Do rural households benefit from mega events? Reply

ShiNa2Dr. ShiNa Li from the University of Surrey in UK visited the School of Economics during the week of 29 May to 2 June. She is a co-worker on a project on Tourism and Poverty reduction, which is funded by the British Academy, together with Prof Andrea Saayman, Dr.Alicia Fourie, and Dr. Marco Scholtz. This is a 1-year project, which aims to investigate the influence that various aspects of tourism have on poverty.

During her visit, she presented some research results on the distributional effects of mega events. The case study presented investigates the effect of the Olympic Games, held in Beijing in 2008, on income distribution and opportunities to both urban and rural households in China. The exceptional circumstances in China, where the household registration system (hukou) distinguishes between a rural and urban person, hampers labour mobility. A person with a rural registration has access to poorer educational services and may not migrate to urban areas to search for work there. This has led to an increase in income disparity between urban and rural households in China.

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The SA economy, structure and growth Reply

Channing Arndt

Yesterday we had the privilege of hosting Channing Arndt of UNU-WIDER at our seminar series. He spoke on the topic of structural change of the South African economy and used mini Social Accounting Matrices constructed for the period 1993 to 2013 to have a closer look at changes in productivity.

He outlined the familiar facts of slow economic growth and a low rate of employment growth over the period – since 2008 these growth rates have been even lower. Linking this to productivity, he characterised the sectors as follows.

Employment growth
Low High
Productivity growth High Manufacturing
Low Mining Services

We had an interesting discussion on the exports of services and the growth in the skilled wage premium.

Seminar: Extreme monetary policy settings Reply

Johan vd Heever

A couple of weeks ago the School of Economics had the privilege to host Dr Johan van den Heever of the SA Reserve Bank at our seminar series. He spoke about the South African economy’s reaction to extreme monetary policy settings in an interesting overview of economic events and policy reactions since the early 1970’s. There were clear episodes of extreme policy settings in 1984, 1998 and 2009. He also had an interesting real repo rate graph that showed how loose (-8% in 1987) and tight (14.2% in 1998) monetary policy was at times. It was also fascinating to see that interest rates have not been well correlated with capital flows / the exchange rate, but the repo is more clearly linked to credit extension. It really is a pleasure to host an economist of Johan’s caliber for a seminar and we hope to see him more frequently next year.

A word of thanks to Prof Kleynhans who made all the arrangements for the ECON622 group.

Seminar on trade policy Reply

This afternoon Prof Henri Bezuidenhout and the ECON616 class, along with TRADE, hosted Peter Draper of Tutwa Consulting for a seminar on trade policy.

Peter Draper

The theme as AGOA and the future of SA-US trade relations and had a very interesting international political economy angle. Peter first explained the strategic context, putting AGOA into perspective. Then he focused on the current issues, specifically the case of poultry. In his analysis, the US won this first battle, but with AGOA set to expire in 2025, there are any number of possible skirmishes ahead – many of which will be about US foreign direct investment and the regulation of multinationals. The chance that a free trade agreement (FTA) will replace AGOA looks slim: on the one hand there are protectionist views and powerful interest groups in South Africa, and on the other hand the US has an inflexible gold-standard-FTA template that they are not keen to negotiate around. The alternative could be a new agreement on a Most Favoured Nation (MFN) trade basis, but here South African agricultural products and vehicles looks set to lose. How government and business will respond brings us back to political economy.