The objectives of the macroeconomics policy critical and assessment in the South African economy

Résumé du document

Although South Africa is regarded as an “economic powerhouse” in Africa and has a strong modern industrial and financial base, it faces severe developmental challenges: poverty, high level of inequality, unemployment…” (Fourie and Burger 2003: 4). The Human Development Index for South Africa is 0.653 which gives the country a rank of 121st out of 127 nations (United Nations 2007). In this way, the South African economy faces two main issues: to ensure sustainable development, which is defined as “… development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (Brundtland Commission 1987:43 cited in Fourie and Burger 2003:2) and to globalize successfully (Fourie and Burger 2003: 10).

Extraits

[...] The objectives of the macroeconomics policy Critical and assessment in the South African economy Table of contents Introduction The objectives of macroeconomic policy The SA fiscal policy objectives The SA monetary policy objectives Comments To what extent does the government pursue the same objectives as the Reserve Bank? To what extent do the objectives differ? Critical assessment and overview of these macroeconomic objectives 4 Conclusion Bibliography lthough South Africa is regarded as an “economic powerhouse” in Africa and has a strong modern industrial and financial base, it faces severe developmental challenges: poverty, high level of inequality, unemployment (Fourie and Burger 2003: 4). [...]

[...] The aggregate government expenditure in 2006 was R 323 Billion: of GDP (SARB 2007: S-104, S-145). In increasing this expenditure each year, the SA government wants to accelerate growth, to modernise public services and infrastructure and to reduce poverty and inequality (Budget Speech 2007). The increase is likely to stimulate economic activity GDP and employment, as we can see with these Keynesian chain reactions: Higher government expenditure ( aggregate expenditure increases ( upward pressure on prices and domestic production stimulated ( Income boosted and GDP increases On the other hand, Fourie and Burger (2003: call the GEAR a “neoclassical macroeconomic stabilisation policy”. [...]

[...] The aim is to face all the developmental challenges developed in introduction. To achieve these goals, the South African government has developed two key economic policy developments since 1994 (end of the apartheid): the Reconstruction and Development Programme (RDP) (1994) and the Growth, Employment and Redistribution plan (GEAR) (1996). The aim of the RDP is to improve the service delivery to the poor and to create a great environment for human development. This programme increases government expenditure to education, health, welfare, safety and security and infrastructure. [...]

[...] In this way, as explained by Fourie (2001: 272), the ultimate goal of the fiscal policy is improvement of the well-being of all the people in the country”. President Mbeki illustrates this mission by: pursuit of the goals of social cohesion and human solidarity.” (4th Nelson Mandela Lecture 2006). Two main objectives can be noted as follow: - To stabilize the Debt/Equity ratio in order to globalise successfully. As Fourie and Burger (2003: said, it is relevant to create an environment “friendly to foreign investors”. In this way the government must reduce the budget deficit to below of GDP to stabilise the debt/equity ratio. [...]