Local Economic Development (LED) is an applied economic development strategy which seeks to address site-specific needs through locally appropriate solutions. In this thesis, the faith being accorded to the potential of LED in South Africa is critically examined. The study is based on a detailed examination of the experience of regional development and several emerging cases of LED in the Eastern Cape Province of South Africa. High levels of poverty and unemployment necessitate and justify innovative approaches to address such problems. The thesis examines the potential of LED strategies and identifies applied policy guidelines which can help address the Province's development needs. The theoretical framework of this research is based on a critical examination of international and South African literature dealing with development issues, LED and localities theory. A detailed documentary examination of early LED endeavours and the experience of regional development in the present century was undertaken. Results suggest that LED is not a new concept and that regional development, through its political bias, achieved only limited success. Contemporary examples of LED were identified and examined through detailed site-specific investigations. This was carried out through the use of semistructured interviews supplemented by participatory rural appraisal and questionnaire surveys which served as a means to triangulate the results. The research findings indicate that regional development, as applied in the study area, did not lead to the establishment of a permanent industrial base. In terms of the concept of LED, it is apparent that it has allowed for socio-political empowerment but has only improved economic conditions in the more well-endowed case-studies. In these areas, positive antecedent conditions and the key role played by community supportive nongovernmental organizations is apparent. Despite the limited degree of success which many initiatives attain, the thesis regards LED as a development alternative for areas which are unlikely to draw in external investment. Some of the key contributions of the thesis include the advancement of a refined typology of LED, the development of a research schedule to investigate and assess LED initiatives and the postulation of appropriate development guidelines and theoretical constructs.

There has been some concern that the pace of expectations being built up regarding the transfer of ownership of the economy into the hands of the previously disadvantaged was not allowing for the due diligence and analysis of the implications of such transactions. Tax legislation relating to the transfer of assets is also not seen to be consistently conducive to this process. The focus of this thesis is taxation and a critical analysis of how the current tax legislation affects most of the transactions which usually form the basis of black economic empowerment. It is argued that tax policy is one of the fundamental instruments available to government to encourage the process of black economic empowerment. It is therefore important to assess whether or not current tax legislation is supportive of the process of black economic empowerment and to suggest ways in which it can be amended to serve this purpose. By means of a literature review and a case study of a Black Economic Empowerment deal in the financial sector, the thesis examines various sections of the Income Tax Act, 58 of 1962, which may have a bearing on black economic empowerment transactions and structures, including corporate restructuring rules, the taxation of trusts, inter-company loans, the use of hybrid financial instruments, the taxation of small business corporations, employee share incentive schemes, connected persons rules and value-shifting arrangements, the general deduction formula and the deductibility of interest incurred on amounts raised to acquire shares. It appears that although some aspects of the current tax legislation lend themselves to assisting black economic empowerment transactions, there are still areas where much improvement is required. / KMBT_363

This thesis focuses on monetary policy transmission and particularly seeks to examine the impact of credit and exchange rate channels of monetary policy transmission in the South African economy. South Africa's monetary policy has gone through several changes over the past thirty years. In this respect, there is a need for robust empirical evidence on the effects of these channels on inflation and output. The thesis employs a structural vector autoregressive (SVAR) model to identify monetary transmission in South Africa for the period 1994:q4 - 2008:q2. The form of the SVAR used in this thesis is based on the fact that South Africa is a small open economy, which means that external shocks are an important driver of domestic activity. The impulse responses and variance decomposition results show that the repo rate, credit and exchange rate play a role in terms of their impact on inflation and output. The dynamic responses to the identified monetary policy shock are consistent with standard theory and highlight the importance of the interest rate channel. A shock to the interest rate, increasing it by one standard deviation, results in a persistent fall in credit. The response of output is immediate as it falls and bottoms out within the second year. Inflation shows a lagged response, it is positive within the first year as the exchange rate depreciates but in subsequent quarters inflation responds negatively as expected. Inflation falls and reaches a minimum by approximately eight quarters then moves towards baseline. The exchange rate shows delayed appreciation. The shock to the repo interest rate leads to an immediate depreciation of the exchange rate in the first two quarters as output declines, followed by an appreciation in the third and sixth quarter. Due to larger error bounds the impact of the repo rate on the exchange rate could be less effective within the first two years. The impulse responses suggest that monetary policy plays an effective role in stabilising the economy in response to a credit shock, notwithstanding large standard error bounds. Hence, the monetary authority reacts by increasing the repo rate as a result of inflation. The impact of credit on output is positive but is offset to some extent by the rising repo rate. In response to the rand appreciation, the monetary authority reduces the repo rate significantly during the first year with the maximum impact in the second year and then returns to baseline thereafter. Therefore the monetary authority reduces the repo rate, probably to stabilise falling inflation. The result shows that inflation falls as a result of the rand appreciation. A shock to the exchange rate causes a rise in output, though small in magnitude, which is persistent but reaches baseline at the end of the period. This result could reflect the effects of the resultant fall in the repo rate and a persistent rise in credit over the whole period, which tends to increase output. The exchange rate shows an obvious and stronger immediate impact on inflation compared to credit impact on inflation. However, the credit shock has an obvious and stronger impact on output compared to an exchange rate impact on output. However, the large standard error bounds may imply that credit and exchange rate channels are not as effective in the short run. It is important to note that the results are based on the SVAR model estimated with percentage growth rate of the variables. The variance decomposition result is in line with the impulse responses and shows that the exchange rate and credit channels could be important transmission channels in South Africa over the chosen sample period. The exchange rate and credit shocks show a stronger effect on inflation than on output, looking at both the impulse responses and variance decomposition results. The reaction of the repo interest rate to the credit and exchange rate shocks comes out as expected. The repo rate increases as a result of an increase in the credit and falls as a result of the currency appreciation.

