New Research
New report diagnoses drivers of South Africa's severe economic and social challenges
Growth Lab researchers identify problems undermining inclusive growth: collapsing state capacity and spatial exclusion
Cambridge, MA - A new report by Harvard's Growth Lab finds that South Africa's economy is performing poorly, and its society is facing the consequences of extreme unemployment and inequality. Three decades after the end of apartheid, the economy is defined by stagnation and exclusion, and current strategies are not achieving inclusion and empowerment in practice.
This report asks the question of why. It documents the central findings of an intensive two-year applied research project by the Growth Lab, led by Professor Ricardo Hausmann, where a large team conducted a deep diagnostic of potential causes of South Africa's prolonged underperformance. Throughout the project, the research team worked alongside public officials, the business community, members of the academic community, and numerous non-profit entities to understand constraints at a deeper level.
The report describes how South Africa is not accomplishing its goals of inclusion, empowerment, and transformation and argues that new strategies and instruments will be needed to do so. The research identifies two broad classes of problems that undermine inclusive growth across South Africa: collapsing state capacity and spatial exclusion. These issues have caused the South African economy to lose its historic sources of comparative advantage — including its cheap and reliable electricity — and have kept the labor, talents, and capabilities of far too many South Africans disconnected. | 
