Development Paths and Employment

Year Published 2009
Business unit: Special Projects
Resource type: Research reports
Research report: HSRC
File type: PDF
Theme(s): Economic Development, Employment & labour markets

Description

The paper explores the meaning of intensive and extensive growth paths and considers how to construct an indicator that tracks whether the economy is tending toward one or the other. It suggests that such an index must be based on identifying dynamic sectors, based on their productivity growth and on their linkages with the rest of the economy. A sector may be dynamic in itself, but this is not translated into the systemic dynamism required for economic development if there are not high spillovers into other sectors. It finds that the measure of productivity problematic. Although past performance in terms of productivity growth may be important, the gap between productivity in the domestic economy and the global productivity of the sector might be a better indicator of sectoral potential. Despite these problems, the paper illustrates how a monthly indicator of the development path can be constructed. An illustrative estimation suggests that the South African economy has been tending away from intensive growth since the end of 1995. The paper recommends that further work be undertaken to place the indicator on a firmer footing.

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