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Is Black Economic Empowerment a South African Growth Catalyst? (Or Could it Be...)


Matthew Andrews


Harvard University - Harvard Kennedy School (HKS)

September 10, 2008

HKS Working Paper No. RWP08-033

Abstract:     
This study asks the question, "Is Black Economic Empowerment a South African growth catalyst?" It addresses the question with reference to the theoretical literature on economic and organizational structures. This literature argues that structures reflect values and influence patterns of behavior, empowerment and opportunities for economic growth. The paper shows that South Africa's economic structures have had negative influences on racial access and economic opportunity, creativity and responsiveness. The proposition is that transformation and growth require change in economic structures; the same BEE-induced changes will work for both goals. However, some observe that BEE is not effecting change. This raises a counter proposition that BEE will not catalyze growth. The two propositions are examined in a study of BEE responses in twenty-five JSE listed firms.

The basic finding is that while firms are actively responding to BEE requirements they are also doing so within a static structural context, where firms keep looking to established networks for solutions. This limits the number of beneficiaries of BEE. It also exacerbates constraints on the number of people in these groups - especially manifesting in added pressure on skilled groups. A number of firms are also not developing vertical connections that might open opportunities for entrepreneurs. Firms that are developing vertical connections are creating capacities to bridge the network divides that exist. The payoff seems very high in these initiatives, evident in trained and screened talent, new jobs and new enterprises. These findings lead the paper into a discussion of what could be done to improve BEE - such that it does become a policy that catalyzes growth.

Number of Pages in PDF File: 107

Keywords: Business and Government Policy, International Development, Political Science, Public Management


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Date posted: September 11, 2008  

Suggested Citation

Andrews, Matthew, Is Black Economic Empowerment a South African Growth Catalyst? (Or Could it Be...) (September 10, 2008). HKS Working Paper No. RWP08-033. Available at SSRN: https://ssrn.com/abstract=1266797 or http://dx.doi.org/10.2139/ssrn.1266797

Contact Information

Matthew Andrews (Contact Author)
Harvard University - Harvard Kennedy School (HKS) ( email )
79 John F. Kennedy Street
Mailbox 31
Cambridge, MA 02138
United States
617-384-8039 (Phone)
HOME PAGE: http://www.hks.harvard.edu/about/faculty-staff-directory/matt-andrews
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