long term.

Dissertation submitted to the University of the Witwatersrand, Faculty of Commerce, Law and Management in partial fulfilment of the requirement of the degree of MASTER OF COMMERCE IN DEVELOPMENT THEORY AND POLICY University of the Witwatersrand Faculty of Commerce, Law and Management School of Economics and Business Sciences – SEBS Corporate Strategy and Industrial Development (CSID) / Zimbabwe’s mineral sector has been the major contributor of the national economy’s Gross Domestic Product (GDP) since the economic meltdown post land reform programme. The scale of the crisis resulted in the adoption of the multicurrency system in 2009. In an attempt to save the economy from total collapse the government has turned to the mining sector to establish linkages through mineral beneficiation. This study has analysed whether the creation of linkages in the mineral sector, through beneficiation and value addition, could resuscitate the economy. Literature on natural resources shows that countries that are resource-rich experience slow growth rates than resource-poor countries. The study found that mineral resource dependency could be a platform or foundation for economic growth and developmental opportunities through linkages creation in the mineral sector. However, resource-based development strategy is a challenging development path that needs a strong state with vested capacity to actively direct and co-ordinate economic transformation through deepening of the resource sector. Political tensions in Zimbabwe are the overriding obstacles to economic linkages creation in the mining sector and across other sectors. It is therefore, imperative to understand the socio-economic and political dynamics and interactions that influence and shape policy decisions, implementation and their outcomes in order for Zimbabwe to optimise economic linkages and revive its economy. / MT2017

A research report submitted to the Wits Business School, University of the Witwatersrand, in partial fulfilment of the requirements for the degree of Master of Management in Innovation Studies. March 2015 / The purpose of the research is to identify interventions required for Local Economic Development Agencies (LEDAs) to achieve their role in supporting local innovation. This study uses a qualitative research methodology of inquiry and analysis of LEDAs. The methodology is based on a process in which themes are developed from categories that emerge from the analysis of data collected through techniques such as unstructured discussions with most of the Industrial Development Corporation (IDC) grant-funded LEDAs’ management and administrative personnel; parent-municipalities’ management; political leadership (mayors and councillors); observations, documented case studies on the five (5) LEDAs under study (ILembe, ASPIRE, UMhlosinga, Mandela Bay, and Lejweleputswa); and other LEDAs within the South African context, and those in other developing and developed countries. Given that the IDC has to date funded almost thirty (30) LEDAs throughout the nine provinces of South Africa, the five (5) LEDAs sampled, have been purposively selected. This study addresses the challenges that LEDAs face if they are to be successful. These challenges involve striking the right balance between operational freedom or agility and the need for effective policy and strategy leadership and supervision from the public bodies involved. There are also critical communication challenges that have to be addressed. Despite widespread acceptance within government of the need to pursue active economic development policies, it is not immediately apparent to citizens or media commentators that this is a natural arena for local government activity, and there is limited appreciation of what is appropriate local development activity or investment. From the study, it is evident that, since local economies respond best to integrated approaches that combine physical, social, economic, and environmental interventions, and these are activities where responsibility is usually widely dispersed amongst a range of bodies and authorities, it is critical that there is effective leadership both within the LEDAs and within the wider range of bodies to achieve co- ordination. Leadership overcomes institutional rigidities and gaps in mandates by fostering an integrated vision and collaborative organisations. At the same time, the possible absence of leadership in local government, in the business community of a locality, and in the LEDAs themselves, would make an integrated approach and public confidence very difficult to achieve and sustain. Drawing on the results of the study on the five (5) IDC-funded LEDAs, it is evident that there is overwhelming confidence in the LEDA model across local municipalities within the South African landscape. This is also pertinent in most developing countries, as is also the case in Organisation for Economic Co-operation and Development (OECD) countries. Through analysing the findings of the study, it has emerged that research consistently proves that historically, numerous developed and developing countries have opted to use the LEDA models as a preferred vehicle to implement local economic development at local and district municipality levels. However, for all LEDAs, there is a primary need to first define what value the LEDA will add, with clear goals and roles to its locality, before it is established. Furthermore, the analysis does not focus only on the LEDA in isolation, but focuses on the coherence and efficiency of how all the relevant institutions and formations in a locality work together in a ‘local innovation system’ (LIS). There is a tendency in the economic development arena to expect that a LEDA should succeed ‘on its own’ rather than by working within a local innovation system (LIS). This study has observed that, for LEDAs to be effective, they should operate within the well designed and co-ordinated local innovation system. This implies that the system of organisations for local governments must be well managed and integrated. This requirement must not be placed on LEDAs alone, but on all the relevant institutions and formations within a particular LEDA’s locality. It can be concluded from the findings mentioned in Chapter 4 that there is a ‘golden-thread’ that is characteristic of the five (5) LEDAs discussed in the study. This ‘golden-thread’ serves as a recommendation for LEDAs to adopt for them to be successful in achieving their mandates.