The history of economic thought is ‘flooded’ with neo-classical accounts despite the fact that neoclassical economics did not occupy history alone. This has caused the discourses on ‘lost alternatives’ to be relegated as the deterministic ‘straight line’ neo-classical historical discourses are elevated. Globally hegemonic neo-classical discourse aided this phenomenon as it served to subordinate any counterhegemonic local discursive processes towards alternatives. This study is premised on the theme of non-neoclassical ‘lost alternatives’ using the post-apartheid South Africa as a case study. Emerging from the apartheid regime, the impetus towards non-neoclassical redistributive policies was strong in South Africa but this did not gain traction as the ANC’s ‘growth through redistribution’ was replaced by globally hegemonic discourse which favoured ‘redistribution through growth’. This thesis postulates the idea of two waves of ‘internal’ discursive formations; capturing the transition to democracy up to 1996 as the first wave and the period from 2005 to about 2009 as the second wave. The developmental state paradigm (DSP) emerged as the central heterodox paradigm with ideas such as industrial policy, welfare, and social dialogue/compacts being main elements. The DSP was expressly chosen in the early 1990s, the first period of strong internal discursive formation, but faded as neo-classical policies, epitomised through GEAR, dominated the policy space. The DSP discourse gained vitality in the second wave of internal discursive formation (2005-2009) and it was associated with the subsequent Zuma’s administration. The study illustrates that the DSP has failed to be fully developed into a practical framework but remained only at rhetorical level with the phrase ‘developmental state’ inserted into government policy documents and documents of ANC as a ruling party. The thesis further illustrates that the DSP fared well ideologically because of its inclination to the ideology of ‘developmentalism’ tended to trump any socialist inclined policies such as a generous welfare regime. The thesis rebuts the notion of the DSP in South Africa which has only been amorphously developed with the phrase ‘developmental state’ becoming a mere buzzword. The thesis argues that the DSP in the 21st century is much more complex and the growing ‘tertiarisation’ of the economy makes the Social Democratic Paradigm SDP’s capability centric approach much more relevant for South Africa. The study goes further to argue that a (SDP) is much more suitable alternative for addressing South African colonial/apartheid legacies and consolidation of democracy.

This study analyses whether the advent of strike action has an effect on the value and volatility of the South African Rand compared with the US Dollar. The literature suggests that strike action can have a significant effect on the exchange rate in terms of either value or volatility, and consequences can result that cause inefficiencies in the economy; inhibiting employment and economic growth. Strike action has become common place in South Africa, with 2012 alone recording 99 strikes, 45 of which were “wildcat” or unprotected strikes. This study uses GARCH and Intervention Analyses to determine what the resulting effects of the strikes might be on the exchange rate. The analysis used ZAR/USD exchange rate data for the period January 2000 to October 2013, and covered 72 of the most significant strikes in terms of lost man-days. The results are mixed, suggesting that the effects of strikes do not always conform to expectations (increased volatility and a depreciation in the Rand), and that outside factors affecting the global economy may have a more significant effect on the exchange rate than strikes on their own.

