The neo-liberal incentive structure and the absence of the developmental state in post-apartheid South Africa

Despite initial promises of a Keynesian-inspired redistribution programme by the African National Congress, macroeconomic policy making in South Africa has been shaped largely by market orthodoxy ever since the 1996 Growth, Employment, and Redistribution programme was unveiled by the finance ministry. The article draws on econometric analysis combined with interviews, and a rich body of literature that focuses on the economic incentives underwriting state industrial policies, in order to highlight the causal mechanisms responsible for the persistence of neo-liberal orthodoxy in South Africa over a 20-year period. It argues that the failure of the developmental state to materialize during the post-apartheid era can be attributed to a convergence of interests between the national treasury, the business sector, and global financial actors. More specifically, it shows that capital account liberalization reduced the exchange rate risk for international investors by strengthening the rand, thereby generating a decline in South Africa's 10-year bond yield and facilitating the treasury's access to international finance at reduced interest rates.