Browsing by Subject "economics"

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    A small push goes a long way: An evaluation of the cumulative effects of a cash transfer on South African youth
    (2021) Jani, Tafadzwa; Eyal, Katherine
    Persistently high poverty rates in developing countries have negatively affected social welfare outcomes, including infant mortality, food security, life expectancy, and educational attainment. In the late 2010s, depressed household incomes endured in many developing countries in the Americas, Africa and Asia. Cash transfer programs were introduced in many low-income countries in the 1990s, often intended to reduce poverty and increase human capital. South Africa launched the child support grant (CSG) in 1998, an unconditional cash transfer for children below the age of seven. By 2017, the program boasted twelve million beneficiaries, with an upper age limit of eighteen. Globally, initial evaluations of cash transfers (including the CSG) focused on children, and the short-term impacts on education, health, and consumption. However, fewer evaluations of the impact of extended receipt have taken place, particularly using older beneficiaries who experience lifelong receipt. This thesis analyses the long-term effect of CSG receipt on youth outcomes. Observing a positive CSG effect on South African youth would be encouraging, given that 3.3 million youth were not involved in any employment, education, or training in 2018. The literature focussing on older youth outcomes and long-term receipt primarily examines educational outcomes, mainly evaluating cash transfer programs in North America. This thesis draws on the National Income Dynamics Survey, a nationally representative longitudinal study conducted in South Africa between 2008 and 2017. Both the irregular expansion pattern of the CSG, and the panel nature of the survey are utilised to estimate grant impact on two cumulative outcomes (educational achievement and physical health, measured by height), and two current outcomes (labour force participation and mental health), using a youth sample aged between fifteen and twenty-seven. Those experiencing a higher duration of CSG receipt display higher educational achievement, higher average height and lower labour force participation. However, no significant effects are found on mental health. These results suggest extended receipt of an unconditional transfer may positively impact human capital accumulation, while current outcomes are less likely to be affected (World Bank 2016).
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    Alternative contracting for informal economy financing
    (1992) Liles, Scott Day; Hartzenberg, Trudy
    The informal economy in South Africa is a source of considerable debate. Academics and practitioners struggle to define, characterize, measure and place the informal economy in South Africa's macroeconomic picture. Despite the polemic, it is generally agreed that the informal economy is important. Every collection of ideas regarding the South African economy includes some thoughts on the informal economy. The compelling point is that these thoughts are generated in a wide variety of disciplines. The informal economy features in collections addressing economics, politics, history, urban planning and even literature. Christian Rogerson and Eleanor Preston-Whyte' s recent collection, "South Africa's Informal Economy", is testament to the broad application of the informal economy. Beyond the debate of definitions and characteristics is the debate on how to assist the informal economy. Leiman suggests that one of the major constraints on the informal economy is "blocked access”. Blocked access refers to limited access to product and factor markets. In the case of the informal economy this reference means limited access to raw materials, skills and capital. In South Africa the limited resources directed to informal economy activity can be largely attributed to past government policies that were hostile to the informal economy's existence and development. As such, the role of informal economy development was left to non-governmental and welfare organizations.
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    An investigation of employment outcomes in South African manufacturing
    (2020) Mercer, Sean; Black, Anthony
    The aim of this research paper is to investigate the employment outcomes in South African manufacturing between 1972 and 2016. The research employs a combination of qualitative and quantitative analysis in demonstrating how South Africa's manufacturing sector has become increasingly capital-intensive, with aggregate manufacturing employment falling by approximately 600 thousand jobs between 1982 – 2016. The investigation highlights the influence of industrial policy decisions in this outcome, creating a bias towards investment in capital-intensive manufacturing industries. This trend has continued post-1994, despite government's repeated commitment to job creation and strategic policy support for more labour-intensive industries. A further investigation of the manufacturing sector at a sub-industry level indicates that while capital-intensity has increased in capital and labour-intensive industries alike, the increase in aggregate manufacturing capital-intensity is due primarily to capital-intensive industries expanding their share of aggregate capital stock and output relative to labour-intensive industries. Consequently, South Africa's revealed comparative advantage lies, somewhat paradoxically, in capital-intensive production, contrasting the manufacturing sectors in similar comparator countries. To ensure a rigorous investigation of the aforementioned outcomes, the paper examines the common notion that South African real wages are too high to be competitive in labour-intensive production. The findings indicate that poor labour productivity is an equally important contributor to uncompetitive unit labour costs relative to competitor countries. As a means of addressing these challenges, utilizing a practical example, the paper proposes the use of special economic zones to create an environment from which labour-intensive production can thrive. It highlights the potential of targeted industrial policies, in a controlled environment to reduce the cost of labour whilst simultaneously improving productivity over time. Utilizing various instruments, for example wage subsidies, the example illustrates how such an approach is a cost-effective way of encouraging investment in labour-intensive industries, simultaneously offering a solution to more meaningful employment creation in South African manufacturing.
