Policy Conclusions
Our results are suggestive of several ways through which growth can lead to poverty alleviation and greater inclusiveness. They also provide some guidance as to the type of policies that can increase the pro-poorness of growth. The two countries have moved progressively over the last decades – through policies and structural change – from economies based largely on agriculture and primary sectors of activity to economies increasingly based on manufacturing, services, exports and tourism. In both Mauritius and South Africa, privatization and trade liberalization were promoted as policies to spur growth. However, policy choices in the two countries have been different in terms of employment opportunities and human capital development. While Mauritius has focused its poverty reduction strategy on education and health services and has targeted the most vulnerable segment of the population through improved social safety nets, South Africa’s policy focus has shifted to fighting deprivation more recently. It has not succeeded yet in developing skills and providing quality health care and education services across the entire country. The results in terms of growth pro-poorness have been quite different. South Africa's promotion of market-based growth and job creation has had mixed results: it has not been absolutely pro-poor between 1995 and 2005, and it has been anti-poor relatively speaking, improving living standards only among the top third of the population. The increase in domestic demand for housing and services and the rise in manufacturing and private investments have not integrated sufficiently the poorer South Africans (and the urban migrants in particular) into productive labor markets. Because of this, South Africa’s pattern of economic development between 1995 and 2005 appears to have failed to generate a pattern of inclusive development. South Africa’s growth benefitted almost exclusively the higher earners in urban areas. Rural workers gained very little from it, and the unskilled and lower urban earners often lost from it.
Policy ConclusionsOur results are suggestive of several ways through which growth can lead to poverty alleviation and greater inclusiveness. They also provide some guidance as to the type of policies that can increase the pro-poorness of growth. The two countries have moved progressively over the last decades – through policies and structural change – from economies based largely on agriculture and primary sectors of activity to economies increasingly based on manufacturing, services, exports and tourism. In both Mauritius and South Africa, privatization and trade liberalization were promoted as policies to spur growth. However, policy choices in the two countries have been different in terms of employment opportunities and human capital development. While Mauritius has focused its poverty reduction strategy on education and health services and has targeted the most vulnerable segment of the population through improved social safety nets, South Africa’s policy focus has shifted to fighting deprivation more recently. It has not succeeded yet in developing skills and providing quality health care and education services across the entire country. The results in terms of growth pro-poorness have been quite different. South Africa's promotion of market-based growth and job creation has had mixed results: it has not been absolutely pro-poor between 1995 and 2005, and it has been anti-poor relatively speaking, improving living standards only among the top third of the population. The increase in domestic demand for housing and services and the rise in manufacturing and private investments have not integrated sufficiently the poorer South Africans (and the urban migrants in particular) into productive labor markets. Because of this, South Africa’s pattern of economic development between 1995 and 2005 appears to have failed to generate a pattern of inclusive development. South Africa’s growth benefitted almost exclusively the higher earners in urban areas. Rural workers gained very little from it, and the unskilled and lower urban earners often lost from it.
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