- Professor Ricardo Hausmann, founding director of Harvard University’s Growth Lab, spoke to CDE’s executive director Ann Bernstein about the Growth Lab’s research project diagnosing the causes of South Africa’s economic challenges and what should be done to accelerate growth and drive mass inclusion.
- The Growth Lab report, Growth through Inclusion, identifies two major explanations for why South Africa’s economy has performed so poorly over the past 15 years: a collapse in state capacity and continued spatial exclusion.
- Hausmann explained that South Africa’s decline is “strongly linked to the collapse in electricity provision”. Since “a lot of the country’s comparative advantage was based on the availability of cheap, reliable electricity”, it meant that “when the government malfunctions on electricity, it hits economic activity especially hard”.
- According to Hausmann, “instead of focusing so much on redistribution to compensate people for their exclusion”, South Africa should instead look to attract “investments to make sure that people get included” in the economy. That is what ‘growth through inclusion’ means.