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    Analysing the role of language in the context of education, employment and income in South Africa
    (2020) Kahn,Amy; Leibbrandt, Murray; Branson, Nicola
    Although most of the South African population speak an African language as their home language, English remains the lingua franca and continues to dominate economic and political life. This thesis explores the role of language in the context of the labour market, the schooling system and survey data collection primarily using data from the National Income Dynamics Study (NIDS) survey. Firstly, I assess the impact of English proficiency among African home language speakers on employment probabilities and wages. After accounting for endogeneity and measurement error in the employment and wage models, I estimate that being proficient in English is associated with a 23-25 percentage point increase in the probability of employment, and a wage premium of 33 percent. These results contribute to the limited research on this topic in South Africa. Secondly, I explore the extent to which English and Afrikaans dominate as the Languages of Learning and Teaching (LoL T's) in the foundation phase of schools where a share of the learners speak an African language as their home language. Despite overwhelming evidence that mother-tongue instruction in the early years of schooling is superior pedagogically, parental preferences towards it remain low and I find that most schools in urban areas still choose to teach in English or Afrikaans. Mother-tongue instruction tends to occur in rural areas, or poorer urban communities, and where learners within a school come from relatively similar language backgrounds. Thus, when devising implementation plans to assist schools in adopting mother-tongue instruction, there may be a need for different strategies across different areas and schools. Finally, l investigate the role of language in determining the quality of the data that are used to investigate the phenomena in the first two sections. Through a multilevel analysis of the NIDS survey data, I find that when the interviewer and respondent are from the same language group, the respondent is more likely to participate in the survey. This is an important methodological finding as it implies that matching interviewers and respondents according to language may have a positive impact on survey response and hence the representativity of the data.
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    Assessing the Impact of Minimum Wage on South Africa's Earnings distribution
    (2018) Brey, Yaseen
    The topic of minimum wage has been of interest for a long time and particularly its potential in addressing wage inequality and ultimately improve the livelihoods of the most marginalized. South Africa has high prevalence of inequality and poverty and the minimum wage is touted as a potential mechanism to improve the lives of individuals at the bottom end of the wage distribution. The mainstay of analysis for minimum wage is the impact on employment. To this end, the paper will flesh out the history of minimum wages and contextualize them through their role in improving welfare. In February 2017, the National Economic Development and Labour Council, constituted out of representatives from business, labour and government, signed the national minimum wage agreement. This agreement outlines the basis for instituting a new national minimum wage no later than 1 May 2018. The proposed new minimum wage of R20 per hour is aimed to “improve the lives of the lowest paid workers and begin to address the challenge of wage inequality” (NEDLAC, 2017). Although many sectors are already at this level, significant increases in the private security and domestic workers sector will require a large increase to come up to parity. In terms of the political economy, the African National Congress (ANC) is undergoing significant grappling for power of South Africa’s ruling party. Although it cannot be seen as more than conjecture, it is nevertheless worthwhile to view the national minimum wage as more than just labour reform, but also a bargaining chip for political gain in the 2019 national elections.
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    British American tobacco PLC: an analysis of the group's pricing strategy across its key markets
    (2022) Mathebula, Peter-Wallace; Van Walbeek, Cornelis
    Tobacco products are subject to substantial excise and sales taxes. In most countries these increase over time, but the rate of increase varies between countries and across different types of tobacco products. The tobacco industry is opposed to increases in tobacco taxes, changes in relative tax rates for different tobacco products, and adjustments to excise structures because these adversely affect their profits. However, the tobacco industry can mitigate these shocks by means of its pricing strategies. This paper investigates how the British American Tobacco Group has reacted to excise tax increases and declining industry volumes in order to maintain profitability in its 31 key markets (i.e. key countries) over the period 2006 to 2019. The Group's most common response to the excise tax increases was to overshift the excise increases. This meant that the retail price was increased by more than the increase in the excise tax. In a scenario of decreasing sales volumes and shifting consumer preferences, it is the relatively price-inelastic demand for the Group's products and its substantial market power which often make this strategy possible and successful. However, even though this strategy is most common, the trading environment differs in each market, which meant that the Group had to sometimes apply different strategies. These strategies include undershifting the tax (especially for cheaper brands), oversupplying the market in anticipation of excise increases, timed price changes, and adjusting product attributes in response to regulatory changes. Furthermore, as traditional combustibles are coming under increased pressure, the Group is developing new product categories.