A thesis submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, in fulfillment of the requirements for the degree of Master of Management by Research and Dissertation / This study focuses on the gap-filling role of the Development Bank of Southern Africa (DBSA). The use of development banks as a policy instrument to spur economic growth has been a practice followed internationally since World War II. Development banks are intended to extend financing to undertakings in the market economy deemed by the private sector as posing too much financial risk. Usually, these are development-orientated, low-profit green-fields projects initiated by clients in the public sector. By financing such development projects traditionally excluded by the market, the development bank fills a gap in the market. The DBSA was established in 1983 to bridge the gap between the industrialised central government and the underdeveloped Bantustan states and independent territories. At the time, the Bank could finance any development project so long as it fell within the Southern African region. However, post 1994, the DBSA mandate changed, shifting its focus to the public sector – low-income municipalities – and to particularly, specialise in financing infrastructure projects. Now altered, its development finance functions extended far beyond the Bantustan territories and independent states. Interest in the DBSA’s gap-filling role was generated by the observation that it had not been providing development finance according to the traditional tenets of understanding development finance. The problem was two-fold. The Bank’s target client was not necessarily the most deserving. Additionally, projects financed by the DBSA did not automatically fall within the infrastructure development mandate. This thesis has explored how, in light of its financier role prior and post 1994, the DBSA interpreted and acted in relation to its mandate as set out in its policy documents and strategies. This study also delved into the nature of projects financed and if they were in line with the traditional understanding of gap-filling. As well, this report investigated factors contributing to the DBSA’s deviation from its gap-filling role. To carry out this research, case study methodology was used in tandem with the qualitative approach. To answer research questions in-depth-unstructured interviews and document analysis were used. The study was both an exploration of the DBSA’s gap-filling role as well as examination of development finance in action in the South African context. The study drew on literature in New Institutional Economics (NIE) as an umbrella theory best suited to explore the DBSA’s gap-filling role. It was found that prior to 1994 the DBSA did act in line with its gap-filling role. However, post 1994 the Bank most certainly deviated from its gap-filling role. Contributing factors to this divergence were found to be an increasingly competitive private sector, confusion over its development mandate, a challenging municipal client base and a self-sustainability funding model. Prior to 1994, the DBSA enjoyed a monopoly over its target client base, the Bantustan states and independent territories. It had a broad development mandate coupled with capital backing from the Republic of South Africa (RSA) central government. Post 1994, the DBSA mandate was infrastructure development targeted towards the public sector. The Bank was required to adopt a self-sustainability funding model. This, coupled with entry into a competitive private sector moving into the development space, placed a great deal of pressure on the Bank. Therefore, it became necessary to finance profit generating projects rather than those initiated by its mandated low-income high risk client base – poor municipalities. This study contributed to DFI literature by illustrating what functions DFIs are mandated to perform compared to what they do in reality. Also, this analysis has shown traditional market-failure studies assume DFIs perform a gap-filling role. This has to be re-examined taking into account the changing institutional environment. And, particularly in South Africa, more studies need to be conducted to further understand limitations and opportunities the DFI model offers for overall development.

