Research & Innovation 2015-16 - Page 35



Thought leader
improving significantly. There has been some progress
in equalising access to education for girls and boys at
primary school level, but there has been no progress,
on average, in achieving gender parity in secondary
schooling, and there has been a widening of gender
inequality in tertiary education enrolment.
With many African countries relatively unequal, poverty
reduction in Africa has not been nearly as rapid as
it might have been, considering the rate of growth.
In countries with high levels of inequality, even rapid
economic growth often has a very small effect on
reducing poverty.
reduced the effect of shocks, which damage the
livelihoods of the poor much more than those of
the rich.
Land redistribution, accompanied by measures
to encourage agricultural productivity, was an
important foundation for relatively equitable growth
in Asian countries such as Japan, South Korea and
Taiwan.
Policies, institutions and leadership key to growth
Policies to develop high-growth sectors — such as
manufacturing, construction and labour-intensive services
— could have a significant effect on decent employment.
Uncertainty a fear factor for investors
Finally, strong institutions are critical to underpin reforms
that support growth and redistribution. This might sound
obvious today, but it was not obvious to the global policymakers of the 1980s and 1990s.
High levels of inequality are ultimately a constraint on
growth, and also undermine social cohesion. Growth
economist Johannes Fedderke argues in a 2010 policy
paper, Sustainable Growth in SA, that the main reason
for relatively low levels of private investment in the
country is the high level of uncertainty.
Africa needs smart, bold, well-informed leaders who
understand what works and what is implementable.
Uncertainty, he says, reflects a perception of political
instability and has a marked effect on private sector
investment. So the lack of social cohesion, largely an
outcome of inequality and other social cleavages,
contributes to low rates of growth.
Professor Alan Hirsch is director of the Graduate
School of Development Policy and Practice. Main
image by Deutsche Gesellschaft für Internationale
Zusammenarbeit, Violence and Crime Prevention. Image
of Lagos by Stefan Magdalinski, Wikimedia Commons.
A comparative look at Africa
There is strong evidence that developmental and
institutional reforms can reduce inequality. As in Latin
America, once the most unequal continent, levels of
inequality have decreased in many countries.
Broadening the distribution of education can have a
positive effect by raising productivity and reducing the
difference in income. In SA and in many other African
countries, the skills differential remains extremely high.
Social assistance has counteracted inequality in SA,
Ethiopia and several Latin American countries – the
evidence is already very clear.
In many African countries, tax collection is lower than
it should be and a general improvement in taxation
systems could have a significant effect on the ability
of a country to address inequality.
The tax collection rate in Latin America increased
by 3.5% of GDP in the 2000s – a huge step forward
and one that has not since been reversed. This was in
addition to an increased commitment to education
and social assistance in recent decades.
Latin American countries reduced their
external vulnerability to shocks by avoiding the
accumulation of foreign debt or large deficits,
by adopting flexible exchange rates and by
accumulating large foreign reserves. All this
No poverty, economic growth and reduced inequalities 30

Stefan Magdalinski





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