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    China in Africa
    (2013) Anthony, Ross
    This two-lecture course will consider the political rationale behind Sino-African relations and some of the actors and institutions which drive the political agenda, and will also explore aspects of the economic dimension.Since the late 1990s, driven by China’s ‘go out’ policy, Sino-African trade has experienced unprecedented growth. For anyone interested in learning more about China's role in Africa's economy and politics.
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    Corporate taxation and investment in South Africa
    (2021) Maboshe, Mashekwa; Woolard, Ingrid D
    This thesis investigates some aspects of corporate taxation and firm-level investment in South Africa. The thesis uses specially constructed and unique datasets to draw insights on the link between corporate tax changes and firm-level investment and as well as the efficiency of capital allocation in South Africa. The thesis comprises a short introductory chapter, three empirical chapters, and a summary chapter. The first empirical chapter (chapter 2) evaluates the responsiveness of firm-level investment to corporate tax changes over a period of notable corporate tax reforms in South Africa. The study estimates a reduced form neoclassical investment model using a particularly constructed dataset of firms listed on the Johannesburg stock exchange over the period 1999-2012. Generalised methods of moments (GMM) techniques are used to control for various econometric biases. The findings suggest that although the corporate tax reforms reduced the marginal cost of investment, these reductions did not result in a statistically significant increase in firm-level investment. The null effects found in this study are robust to various estimation specifications. Although at variance with the established literature from developed countries, the findings are similar to emerging evidence in other developing country contexts and suggest that other factors may be more important determinants of investment than corporate tax policy. Chapter 3 explores the possibility that the unresponsiveness of firm-level investment to corporate tax policy may be a result of the presence of financial constraints. According to the financial constraints hypothesis, neoclassical fundamentals may fail to explain investment in the presence of financial constraints. The paper investigates the role of financial constraints in investment using dynamic GMM and endogenous switching regressions methods. The paper finds that financial constraints are an important factor in investment determination. Firms that are more financially constrained rely more on the availability of internal resources to fund investment relative to the less financially constrained firms. The findings suggest that investment policy should consider strategies that reduce informational asymmetries and other capital market inefficiencies. Such strategies would help lower the barriers and costs of external finance, thus improving firm-level investment. Chapter 4 considers the implications of differential taxation of assets and industries in South Africa. The paper's motivation is that although there are variations in the tax treatment of investments in assets and across industries, little empirical evidence exists on the nature of any investment distortions due to differential tax policies. Using a rare and unexplored industrylevel data source from Statistics South Africa, the study constructs a panel of asset shares by industry over the period 2007-2014 and estimates inter-asset tax elasticities to estimate the potential investment distortion or misallocation effects of differential taxation policies. The findings suggest the presence of non-negligible inter-asset distortions due to non-uniform taxation of investments. Investments in a given asset are found to respond to the tax incentives provided for other asset classes. Our findings suggest that current corporate tax policies that offer differentiated and asset or industry-specific investment incentives may be causing distortions and inefficiencies in the allocation of assets among industries.
