i A SOUTH AFRICAN DEVELOPMENTAL STATE: THE SIGNIFICANCE OF STATE CAPACITY. A research report submitted to the Political Studies Department, Faculty of Humanities of the University of the Witwatersrand, in partial fulfilment of the requirements for the Degree of Master of Arts (M.A) in Political Studies. By Sifiso Ndlovu 0607401D. Prepared under the supervision of Professor Anthony Butler. March 2011. ii PLAGIARISM DECLARATION 1. I know that plagiarism is wrong. Plagiarism is using another?s work and to pretend that it is one?s own. 2. I have used the Author Date Method as the convention for citation and referencing. Each significant contribution to, and quotation in, this essay/report/project/? from the work, or works of other people has been attributed and has been cited and referenced. 3. This essay/report/project? is my own work. 4. I have not allowed, and will not allow, anyone to copy my work with the intention of passing it off as his or her own work. SIGNATURE: __________________________ DATE: ________________ iii ACKNOWLEDGEMENTS I would like to extend my sincere gratitude to my supervisor, Professor Anthony Butler. Professor Anthony Butler is especially thanked for his precision in identifying and correcting all presentations from the first and final part of this research study. Not only have his comments and recommendations been helpful, but his knowledge in researching and writing on South African politics has been inspirational. Professor; you were extremely helpful in providing informative feedback to every work submitted and guided the researcher in developing innovative ideas. Your wisdom and advice has gone a long way towards refining my work. Sincere gratitude is also extended to Dr Delia Nzekwu. Dr Delia Nzekwu, this study would not have been possible without your input. I extend my sincere gratitude to Delia for her unconditional support, editing as well as spurring me on throughout my research journey. This work would not have been successfully completed without the assistance of my family members who tirelessly gave me emotional and financial support throughout my academic endeavours. My heartfelt thanks and much appreciation is extended to my sisters and brothers; Nomagugu, Thembelihle, Professor Sabelo, Sibonokuhle, Mandlenkosi, Morgan and my mother. I say thank you for believing in me. Without all of you who kept me motivated and encouraged, it would not be possible to complete this research study. Special mention must be made to Professor Sabelo Ndlovu-Gatsheni; you have been more than a brother, thank you for your unwavering resilience in reading and editing my work. Indeed your discerning and incisive critique of my writings helped a great deal in developing ideas that led to the success of this research study. Thank you very much. I also have a special appreciation for my friends Orievulu Kingsley, Russell, Philani, Nompumelelo, Fabrice and Dikeledi who tirelessly discussed and fine-tuned my ideas; thank you very much, you have been more than academic colleagues. Last but not least, I thank God for making my academic vision possible and for providing all my needs towards accomplishing it. I give all honour and thanks to God who gave me strength, courage and peace of mind to persevere to this point. This is for you. Above it all, I say I alone am responsible for the deficiencies of this research study. iv ABSTRACT This study uses secondary literature and primary sources to explore the significance of state capacity in proposals to build a South African developmental state. Its main aim is to get a deeper understanding of state capacity as a significant ingredient in building a successful developmental state. The analysis is based on the postulation that no country can successfully build a developmental state without the necessary state capacity. The study surveys the literature on developmental states, explores the key attributes/institutional benchmarks of a developmental state and draws out findings about what accounts for a successful developmental state. One of the key conclusions drawn from the literature is that in order for a state to be a successful developmental state, it needs to be institutionally configured in such a way that it possesses the capacity to formulate and implement policies successfully. Using theoretical benchmarks propounded by scholars as a point of reference, the study establishes how we should understand state capacity and shows that such state capacity is a necessary precondition for a successful developmental state. Following from this analysis, it explores how the South African government has to come into grips with the issue of state capacity in its quest to build a South African developmental state. The failure of post-1994 macro and micro economic reform strategies to address the principal challenges of poverty, unemployment and underdevelopment indicates that successful implementation of any policy is dependent on state capacity. v ABBREVIATIONS ANC- African National Congress ASGI-SA- Accelerated Shared Growth Initiative of South Africa BEE- Black Economic Empowerment CIU -Co-ordination and Implementation Unit COSATU-Congress of South African Trade Unions DTI-Department of Trade and Industry EDD- Economic Development Department GEAR- Growth, Employment and Redistribution iPAP- Industrial Policy Action Plan MITI-Ministry of Internal Trade and Industry NGP-New Growth Path NPC- National Planning Commission NP-National Party PCAS-Policy Coordination and Advisory Services PSC- Public Service Commission RDP- Reconstruction and Development Programme SACP-South African Communist Party SRI-Solidarity Research Institute vi Table of Contents PLAGIARISM DECLARATION???????????????????????................................i ACKNOWLEDGEMENTS?????????????????????????????????ii ABSTRACT??????????????????????????????.. ................................iii LIST OF ABBREVIATIONS????????????????................................................................iv CHAPTER ONE ............................................................................................................................................ vi 1.1 INTRODUCTION TO THE STUDY .......................................................................................................... 1 1.2 BACKGROUND TO THE RESEARCH TOPIC ..................................................................................... 1-2 1.3 THE STRUCTURAL NATURE OF POVERTY, INEQUALITY AND UNDERDEVELOPMENT?????????????. 2-4 1.4 POST-1994: GOVERNMENT?S EFFORTS TO CHANGE THE STRUCTURE OF THE ECONOMY ..................................................................................................... 