From Developing to Developed: What South Africa needs to do

File image: IOL

Effective state intervention within developmental states is at the pillar of economic development. The state plays a significant role in controlling the prices of goods including the shifts in the market. As such, effective state intervention becomes a precondition for firms to gain profits. In order to achieve economic growth, the state has to formulate long term strategic mechanism which will in turn yields long term incentives on investment. And that is a matter of collaborating both market performance and state intervention. Strategic industrial policies directed towards economic growth and development are vital and central to the developmental states.

In Japan, the state formulated policies that assimilated all sectors of the industry by offering lower interests rates on long term loans through subsidies. Furthermore, encouraging international trade and competition as opposed to local competition helped the state to achieve remarkable results in terms of development. The private-public relations became feasible due to effective political management. 

For the East Asian tigers to develop. They kept regular consultations with the international community in order to ensure that their economic policies and technological advancement are formulated on the same playing field with those of the First World countries. They slowly or gradually equipped themselves with the economic strategies that were employed in the Western world. Amid development, the East Asian tigers were also faced with challenges arising from internal pressures and external pressures. Internally, demographic factors as people lived longer than usual had an impact on the developmental states and externally, new international laws on trade made it impossible for the state to determine its own prices.

Economic globalization continues to impact developmental states. What is currently at stake for developmental states in the twenty-first century is the shift from the production economy to the knowledge economy but that requires larger investment in education and technology for information to be disseminated simply and accurately. Renewable energy is another crucial factor to be considered by developmental states in the twenty-first century including the extent to which individuals and organizations engage in violent activities that threaten development. 

For African countries who are still in the developmental phases such as South Africa with rich natural resources such as gold and platinum, a new shift and focus on the mineral resource as key exports for economic growth is vital. The South African state need to invest more in the knowledge economy and renewable energy as opposed to coal empowered stations. There seems to be no effective interventions for economic growth in developing countries. Dysfunctional institutions still makes it difficult to realize democratic ideals. Power in the economy still reside with the few minority Whites who continue to damage our economy through illicit financial outflows. 

RSA needs new strategies to deal with investments, divestments and financial outflows.  Local production and consumption need to be highly encouraged and keeping the interests rates as lower as possible to increase borrowing for new and small business ventures including is vital to increased Gross Domestic Product (GDP). Increased GDP from local production will mean increased job opportunities thus addressing the high unemployment and poverty rates in RSA.

Development is possible but good institutions, clear and dedicated political will and the ability to strategies extensively around production, consumption, loans and investments and national projects is key to development.


Chuene Raphunga is a student with the Wits School of Governance (2019/20) and holds a MA Degree in Social Anthropology from Wits University.