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    Corporate taxation and investment in South Africa
    (2021) Maboshe, Mashekwa; Woolard, Ingrid
    This thesis investigates some aspects of corporate taxation and firm-level investment in South Africa. The thesis uses specially constructed and unique datasets to draw insights on the link between corporate tax changes and firm-level investment and as well as the efficiency of capital allocation in South Africa. The thesis comprises a short introductory chapter, three empirical chapters, and a summary chapter. The first empirical chapter (chapter 2) evaluates the responsiveness of firm-level investment to corporate tax changes over a period of notable corporate tax reforms in South Africa. The study estimates a reduced form neoclassical investment model using a particularly constructed dataset of firms listed on the Johannesburg stock exchange over the period 1999-2012. Generalised methods of moments (GMM) techniques are used to control for various econometric biases. The findings suggest that although the corporate tax reforms reduced the marginal cost of investment, these reductions did not result in a statistically significant increase in firm-level investment. The null effects found in this study are robust to various estimation specifications. Although at variance with the established literature from developed countries, the findings are similar to emerging evidence in other developing country contexts and suggest that other factors may be more important determinants of investment than corporate tax policy. Chapter 3 explores the possibility that the unresponsiveness of firm-level investment to corporate tax policy may be a result of the presence of financial constraints. According to the financial constraints hypothesis, neoclassical fundamentals may fail to explain investment in the presence of financial constraints. The paper investigates the role of financial constraints in investment using dynamic GMM and endogenous switching regressions methods. The paper finds that financial constraints are an important factor in investment determination. Firms that are more financially constrained rely more on the availability of internal resources to fund investment relative to the less financially constrained firms. The findings suggest that investment policy should consider strategies that reduce informational asymmetries and other capital market inefficiencies. Such strategies would help lower the barriers and costs of external finance, thus improving firm-level investment. Chapter 4 considers the implications of differential taxation of assets and industries in South Africa. The paper's motivation is that although there are variations in the tax treatment of investments in assets and across industries, little empirical evidence exists on the nature of any investment distortions due to differential tax policies. Using a rare and unexplored industry level data source from Statistics South Africa, the study constructs a panel of asset shares by industry over the period 2007-2014 and estimates inter-asset tax elasticities to estimate the potential investment distortion or misallocation effects of differential taxation policies. The findings suggest the presence of non-negligible inter-asset distortions due to non-uniform taxation of investments. Investments in a given asset are found to respond to the tax incentives provided for other asset classes. Our findings suggest that current corporate tax policies that offer differentiated and asset or industry-specific investment incentives may be causing distortions and inefficiencies in the allocation of assets among industries.
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    Cost utility and budget impact analysis of bortezomib and lenalidomide for the treatment of relapsed/refractory multiple myeloma in the South African public health sector
    (2021) Matsela, Lineo Marie; Cleary, Susan; Wilkinson, Thomas
    Multiple myeloma (MM) is the second most common haematologic cancer, accounting for approximately 13% of all blood cancer cases worldwide. The global incidence rate increased by 126% from 1990 to 2016. In South Africa, multiple myeloma accounts for approximately 9% of haematological cancers and less than 1% of all cancers. Nevertheless, some studies have reported that the incidence is likely underestimated due to an underdiagnosis of the cancer. Thus, the disease could possibly be an issue of greater concern in South Africa than current statistics indicate. The nature of the MM tumour makes patients prone to resistance of chemotherapy and multiple relapses leading to the development of relapse/refractory multiple myeloma (RRMM). During the relapse/refractory period, the patient is nonresponsive to treatment and/or experiences progressive disease When a patient experiences relapse/refractory MM, their prior, (first line) treatment is readministered if it was clinically efficacious and well-tolerated. Contrarily, a change in regimen is recommended if “an insufficient response, a rapid relapse and poor tolerance” to the first-line treatment is experienced by a patient. Second-line regimens that are recommended due to their proven high clinical efficacy are lenalidomide plus low-dose dexamethasone (LEN/DEX) and bortezomib monotherapy (BORT). The clinical effectiveness of both regimens for second-line treatment of RRMM was reported in the MM009/010 and the APEX studies, respectively, where each regimen was compared against dexamethasone monotherapy. Given this proven clinical effectiveness for RRMM, lenalidomide is under consideration for inclusion in the South African Essential Medicines list. Three treatment strategies for second line RRMM treatment were modelled from a provider's perspective. These