Market Power, Growth, and Inclusion: The South African Experience
20 Pages Posted: 30 Oct 2020
Date Written: September 2020
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: Suggested Citation