Social entrepreneurship activity is very low in South Africa, especially among the youth. It is argued that favourable attitudes toward social entrepreneurship are determinants of successful social entrepreneurship that could contribute to sustainable socio-economic development amongst the youth who are still grappling with the “triple challenge” of unemployment, poverty and inequality. The primary objective of this study was to describe the attitudes of urban youth toward social entrepreneurship and to identify the constraints that the youth perceive as barriers to engaging in social entrepreneurship. The data of this study was from a survey conducted in Diepsloot, North of Johannesburg involving 153 young people. Data was collected using two self-rating questionnaires. The Social Entrepreneurial Intent Scale (SEIS), adopted from Thompson (2009), was used to measure social entrepreneurial intentions, while the Constraint scale developed by Fatoki and Chindoga (2011) was used to identify constraints. The study produced three main findings. Firstly, the majority of respondents had positive attitudes towards starting and engaging in social enterprises. Secondly, the research identified three main constraints that discourage the youth from starting or engaging in social enterprise, namely “lack of access to finance”, “lack of savings to start”, and “weak economic environment”. Thirdly, the research also identified an overall limitation to social entrepreneurship, namely; lack of support. Recommendations to reduce constraints and support social entrepreneurship were suggested.

Foreign direct investment is an important topic in economic research. FDI occurs when a firm invests in a foreign country. The purpose of this thesis is to empirically analyze the effects of FDI on the economic growth of the selected sample of twenty-one OECD countries. The thesis is based on a theoretical model of cross-country regressions and a panel data technique methodology was followed. The results of the time-period 1998-2017, show a direct positive impact of FDI on GDP per capita growth, namely economic growth. Moreover, it was found a lack of complementarity between FDI inflows and human capital, and a negative dependency between FDI inflows and institutions such as private sector credit.

A análise de contabilidade do crescimento aplicada ao Brasil, no período de 1950 a 2007, indica que o crescimento brasileiro não é explicado de forma satisfatória pelas teorias que tratam o progresso técnico como exógeno. Usando o modelo neo-schumpeteriano, explorou-se o papel da competição de mercado no crescimento da produtividade e do esforço inovativo das firmas usando as bases de dados da PAEP/SEADE e da PIA/IBGE. A importância do tamanho da firma nessas análises estimulou a investigação da relação entre o tamanho da firma e sua taxa de crescimento, explorada usando a base de dados da RAIS elaborada pelo IPEA, e o papel das grandes empresas internacionalizadas e do investimento direto estrangeiro, na perspectiva macro e micro, para o crescimento econômico brasileiro. Os principais resultados são a presença de uma correlação entre o crescimento da produtividade e uma medida de competição na forma de parábola côncava e que a ameaça de entrada não foi um fator significativo na segunda metade da década de 1990 para o crescimento da produtividade; apesar da evidência de correlação positiva entre a probabilidade de inovar e o crescimento da produtividade com tamanho, o crescimento do pessoal ocupado pelas firmas industriais brasileiras tendeu a ser maior nas firmas menores no curto prazo, ainda que no longo prazo exista uma convergência para a Lei do Crescimento Proporcional. Apresentaram-se indicações de que o aumento da poupança doméstica e da ameaça de entrada podem tornar o investimento direto estrangeiro um catalisador do crescimento da produtividade e levar o Brasil a crescer mais e com menor risco de volatilidade externa. A transição para um processo de crescimento voltado para a inovação pode ser estimulada por políticas que fomentem a competição nos setores mais próximos a fronteira tecnológica e o ingresso de investimento direto estrangeiro nos setores mais distantes. O desenvolvimento de ativos proprietários pelas empresas Brasileiras indica ser um fator crucial para assegurar um maior potencial de crescimento econômico. / The growth accounting analysis applied to Brazil in the period from 1950 to 2007 indicates that the Brazilian growth is not satisfactorily explained by the theories that deal with technical progress as exogenous. Using the neo-schumpeterian model, it was explored the role of market competition on productivity growth and firms innovative effort using the PAEP/SEADE and PIA/IBGE data bases. The importance of firm size has stimulated analyses on the relationship between the size of the firm and its growth rate, using the RAIS data base prepared by IPEA, and the role of large internationalized enterprises and the foreign direct investment, in its macro and micro perspectives, for the Brazilian economic growth. The main findings are the presence of a correlation between productivity growth and a measure of competition in the form of a concave parable and that the threat of entry is not a significant factor in the second half of the 1990s for productivity growth; despite evidence of positive correlation between the probability of innovation and productivity growth with size, growth of personnel occupied by Brazilian industrial firms tended to be higher in smaller firms in the short term, even though in the long run there is a convergence to the Law of Proportional Growth; we present indications that increased domestic savings and the threat of entry can make foreign direct investment a catalyst for productivity growth and lead Brazil to grow at higher levels and with less risk of external volatility and the transition to a growth process toward innovation can be stimulated by policies that promote competition in sectors closer the technological frontier and the inflow of foreign direct investment in the most distant. The development of proprietary assets by Brazilian firms seems to be critical to ensure a greater potential of economic growth.