strategies were dexamethasone (standard of care), BORT and LEN/DEX. For each strategy we modelled a hypothetical cohort of relapsed/refractory multiple myeloma patients using a three-state Markov model (pre-progression, progression and dead) over a 15-year time horizon. Efficacy data was obtained from the MM009/010 and APEX trials, while utilisation rates were obtained from a European study. Other input data was sourced from local literature. Outcomes were reported in quality adjusted life years (QALYs). Incremental cost effectiveness ratios (ICERs) were calculated for BORT and LEN/DEX and compared to the local cost-effectiveness threshold to determine if the drugs are good value for money for the South African government. The total costs per patient using DEX, BORT and LEN/DEX over 15 years differed significantly resulting in estimates of R8 312.32, R234 995.50 and R1 135 323.37, respectively. The associated health benefits in terms of quality-adjusted life years gained from the treatments were 1.14, 1.49 and 2.29. Hence, for every quality adjusted life year gained from BORT relative to DEX, an additional R654 648.52 would need to be spent. In contrast, when BORT is compared to LEN/DEX, an additional R1 225 542.23 would need to be spent for an additional quality adjusted life year gained from LEN/DEX. Both the BORT and LEN/DEX treatments were not cost-effective relative to the costeffectiveness threshold of R38 500 per DALY gained. Due to the high costs, both BORT and LEN/DEX could potentially have significant economic impacts on the South African public health sector budget. The study suggests that one year of treatment for 337 RRMM patients in South Africa using the BORT and LEN/DEX would increase the budget budget-cost of RRMM treatment by 3136% and 8684%, respectively. Both BORT and LEN/DEX treatments would not be cost-effective strategies for second-line treatment of RRMM in South Africa. The results indicate that the drug prices of lenalidomide and bortezomib hinder the cost-effectiveness of BORT and LEN/DEX. Price reductions could potentially make BORT more cost-effective and allow it to be considered as an option for second-line treatment for RRMM patients.
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    Decomposing trust into risk preferences, altruism, and subjective beliefs: An experimental analysis
    (2019) Beattie, Tarryn; Hofmeyr, Andre
    There is a sizeable economic literature dedicated to understanding trust and the extent to which it influences decision making. Although trust is difficult to measure, experimental economics has commonly used the 'amount sent’ in the Berg, Dickhaut and McCabe (1995) investment game to elicit levels of trust from players of the game. However, there is a growing body of literature suggesting that factors such as risk preferences, altruism, and subjective beliefs may confound this measure of trust, thereby questioning the validity of using the 'amount sent’ to elicit people’s levels of trust. To understand these factors, we designed and conducted an incentive-compatible economic experiment with students from the University of Cape Town. These participants completed the investment game, the dictator game (to measure levels of altruism), and a random lottery pair risk preferences task (to gauge risk preferences). We also included an information treatment where students were shown the conditional distributions of amount sent decisions made by students in the previous, baseline treatment. This was done to evaluate whether knowledge of the actions taken by other students would ground students’ beliefs and influence the decisions they made. We estimate a set of standard statistical models to gauge determinants of the amount sent and a complementary maximum likelihood estimation approach to estimate Expected Utility models and Rank-Dependent Utility models in order to further evaluate our data. Our results show that caution needs to be taken when using the amount sent as a measure of trust as the relationship between risk preferences and the amount sent is a nuanced one. Moreover, altruism has a statistically significant association with the amount sent and with risk preferences. We also found that those who were part of the information treatment sent significantly more than those who were not, and they were on average also less risk averse. This indicates that while subjective beliefs do influence behaviour in the investment game, they also affect risk preferences. Thus, our results suggest that researchers should not use the amount sent in the investment game as a pure measure of trust because its measurement is confounded empirically by altruism and subjective beliefs, and theoretically by risk preferences.
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    A developmental state': the challenge ahead
    (2011) Various speakers
    Lecture series co-ordinated by Alec Erwin, Honorary Professor of Economics, University of the Western Cape Considerable economic and other challenges face contemporary states around the world.This is even more the case for Africa, where the developmental issues are massive. This course will examine the implications of a commitment to a ‘developmental state’ for South Africa and Africa, and assess key contemporary challenges. This podcast series can be enjoyed by anyone interested in economics in African contexts. It is also a credible resource for students writing on this topic.
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    Does Africa need the IMF
    (2013) Ellyne, Mark
    This is a presentation on the role of the IMF in Africa and review the period of structural adjustment programs. Introduction to the IMF and World Bank and their role in Africa. Provides some introduction on sources of growth.
