On the case for "black economic empowerment" in South Africa
This paper started by briefly pointing to the economic dilemma which gave rise to the Black Economic Empowerment Commission (BEECom). The country has experienced low growth coupled with high and growing levels of unemployment, which have led to widespread poverty and a highly unequal distribution of wealth. The BEECOM report itself proposes a broad range of interventions on the part of government, covering new land reform and capital ownership initiatives, infrastructure investments, accessibility to the sources of financial capital, human resource development, and rural development strategies. It is possible to argue that the South African economy with its peculiar history is a special case, calling for extra measures complementing and even replacing the market mechanism. As such the BEECOM recommendations, like the earlier RDP, can be justified on equity grounds alone, and perhaps also on efficiency grounds: giving disempowered people better access to markets and institutions may enable them to acquire additional human capital, inter alia by "learning from doing", thus putting in place the conditions for sustainable economic growth. It can however be questioned whether the type of skills which the BEECOM wants to promote are also the skills required for sustainable growth. If they are not, the proposed strategy may well entail a huge cost in terms of economic growth forfeited. Limited savings may then be diverted away from highly productive skills, whilst the strategy itself may also reinforce the "drain" of those selfsame skills from the country.