Halving Poverty in South Africa: Growth and Distributional Aspects

The United Nations Millennium Declaration commits to halving extreme poverty between 2000 and 2015. The South African government has set a goal of halving poverty by 2014, although the meaning of this goal has not yet been defined. This article specifies government.s stated target of halving poverty by 2014 in terms of specific measures of the poverty gap and poverty headcount ratio, using income and expenditure survey microdata. With the poverty line as defined here, approximately half the South African population falls below the poverty line. Despite this, the aggregate poverty gap is surprisingly small at about 3 per cent of GDP. Projections of the effects of distributional scenarios on poverty indicate that halving poverty appears feasible with moderate growth rates and fairly mild pro-poor distributional change.income distribution, poverty, inequality, South Africa

Sectoral Engines of Growth in South Africa: An Analysis of Services and Manufacturing

Manufacturing has traditionally been regarded in the development literature as having special ?growth-pulling? or ?growth-enhancing? properties. The share of manufacturing in GDP has been declining slightly over time in South Africa, while that of services has been growing. This study focuses on the ?Hirschmanian? channels through which sectoral growth can lead or support aggregate economic growth, using input-output tables to investigate intersectoral linkages in the South African economy. Manufacturing is found to be especially important as a source of demand for the services sector and the rest of the economy through its strong backward linkages. This draws attention to possible negative implications of a decline in manufacturing on the South African economy.growth, manufacturing, services, multipliers, input-output tables, South Africa

Manufacturing Productivity, Deindustrialization, and Reindustrialization

In considering pathways to industrialization in the twenty-first century, cognisance needs to be taken of the fact that many countries have actually been deindustrializing. This paper analyses deindustrialization experiences internationally, by decomposing changes in the level and share of manufacturing employment. The results indicate that in most countries the decline in manufacturing employment is associated mainly with rising labour productivity in manufacturing. Reindustrialization is likely to be important for long-term economic growth, yet it is difficult and is not common. This highlights the importance of robust industrial policies if countries are to move from deindustrialization to reindustrialization.deindustrialization, reindustrialization, manufacturing, employment

What are the Distributional Implications of Halving Poverty in South Africa when Growth Alone is not Enough?

The South African government has set a target of halving poverty by 2014. Using microdata from the 2005/6 Income and Expenditure Survey, this article frames government’s stated target of halving poverty by 2014 in terms of specific measures of the poverty gap and poverty headcount ratio. With the poverty line as defined here, about half the South African population is classified as poor. Even so, the aggregate poverty gap is only about 3% of GDP. Projections of poverty in 2014 under various growth scenarios indicate that growth alone will be insufficient to halve poverty by then. It would take average annual growth of 8.7% between 2006 and 2014 to halve both the poverty gap and poverty headcount ratio with the current distribution of income and expenditure. However, projections of the effects of a range of growth and distributional scenarios on poverty, using a new method for simulating pro-poor distributional change, indicate that halving poverty appears feasible with moderate growth rates and fairly mild pro-poor distributional change. The results are indicative as to the scale of distributional changes necessary to halve poverty under various growth scenarios

An empirical investigation of the effects of concentration on profitability among US banks

This paper analyses the effects of concentration on profitability in the US banking sector from 1994-2005, using bank-level panel data. A new index of concentration is proposed, which reflects the depth and intensity of concentration. The econometric specification facilitates the simultaneous testing of the four main hypotheses in the literature concerning the relationship between concentration and profitability. Strong support is found for the Structure-Conduct-Performance hypothesis, as well as some support for the Relative Market Power hypothesis. The results are robust to alternative econometric techniques and specifications, and to various measures of profitability and of concentration. Further analysis sheds light on the nature and possible channels of the concentration-profitability relationship. A positive relationship is found between concentration and profitability even when the largest banks are excluded from the sample, suggesting that the relationship between concentration and profitability may act in a generalised structural way. In addition to very large banks, large banks and small banks also appear to benefit from concentration, but with no clear advantages to lower-middle-sized banks. Analysis of the effects of concentration on the components of profitability suggests that concentration may raise both interest and non-interest revenue, and reduce both interest and non-interest costs. Furthermore, concentration appears to depress bank deposit interest rates and raise both lending rates and the interest rate spread. This suggests that bank concentration might have negative effects on savings, investment, and growth

An empirical investigation of the effects of concentration on profitability among US banks

This paper analyses the effects of concentration on profitability in the US banking sector from 1994-2005, using bank-level panel data. A new index of concentration is proposed, which reflects the depth and intensity of concentration. The econometric specification facilitates the simultaneous testing of the four main hypotheses in the literature concerning the relationship between concentration and profitability. Strong support is found for the Structure-Conduct-Performance hypothesis, as well as some support for the Relative Market Power hypothesis. The results are robust to alternative econometric techniques and specifications, and to various measures of profitability and of concentration. Further analysis sheds light on the nature and possible channels of the concentration-profitability relationship. A positive relationship is found between concentration and profitability even when the largest banks are excluded from the sample, suggesting that the relationship between concentration and profitability may act in a generalised structural way. In addition to very large banks, large banks and small banks also appear to benefit from concentration, but with no clear advantages to lower-middle-sized banks. Analysis of the effects of concentration on the components of profitability suggests that concentration may raise both interest and non-interest revenue, and reduce both interest and non-interest costs. Furthermore, concentration appears to depress bank deposit interest rates and raise both lending rates and the interest rate spread. This suggests that bank concentration might have negative effects on savings, investment, and growth