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    Econometric analysis of youth tobacco use: evidence from Lesotho global youth tobacco surveys
    (2021) Pokothoane, Retselisitsoe; Van Walbeek, Cornelis'
    This dissertation estimates the prevalence of youth smoking and investigates the determinants of different tobacco products by gender among the youth aged 11 – 17+ years in Lesotho. This is achieved by estimating three independent gender logit regressions using Lesotho Global Youth Tobacco Surveys of 2002 and 2008. The results indicate that most youth smokers in Lesotho are males. The smoking prevalence amongst males is higher than amongst females for all three tobacco products: cigarettes, other smoked tobacco, and smokeless tobacco. Overall, smokeless tobacco has the highest prevalence (16.87%), followed by other smoked tobacco products (13.94%), and, lastly, by cigarettes (12.24%). The results further reveal that the determinants of smoking vary with the tobacco product type and gender. Cigarette smoking has a strong positive association with peer influence and the availability of loose cigarette sticks at retail stores, irrespective of gender. Exposure to other people's smoking in public and newspaper advertisements increase males' cigarette use, while exposure to other people's smoking inside the home increases females' cigarette smoking. The use of smokeless tobacco is negatively associated with being in the age group, 13 and 14 years, for both males and females. Among females only, the use of smokeless tobacco is strongly positively associated with having a mother as the only household smoker and parental discussions about smoking. Peer smoking is the primary determinant of the use of other smoked tobacco among males, while, for females, the main determinants of other smoked tobacco use are exposure to other people's smoking at home and parental discussions about tobacco use. The study recommends that Lesotho ban tobacco media advertising and promotions, abolish the sale of loose cigarette sticks, strengthen teaching at school about the dangers of tobacco, and introduce tobacco education in the Science subject in the early primary grades.
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    Evaluating the impact of preferential markets on Eswatini SME economy
    (2021) Makhanya, Mmeli Maphiwa; Alhassan, Abdul Latif
    The study was motivated by the fact that the impact of preferential trade agreements (PTA) on Eswatini SME economies (measured through labour productivity (LP), as well as the perception from SMEs on these markets) remain unknown. Studies conducted in various continents give conflicting findings on the benefit realised by SMEs exporting to PTAs. In analysing the economic effect of PTAs on Eswatini SMEs, the researcher selected variables affecting labour productivity (LP) based on previous literature findings, and gathered SME perceived solutions to improve PTA through interviews. A mixed method approach was employed, where the quantitative aspect employed Cobb-Douglas production function. LP being the dependent variable, the independent categorical variables were capital intensity, size of firm, qualification of directors, age of directors, proportion of revenue obtained from PTA, and dummy variables being technology, networking, capacity building, external financing, family firm, and tax. Qualitative data on the one hand was gathered through interviews and analysed using a thematic analysis model, based on a tripartite approach themes were generated. The quantitative findings through descriptive statistics presented that LP and size of firm as highly volatile, yet all other variables do not show high volatility. This study found that capital intensity, technology, networking, capacity building, and finance have positive effects on LP, with capacity building followed by financial support causing the most significant increase on LP. Firm size, director's qualifications and age, proportion of revenue, family firm, and tax were found to cause a negative growth effect on LP. Through qualitative data, SMEs observed that PTA sustains job opportunities, however, SMEs lament that preferential markets are highly volatile, competitive, and quality driven. Furthermore, lack of access to finance, coupled with high cost of production put SMEs at a disadvantage. Dependence on manual labour rather than technology result in firm size causing a negative growth effect. Internal conflicts and poor policy framework threaten the sustainability of smallholder farmers. SMEs put their hope on policy adjustments, improved ease of doing business with a special focus on increasing trade rather than revenue collections.
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    Evaluation of the Impact of the Provision of Triple Combination Antiretroviral Therapy to Employees Through the In-House Health Programme at a Large South African Mining Company
    (2018) Brink, Jonathan Edward; Wittenberg, Martin
    HIV/AIDS poses a unique challenge to businesses, particularly those operating in Southern Africa. The region is home to one third of the worldwide HIV positive population (as measured by those aged 15 to 49) yet as a whole contributes a diminutive proportion of the total worldwide population by the same measure (UNAIDS, 2016; World Bank, 2016). Relative to its size, the epidemic has introduced disparately large economic strain due to the fact that the highest HIV prevalence rates coincide with the most productive years of people’s lives, with prevalence rates peaking around the 30 to 34-year-old stratum (Shisana, et al., 2012). Loss of business productivity as a result of HIV related illness through a combination of absenteeism and so called ‘presenteeism’1 as well as death due to AIDS and the resultant increase in employee turnover, has motivated companies to implement workplace HIV education, prevention and treatment programmes over and above governments’ efforts to curb the effect of the disease on business operations and the associated economic costs (Granich et al., 2012; Meyer-Rath et al., 2012, 2015).
