A conceptual framework for the growth and redistribution debate in South Africa

Abstract

It is possible to identify two generic schools of thought on the emotive question of the racially skewed income and wealth distribution in South Africa. Some economists argue in favour of ‘growth through redistribution’, and postulate that redistributive policies can enhance economic growth, especially by increasing labour productivity and generating greater political stability. Others support ‘redistribution through growth’, and emphasise the efficiency losses attendant upon any meaningful redistribution of existing income and wealth. The debate between these two schools of thought can be examined and evaluated within a common analytical framework. In so doing, it appears that, although proponents of both points of view have some compelling theoretical arguments, the matter can only be settled empirically.

Notes

The author is indebted to two anonymous referees for helpful comments on an earlier draft of the paper.

Senior lecturer, Department of Economics, University of New England, Armldale, Australia.