A new Bureau for Economic Research (BER) study indicates that there are five countries that the South African Government of National Unity can learn from in implementing reform to promote economic growth.
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A new Bureau for Economic Research (BER) study indicates that there are five countries that the South African Government of National Unity can learn from in implementing reform to promote economic growth. Economists have welcomed the findings.
The report prepared by Prof Johan Fourie, Chair of Economics, History and Policy at Stellenbosch University, said that South Africa’s per capita income has barely grown in two decades. “What separates countries that sustain growth from those that stagnate?.Five countries – Chile, Poland, India, Germany and Argentina – faced critical junctures where coalition dynamics and reform trajectories diverged.”
Fourie added that three lessons emerge for South Africa’s Government of National Unity. “Crises create reform windows, but only credible political settlements translate those windows into sustained investment and growth. Reform sequencing matters – infrastructure first, labour later. And institutional anchoring and coalition coherence determine whether reforms survive beyond the government that enacted them.”
Fourie said that applied to the GNU, these lessons point to a clear prescription: deliver visibly on infrastructure, protect existing institutions and build coalition coherence around a shared reform scorecard. “ We ask what political conditions enable sustained economic growth. We approach the question comparatively, examining five countries that faced critical junctures – Chile (1986), Poland (1992), India (2002), Germany (2005) and Argentina (2003) – where coalition dynamics and reform trajectories diverged.”
Fourie added that their selection seeks variation on the outcome. “Chile, Poland, India and Germany represent Path A – countries that forged credible political settlements and sustained growth for a decade or more. Argentina is the Path B case: it experienced a genuine growth acceleration, but the acceleration reversed because the underlying settlement proved not durable.”
Fourie said that all five cases experienced high political contestation – factional conflict, coalition fragmentation or ideological polarisation. “Contestation is the starting condition, not the differentiator. What matters is what happens next. Path A describes the sequence in which contesting factions reach a credible bargain. The bargain need not be formal or comprehensive; it must be credible – each faction must believe the others will honour their commitments. Credible bargains generate policy coherence, which reduces uncertainty.”
Fourie added that Path B describes the alternative. “An initial acceleration occurs – our data detect one in Argentina in 2003 – but the political settlement is not durable. Without credible commitment devices, the bargain unravels: subsequent governments reverse reforms, uncertainty returns and growth collapses.”
Fourie said that the distinction between Path A and Path B is not whether an acceleration occurs, but whether it is sustained. “The framework draws on three strands of theory: the war-of-attrition model, where reform is delayed because each faction hopes the other will bear costs and occurs only when crisis makes delay costlier than concession. The status-quo bias result, where rational uncertainty about who gains from reform produces collective resistance and the veto-player framework, where more veto players make change harder but reversal equally so. Our contribution is to integrate these into comparative diagnostics applied to five concrete cases and one learner.”
Fourie added that successful growth episodes follow a consistent sequencing pattern: macroeconomic stabilisation and trade liberalisation first, labour-market reform later. “Macro stabilisation delivers visible results quickly, building political capital for harder reforms. Labour-market reform threatens core constituencies and is more likely to be effective once the growth dividend creates fiscal and political space.”
Professor Waldo Krugell, an economist at North-West University, said that he likes the proposal for sequencing reforms because it implies setting priorities. “Our policymakers are really good at describing all our problems, then outlining strategies and plans on how to solve all of them, but getting to very little of it - the famous 'delivery gap'. If the political economy of sequencing can implicitly help to set priorities, that is good.”
Prof Raymond Parsons, economist at the North-West University Business School, said that what is essential for all useful reforms to the GNU, as suggested by BER is that coalitions should ultimately offer more policy certainty to business. “It is well known that uncertainty reduces firms' willingness to hire and invest, as has been calibrated over the years by the North West University (NWU) Policy Uncertainty Index (PUI). Elevated policy uncertainty in South Africa has undermined the three essential pillars of efficiency, stability, and policy consistency that promote adequate growth and reduce high unemployment.”
Parsons added that the BER’s research makes it possible to envisage a credible political settlement for the future, thereby helping to improve South Africa’s economic performance. “Business confidence ultimately depends on political stability and policy certainty. And what is important for future job-rich growth is that a national political coalition must implement growth-oriented, sustainable, and irreversible policy changes. A major factor in the failure to properly implement the National Development Plan was the institutional framework's insufficient anchoring, which failed to ensure the delivery of what had been promised.”
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