Key Points:

  • Job creation is a top priority for South Africa. Unemployment is unacceptably high, and the economy must be pushed into a more labour demanding growth path. However consensus ends there. In this paper, Nicoli Nattrass reviews the international literature on labour-demanding growth and draws some general policy conclusions.
  • Although East Asia and Latin America both experienced substantial industrialisation in the 1980s, the growth of manufacturing employment was four times faster in East Asia. Labour force participation rates rose significantly in East Asia, but remained roughly stagnant in Latin America.
  • International experience provides pointers for constructing an optimal employment-intensive growth strategy – with the caveats that historical experiences are subject to differing interpretations, and that analytical conclusions do not necessarily apply in different contexts.
  • The difference between East Asia and Latin America was that, although both regions initially opted for import substitution, the former switched to export promotion and reaped the benefits of sustained demand during the long post-war boom. Employment expanded rapidly because of the even faster export-driven increase in output.
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