SA could be ‘great nation’, says economist

2011-03-17 07:25

South Africa could grow “in a better way” than China and become a “great nation” if government uses its natural resources wisely, the World Bank’s chief economist said yesterday.

“In South Africa, if your government uses its resources well and makes positive investments you could grow in a much better way than China,” Justin Yifu Lin said during a lecture at the University of Johannesburg’s Soweto campus.

“You can turn South Africa into a great nation.”

He said it was up to the government to generate revenue from its natural resources and to use this to upgrade infrastructure.

“Maybe you can overtake China one day,” Lin said.

South Africa needed to develop entrepreneurs to “embrace challenges” and “find opportunities” for new industries, he said. “Every nation can turn its destiny around in one generation.”

Lin said South Africa had to use its develop labour-intensive industries.

“South Africa is a labour-abundant country. You have so many new young people coming into the job market,” he said.

“This is your comparative advantage. If the labour force are competitive, you can accumulate capital faster and you can gradually move to more capital intensive industries.”

Lin said building up labour intensive industries would have a number of economic spinoffs, such as narrowing the income gap between rich and poor.

“There will be more jobs for the poor and the wage rate will increase when the economy upgrades to more capital intensive industries.”

Lin said a resource-rich country such as South Africa should follow its comparative advantages in developing resource intensive industries, including extraction, forestry, and agriculture.

“Should South African develop labour intensive manufacturing industries? The answer is yes, because most labour forces are in agriculture or are unemployed and are poor.

“Labour intensive industries provide jobs, can be competitive and can pave the basis for continuous upgrading to higher value added industries.”

Lin said South Africa could learn from the Finnish cellphone company, Nokia, which started out as a labour intensive logging company.

“Nokia diversified to rubber boots and later to the assembly of household electronics, and finally it became a world leader in mobile phones.”

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