Este estudo, dividido em três artigos, tem por objetivo analisar as contribuições da demografia, educação e mercado de trabalho no desenvolvimento brasileiro ao longo do século XX. Os três artigos estão encadeados em uma sequência temporal tal que o primeiro artigo concentra-se na transição demográfica brasileira para as coortes nascidas entre 1890 e 1960. O segundo artigo preocupa-se em entender como os efeitos da transição demográfica são absorvidos pelas novas coortes e seu efeito na taxa de matrícula. O terceiro artigo investiga como as coortes mais jovens, com mais capital humano, mudam a oferta relativa da economia e este processo impacta os salários relativos por grupos de qualificação. No primeiro artigo, os microdados dos Censos demográficos foram utilizados na investigação usando variáveis de educação, localidade e coorte de nascimento. Uma vez controlando por coorte e localidade, assumindo a hipótese que na localidade municipal as coortes são mais homogêneas quanto à exposição da oferta escolar, educação explicou aproximadamente 30% da queda da fecundidade. A simulação contrafactual evidenciou que caso não tivesse ocorrido o aumento da escolaridade das coortes, a transição demográfica seria mais lenta e gradual. No segundo artigo, dados da PNAD foram construídos para investigar a probabilidade de matrícula assumindo que a transição demográfica gera uma variação exógena no tamanho absoluto e no tamanho relativo das coortes. Os resultados evidenciaram que para as séries com maiores avanços na taxa de matrícula, diminuição do tamanho da coorte apresentou-se negativamente relacionada com a probabilidade de matrícula. Porém, a magnitude deste efeito não gerou mudanças significativas na simulação contrafactual e, para a primeira série do ensino fundamental, o avanço da escolaridade dos pais mostrou-se significativo. No terceiro artigo, dados da PNAD são utilizados para se investigar mudanças relativas no mercado de trabalho ocasionadas pela entrada de novas coortes com melhores indicadores educacionais. Os resultados apontam que mudanças na oferta relativa de grupos etários mais jovens conduziram a mudanças em seus salários relativos e as mudanças nos salários relativos de grupos etários mais velhos são explicadas por mudanças na oferta relativa agregada da economia. A simulação contrafactual demostrou que, caso não houvesse mudança na oferta relativa da economia, os salários de qualificados em relação a não qualificados apresentaria tendência crescente entre 1981 e 2013. / This study, divided into three articles, aims to analyze the contributions of demography, education and the labor market in Brazilian development throughout the 20th century. The three articles are connected in a temporal sequence such that the first article focuses on the Brazilian demographic transition for the cohorts born between 1890 and 1960. The second article is concerned with understanding how the effects of the demographic transition are absorbed by the new cohorts and affect school attendance. The third article investigates how the younger cohorts, with more human capital, change the relative supply of the economy and this process impacts relative wages by qualification groups. In the first article, the microdata of demographic Census were used in the investigation using variables of education, municipality and birth cohort. Once the cohort and locality control, assuming the hypothesis that in the municipality the cohorts are more homogeneous regarding the exposure of the school supply, education explained approximately 30% of the decrease of the fertility rate. The counterfactual simulation showed that if there had not been an increase in cohort education, the demographic transition would be slower and gradual. In the second article, PNAD data were constructed to investigate the probability of enrollment assuming that the demographic transition generates an exogenous variation in the absolute size and relative size of the cohorts. The results showed that for the series with the greatest advances in enrollment, a decrease in cohort size was negatively related to the probability of enrollment. However, the magnitude of this effect did not generate significant changes in the counterfactual simulation, and for the first grade of elementary school, the progress of parents\' schooling was significant. In the third article, PNAD data are used to investigate relative changes in the labor market caused by the entry of new cohorts with better educational indicators. The results indicate that changes in the relative supply of younger age groups have led to changes in relative wages and changes in the relative wages of older age groups are explained by changes in the aggregate relative supply of the economy. The counterfactual simulation showed that if there were no change in the relative supply of the economy, relative wages from skilled to unskilled workers would show a growing trend between 1981 and 2013.