Market Power, Growth, and Inclusion: The South African Experience

20 Pages Posted: 30 Oct 2020

See all articles by Vimal Thakoor

Vimal Thakoor

International Monetary Fund (IMF)

Date Written: September 2020

Abstract

Before the pandemic, the South African economy remained stuck in low gear, with anemic growth, stagnant private investment, and a shrinking tradable sector. Subdued growth has raised unemployment, poverty, and inequality, hindering inclusion efforts. The pandemic has worsened economic and social vulnerabilities. Economic recovery and social inclusion hinge critically on structural reforms to boost competiveness and growth. Product markets represent a cornerstone of the reform strategy. Firms have used their market power to drive up prices and limit competition. Important state-owned monopolies provide low-quality services, while representing a fiscal drag. Existing regulations inhibit the entry of both domestic and foreign firms. Addressing product markets constraints could boost per capita growth by 1 percentage point-adding about 21/2 percentage points to headline growth-and foster greater inclusion.

Keywords: Competition, Commodity markets, Private investment, Labor markets, Job creation, WP, market power, product market, firm, market concentration, mark-up

JEL Classification: G10, E22, J20, J23

Suggested Citation

Thakoor, Vimal, Market Power, Growth, and Inclusion: The South African Experience (September 2020). IMF Working Paper No. 20/206, Available at SSRN: https://ssrn.com/abstract=3721231

Vimal Thakoor (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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