4-5 1.5 CONSIDERING AN INTERVENTIONIST ROLE FOR THE STATE IN DEVELOPMENT ....................................................................................................................... 5-7 1.6 COMMITMENT TO BUILD A SOUTH AFRICAN DEVELOPMENTAL STATE?????????7-8 1.7 RELATIONSHIP BETWEEN NPC AND DED .......................................................................................... 8 1.8 STATE CAPACITY AS A SIGNIFICANT INGREDIENT FOR A SUCCESFUL DEVELOPMENTAL STATE ......................................................................................................................................................8-vi1 1.9 RESEARCH QUESTION???????????????????????????????....1vi 1.10 SUB-QUESTIONS ................................................................................................................................ 1vi 1.11 RATIONALE???????????????????????????????????11-12 1.12 CONCEPTUAL/THEORETICAL FRAMEWORK????????????????????.12-14 1.13 AIMS/OBJECTIVES OF THE STUDY .................................................................................................. 15 1.14METHODOLOGY??????????????????????????????? ............ vi5 1.14.1 OVERALL APPROACH/RESEARCH DESIGN ..................................................................................... 16 1.14.2 METHODS OF GATHERING DATA .................................................................................................... 16 1.15 LIMITATIONS OF THE STUDY ...................................................................................................... 16-17 1.16 OUTLINE OF CHAPTERS ............................................................................................................... 17-18 CHAPTER TWO ? LITERATURE REVIEW ........................................................................................... vi9 2.1 ORIGINS OF THE TERM ?DEVELOPMENTAL STATE' ................................................................. vi9-21 2.2 WHAT IS A DEVELOPMENTAL STATE? ....................................................................................... 2vi-27 vii 2.3 INDUSTRIAL POLICY AS THE OVERARCHING ECONOMIC POLICY IN EAST ASIA ............... 27-29 2.4 LESSONS THAT CAN BE DRAWN FROM EAST ASIAN COUNTRIES? INDUSTRIAL POLICY???????????????????????????????????...?..........29-30 2.5 WHAT THEN IS A DEVELOPMENTAL STATE? ............................................................................ 3vi-32 2.6 STATE CAPACITY ............................................................................................................................ 32-33 2.6.1 KEY ELEMENTS/COMPONENTS OF STATE CAPACITY ........................................................... 33-35 2.7 CONCLUSION ................................................................................................................................... 35-36 CHAPTER THREE - POLICY FORMULATION AND IMPLEMENTATION AS A MEASURE OF STATE CAPACITY ..................................................................................................................................... 37 3.1 INTRODUCTION .................................................................................................................................... 37 3.2 CONTEXTUAL BACKGROUND ...................................................................................................... 37-38 3.3 TRANSFORMING THE SOUTH AFRICAN ECONOMY: RECONSTRUCTION AND DEVELOPMENT PROGRAMME ......................................................................................................................................... 38-40 3.4 FROM RECONSTRUCTION AND DEVELOPMENT PROGRAMME TO GROWTH, EMPLOYMENT AND REDISTRIBUTION ........................................................................................................................ 40-4vi 3.5 IMPACT OF GROWTH, EMPLOYMENT AND REDISTRIBUTION ON THE STRUCTURE OF THE ECONOMY ............................................................................................................................................. 4vi-44 3.6 IN SEARCH OF A SUSTAINABLE ECONOMIC GROWTH TRAJECTORY: ACCELERATED SHARED GROWTH INITIATIVE FOR SOUTH AFRICA ............................................................................ 44 3.7 BLACK ECONOMIC EMPOWERMENT ........................................................................................... 44-47 3.8 CONCLUSION ........................................................................................................................................ 47 CHAPTER FOUR - TOWARDS A SOUTH AFRICAN DEVELOPMENTAL STATE: AN ASSESSMENT OF SOUTH AFRICA?S INSTITUTIONS AS A MEASURE OF STATE CAPACITY .... 48 4.1 INTRODUCTION .................................................................................................................................... 48 4.2 SOUTH AFRICA?S POLITICAL LEADERSHIP ................................................................................ 48-49 4.3 THE PRESIDENCY AS THE POLICY CO-ORDINATION CENTRE ............................................... 49-5vi 4.4 CONSENSUS BETWEEN LABOUR, GOVERNMENT AND BUSINESS......................................... 5vi-52 4.5 THE PUBLIC SECTOR AND SERVICE DELIVERY......................................................................... 52-55 4.6 SOUTH AFRICA?S INDUSTRIAL POLICY : AS A POLICY PROBLEM LINKED TO CAPACITY...... 55 viii 4.7 INADEQUATE MANUFACTURING STRATEGY ............................................................................ 55-57 4.8 CONCLUSION ........................................................................................................................................ 57 CHAPTER FIVE - SUMMARY AND CONCLUSION ............................................................................... 58 5.1 INTRODUCTION .................................................................................................................................... 58 5.2 RESEARCH FINDINGS ..................................................................................................................... 58-59 5.3 OVERALL ASSESSMENT ...................................................................................................................... 59 5.4 SIGNIFICANCE OF THE STUDY ...................................................................................................... 59-60 5.5 CONCLUSION ........................................................................................................................................ 60 REFERENCES????????????????????????????????????..61-69