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    Firm Size, Age and Growth in South Africa
    (2018) Allen, Caitlin Shannon; Wittenberg, Martin; Kerr, Andrew
    The relationship between a firm’s size, age and proportional growth rate is examined using multiple samples of South African firm-level data from the early to mid-2000s. The foundation of this study is Gibrat’s Law of Proportionate Effect (Gibrat, 1931), which states that a firm’s proportional growth rate is independent of its absolute size at the start of a given period. It is assumed that firm growth follows a random walk and, therefore, should not be affected by firm size. An implication of Gibrat’s Law of Proportionate Effect is that the firm size distribution is lognormal. However, based on both empirical and theoretical literature, this theory of firm growth has fallen out of favour and been replaced by the proposal that there is an inverse relationship between a firm’s proportional growth rate and both its size and age. Two questions are evaluated in this research using the samples of South African firms. The first is whether the firm size distribution is lognormal. If this is not the case then Gibrat’s Law of Proportionate Effect can be rejected. However, this approach cannot confirm that Gibrat’s theory is valid and will, therefore, be referred to in this paper as a partial test. It was shown that the log firm size distribution was not normal, but rather right-skewed with a Pareto distribution characterising the upper tail. Consequently, Gibrat’s Law of Proportionate Effect was rejected for the datasets of South African firms. This evidence is largely observational and does not explicitly assess the relationship between proportional growth rates and firm size. Therefore, the second question is whether Gibrat’s Law of Proportionate Effect holds. This was investigated by testing conditions derived from Gibrat’s Law of Proportionate Effect, the results of which can lead to either the rejection or acceptance of this proposition. This study extends Gibrat’s research in order to determine the relationship between firm age and proportional growth. Statistical methods, such as Ordinary Least Squares regressions, considering only firms that survived the period under consideration, were used. The results revealed that Gibrat’s Law of Proportionate Effect was invalid and there was a systematic tendency for the smaller, younger South African firms in the datasets to grow proportionally faster than the larger, older firms. This finding supports the view that firm growth is not entirely random.
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    Foundation for a national road prioritisation model for South Africa
    (2020) Townshend, Matthew John; Ross, Donald
    Inefficient road infrastructure investment in South Africa has led to five core policy failures: deterioration in road network conditions; neglect of citizens' constitutional rights of access to basic services; insufficient prioritisation of roads that best promote the general economy; an excessive rural road network; and application of inefficient road surfaces that increase road maintenance and road-user costs and fail to take advantage of the low shadow price of unskilled labour. The thesis first reviews the extent and consequences of these failures and evaluates their opportunity cost with respect to the potential benefits from more efficient road infrastructure investment policy. If fiscal constraints are accepted as exogenous given South Africa's politically driven budgeting process and the magnitude of road maintenance backlogs, then the question can be posed as to the capacity of the current maintenance scheduling systems to efficiently prioritise road investment according to the sector mandate to (i) satisfy citizens' right of access to constitutionally protected basic services, and (ii) maximally contribute to economic growth. The answer to this question is negative: the fact that none of the systems are appropriate to prioritisation explains the identified core failures. The thesis addresses this gap in several stages of analysis. The first stage is to develop a cost-effectiveness analysis-based road classification system that accounts for basic access and economic growth. This generates two important findings: most of the demand for access to basic services, which as per a normative economic framework based on arguments due to Rawls and Binmore is the first lexicographical policy priority, can be satisfied by roads that also support economic growth; and authorities can maintain Basic Access Roads and still have significant fiscal space within current allocations to maintain roads that optimally contribute to economic growth. The optimisation exercise proceeds through three stages. First, lifecycle cost analysis is applied to determine cost-effective surface solutions for low volume roads, many of which are Basic Access Roads, and the employment benefits of a policy to seal low-volume roads. Second, a two-step floating catchment area model is used to identify potentially unproductive roads that may be cost-effectively rationalised through basic service hub relocation. With basic access rights satisfied efficiently, cost-effectiveness analysis is lastly applied to exploit the remaining exogenously given road budget allocation to develop and test a model of road maintenance prioritisation that optimises the sector's contribution to national economic growth via export promotion, which is identified in official literature as the primary variable under policy control to promote national economic growth.