Economic development remains elusive for many world economies, but especially those of African countries. The current global inequalities in terms of GNP per capita and human living standards between developed and developing nations have ensured that the challenges of food insecurities are only some of the many negative experiences of underdevelopment in the African continent. Hence, delivery pressures are increasing on policy makers and researchers to provide tangible and timely economic solutions to the resilient state of underdevelopment. In the policy fights against the challenges posed by a lack of development in South Africa, the agricultural sector has in the past and continues in the present to play a central role. Such is the case because the majority of citizens rely on agricultural production activities for their livelihoods. For instance, even though the sector only contributed four percent towards the national Gross Domestic Product in 2006, in the Eastern Cape Province, more than seventy percent of the total population resided in rural areas. Moreover, in 2004 more than sixty percent of the national formal and informal employment levels were found in the sector. These economic indicators do not only reinforce the assertions that high levels of geographical and sectoral inequalities exist in the country’s economy, but they also illustrate the importance of the agricultural sector in public policy attempts, which are aimed at achieving food security alongside long-term developmental objectives. Some economists, especially the proponents of institutionalism, have argued that most of the recommendations to public policy interventions from mainstream economic research endeavours are not adequately helpful. The recommendations generally lack well considered and socially effective ideas, mainly because there remains some level of ignorance about the impacts that institutions have on economic and social systems. Some argue that this ignorance is reflected in (flawed) hedonistic and rationalist assumptions made about economic actors and in the methodological thinking of many research designs and economic analyses. The misuse of formal tools and statistical methods, for example, are some of the important factors, which have led to failures of the discipline of economics to provide effective policy solutions to problems of underdevelopment and poverty, especially in poor country environments. The thesis, having taken account of the majority of criticisms levelled against the classical and new-classical economic schools of thought, argues that the discipline as a whole lacks a paradigmatic integration of institutional and new-classical economic perspectives to offer appropriate guidelines for a methodology aimed at achieving socially responsive research outputs. The lack of this integration has resulted in a skewed selection of methods by economists, which are employed in research without a supportive and in-depth understanding of institutional and social factors. To support the thesis, a more effective and integrated framework for economic research is developed and presented with case study illustrations in a cumulative manner. The 20th century history of agricultural policies in South Africa, the agricultural and institutional case studies from the Eastern Cape Province alongside reviews of other agricultural studies are all used in presenting a case for rigorous institutional investigations in general economic research. These are also used in developing the proposed integrated framework, which aims to give guidance in developing research methods, which are more socially responsive. Having shown the usefulness of the proposed research framework, the thesis recommends that public policy interventions (at national and local levels) should aim to eliminate all types of institutions which have high associated transactional costs. The interventions should also encourage the emergence and growth of the types of institutions, which present the lowest costs to initiatives of economic development. In the primary case studies from the Eastern Cape Province, the insecurity of land tenure and the various local initiatives of business ventures are highlighted as two examples of the types of institutions, which respectively present high and low transactional costs to local initiatives of agricultural and economic development.

From introduction: This is a study of Indian family businesses in the central business district of Durban, a sea port on the coast of Natal, in South Africa.

The purpose of this thesis was to develop a method by which economic value can be imputed from an economic activity to a non-market ecological function or service which contributes to that economic activity. The Knysna River in South Africa was chosen as the ecological function which supported three economic activities from which value was to be imputed; these were the Knysna Municipal Water Supply, Fish Production in the Knysna Estuary and Production of Indigenous Forest within the Knysna Catchment. Three underlying assumptions and two functional operations were required in order to implement the suggested method. The underlying assumptions were: - The ecological and economic activities considered are within a single catchment. - The allocation of value imputed for a specific economic activity to the ecological function or service under consideration (in this case the Knysna River) is proportional to the total contribution of ecological functions or services contributed to the economic activity. - The valuation of the economic activity for the purposes of obtaining a price-quantity point on a demand function is to be full cost pricing with no producer surplus. The two functional requirements were: - Diagram or map the linkages between an economic activity and the supporting ecological functions. - Determine the consumer surplus related to an incremental change in quantity under a demand function where the original price and quantity are known. A value from each of the economic activities was imputed to the Knysna River. However, the method was not tested. Nonetheless applying the equations and collecting the required data allowed several methodological needs to be clearly pointed out. The most acute deficiency was difficulty in obtaining secondary data from governmental agencies, commercial representatives and existing published academic research to ensure a robust price. Also, scientific information was not sufficiently available for allocating ecological contributions to the economic activities. Even with the shortage of credible data the method appears to allow non-market ecological functions to be valued in context of an existing economic system.

The enormous social, economic, and political government-led societal transformation South Africans have experienced over the past 15 years have brought about numerous societal and identity changes. The aim of the present study was to explore how dominant (White participants) and non-dominant (Black participants) groups experiencing the government-led societal transformation process deal with perceptions of intergroup differences based on Social Identity Theory (Tajfel & Turner, 1979, 1986) and related field research. Social Identity Theory predicts that in the presence of intergroup differences group members irrespective of their status position will apply identity management strategies to either improve or maintain their status position. The relationships between perceptions of intergroup relations and identity management strategies as proposed by Social Identity Theory were tested studying 170 second year Rhodes University psychology students. Sixty participants indicated themselves as Black South Africans (representing non-dominant group) and 110 participants identified themselves as White South Africans (dominant group). The results revealed that dominant and non-dominant groups differ systematically regarding the functional interaction between beliefs about the intergroup situation and identity management strategies. The results of the study indicate too, that ingroup identification differentiates between individual and collective strategies irrespective of the group’s status position.

Amartya Sen argued that poverty was the “deprivation” of the capability to lead a “good life”, therefore ending poverty meant meeting basic physical and social needs, and enabling meaningful economic and political choices. The principal objective of this research was to investigate whether (and if so, in what ways) post-apartheid state-provided non-contributory cash social grants in South Africa reduced “poverty” in Sen’s sense. This thesis used Ezibeleni, a historically black working class township at Queenstown, in the Eastern Cape, as a reference area. Using in-depth interviews, it found that social grants did help reduce poverty, both in terms of helping meet basic needs and enabling grant recipients to make more choices, including facilitating job searches and small businesses. However, it was also found that grants fall short of ending poverty, as the grants were too small to adequately cover basic needs in the context of large family sizes, a serious and long-term lack of resources, persistent unemployment, and high indebtedness, and could also enable only a limited expansion of choices. The grants played a positive role, but were inadequate to remove the “unfreedoms” facing the poor.