Chapter 9

Economic growth and development

Chapter 9

13-08-2015

Unit 4: Development Strategies

Pg. 184-189

Development Strategies

Development Strategies refer to economic and political measures designed and applied in a country to achieve human development.

In other words, strategies aimed at increasing the standard of living/well-being of people

We will look at the following strategies that may assist in accelerating development:

• Development Development through Trade in Agricultural Products• through Trade in Agricultural Products• Development through Industrialisation of the economy• Fostering Entrepreneurship• Diversification of the rural economy• Development through foreign investments, loans and aid• Development through labour intensive development programmes• Development through educational reform• Developing the quality of human resources• Development by accessing modern technology• Development of infrastructure• Providing a stable marco-economic environment

i. Development through Trade in Agricultural Products

• abundance of agricultural products, TRADE!• Increases in the production should increase the

buying power of the population and subsequently the economic growth

• Government MUST facilitate in doing agricultural research, supplying necessary infrastructure & even subsidize farming to a certain extent

• move away from subsistence farming & start to produce for the market

• NB – Diversify the production of foods

ii. Development through Industrialisation of the economy

For a country to develop, industry has to expandWorkers transfer from the primary sector to the secondary and tertiary sectors

When most workers are transfered to the tertiary sector = economy is developed

Examples:

Manufacture goods for the local market Manufacture goods for the export market

COEGA (PE)

iii. Fostering Entrepreneurship

NB to encourage Entrepreneurship to assist in development… A country requires people to take risks and start their own businesses in order to further create employment for others. Government can promote this by offering support in the form of education, providing support & access to cheap finance.

Elon MuskNow living in America, Musk started his foray into business by teaching himself how to program computers and selling computer games. When he started living in America, Musk created PayPal (formerly X.com) which was bought by eBay.com. Now, Musk has moved onto space travel with SpaceX, solar electric company SolarCity and electric car company Tesla.

Mark ShuttleworthFamous for being the first African in space, Mark Shuttleworth has achieved similar sky-high success with his businesses. He first founded Thawte in 1995 which specialises in digital certification and Internet security, which was sold to VeriSign. Later, he founded Canonical Ltd which provides leadership for the Ubuntu system. He has dual citizenship in the UK and South Africa.

Patrice MotsepeSowetan-born Patrice Motsepe is a South African magnate and founder and executive chairperson of African Rainbow Minerals. Motsepe first became a lawyer specialising in business and mining law. He soon founded a mining services venture to clean gold dust from inside mine shafts, implementing a system of worker remuneration that combined a low base salary with a profit-sharing bonus. In 2008, he was declared the 503rd richest person in the world by Forbes.

Anton RupertEntrepreneur and conservationist Anton Rupert was the founder of the Rembrandt group. His career lasted over 60 years and created a net worth US$ 2.3-billion (R21.4-billion). With an initial investment of £10 (R142) and together with two fellow investors, he started manufacturing cigarettes in his garage, which he eventually built into the tobacco and industrial conglomerate Rembrandt Group, overseeing its transition to the industrial and luxury branded goods sectors, with Rembrandt eventually splitting into Remgro (an investment company) and Richemont (a Swiss-based luxury goods group).

Tokyo SexwaleTokyo Sexwale founded Mvelaphanda Holdings (mvelaphanda is the Venda word for “progress”), a company of which he is still executive chairman. His main interest is oil and diamond mining and he has operations across Africa and Russia. On top of this, Sexwale was the host to the South African version of The Apprentice.

Sol KerznerThe son of Jewish Russian immigrants, Sol Kerzner’s family started a hotel chain. After Kerzner graduated as a chartered accountant, he took over the running of the group and went on to create the most successful hotel group in South Africa, Sun International. He is now the founder, chairman and CEO of Kerzner International and his career spans more than 45 years in the resort industry. Highlights of his career include; Sun City, Mohegan Sun casino in America and the Atlantis Resort in the Bahamas.

Raymond AckermanAfter being fired from Checkers, Raymond Ackerman bought and started the retail chain Pick n Pay. Under Ackerman’s leadership, Pick n Pay has grown from four stores in Cape Town to one of the largest retail chains in Africa, which has a turnover of R37-billion. He stepped down from his directorship in 2010.

Herman MashabaA true rags-to-riches story, Herman Mashaba created the cosmetics brand Black Like Me. He started by selling his products from the boot of his car, and it mushroomed into the multimillion Rand enterprise it is today. Recently, he has also started operations in the UK.

South Africa’s TOP ENTREPRENEURS

iv. Diversification of the rural economy

Refers to the establishment of small and medium industries in rural areas in a bid to employ people in non-agriculture related industries.

Examples could be: Develop Tourism in the rural area (example, Namaqua Flowers in Spring brings much needed funds to towns such

as Clanwilliam and Springbok), which could also stimulate other businesses to open.

Another example could be:Farm Tourism, where farmers open up their farms to weekend visitors… (Called Agri-Tourismo in Italy)

v. Development through foreign investments, loans and aid

Financial flows to developing country take on 2 main forms:• Foreign Aid from other Countries

• Grants• Subsidized Loans• Provide machinery/technical help

• Direct Foreign Investment from private companies• Establish a factory

• When gaining access to finance in the form of loans, maintain an acceptable level of 40%-debt-to GDP. Hight debt is harmful to the economy (Interest repayments leads to an outflow of money)

vi. Development through labour intensive development programmes

EPWP -> Remember from yesterday?

vii. Development through educational reform

Invest in BASIC EDUCATION!

• Implement better administration• Integrate education with the labour demands within the economy

• Provide training to Teachers• Adapt communication and technology to the changing environment

viii. Developing the quality of human resources

A country’s human resources (the people/labour force) are key to development.

• Improve Health & Safety, Nutrition etc…• Improve Education & Training of both Adults & Children to reduce illiteracy

ix. Development by accessing modern technology

The use of technology can:• Increase Productivity &• Produce more products at more competitive prices, as well as • Improve the Quality of the products

x. Development of infrastructure

xi. Providing a stable marco-economic environment