3+and+4,+Theory+of+Development



CONSOLIDATED REPORT ON SECTORAL STRATEGIES
 * ANC National General Council, 29 June - 3 July 2005**

=**__Commissions 3 & 4__**=


 * THEORY OF DEVELOPMENT**

1. The NGC engaged in exhaustive discussion on the paper "Development and Underdevelopment: Learning from experience to overcome the two economy divide". 2. A number of weaknesses were identified in the document. In particular, it did not base itself on a comprehensive analysis of our economic policies and programmes to date, and their strengths and weaknesses. Secondly, the document was not pitched at a level that would be conducive to robust discussion at the branch level. Thirdly, the document did not integrate a gendered analysis. 3. Nevertheless, the purpose of the paper was to generate discussion and deepen our understanding of the issues we face, and in this task it has certainly succeeded. This has contributed to the ongoing process of developing a common developmental vision. That vision is intimately linked to the ANC's conception of the National Democratic Revolution. 4. The central challenge our movement faces in the Second Decade of Freedom is to defeat poverty and substantially reduce the level of unemployment.

This means that the ANC and Government must produce a coherent development strategy. Elements of this would involve identifying where we need to move to and what strategic leaps we need to get there.

**OVERCOMING THE TWO ECONOMY DIVIDE**
5. The legacy of colonialism and apartheid continues to reproduce patterns of development and underdevelopment in our society. At a general level, we can approach these problems in terms of two economies: the first is developed, globally integrated and modern, while the second is underdeveloped and marginalised. 6. Nevertheless, we should be clear that we have one economy, albeit structurally divided and polarised along lines of wealth and inequality, development and underdevelopment. 7. As such, there can be no Chinese Wall between interventions in the first economy and the second economy. Our interventions should aim to restructure the economy as a whole. This includes interventions in the 'first economy' to restructure towards more labour absorbing growth. 8. We must also specifically address the question of interventions for bottom up development, particularly in the townships and rural areas. Such interventions include investment in social and economic infrastructure, supporting local development and employment initiatives, especially for the activities of small enterprises and cooperatives and investment in education, training and health. The barriers of discrimination, as well as deficiencies in the spatial patterns of our communities, must be overcome in order to build staircases from the second into the first economy. We also need to build mechanisms that link people in the first economy - salary earners and businesses - to support activities in the second economy.


 * INDUSTRIAL POLICY**

9. South Africa's economy has been historically dependent on the resources sector, particularly mining. The pattern of development that this has generated continues to constrain our economic growth. This results in challenges that affect every aspect of our economic transformation and development strategy. 10. Addressing the challenges of poverty and unemployment requires us to lead the economy toward a new pattern of development, involving a diversified industrial base. This in turn requires a clearly articulated industrial strategy. Such a strategy should be based on a clear assessment of our industrial policy interventions to date, and learning that has been generated from such interventions. 11. It is a strategy that should: · Seek to promote sectors that are likely to generate labour-absorbing growth in the future and those that may not in themselves be labour-absorbing, but which have strong linkages to labour absorbing sectors · Establish clear and well-articulated plans in relation to declining sectors, including long term and comprehensive conversion programmes. This should include a consideration of the role that cooperatives can play. · Be informed by an integrated spatial framework 12. The key challenge is to address the mismatch between the supply of largely unskilled and semi-skilled labour that our history has bequeathed, and the demand for skilled labour that the economy is now generating. Only if significant steps are taken to build new economic activities to absorb the surplus of unskilled and semi-skilled labour can we hope to address the challenge of unemployment. 13. It is on the basis of these priorities that we will be able to articulate a coherent set of policies in respect of, among other issues, the cost of capital, the cost of labour, directing investment and skills development. 14. There is also a need to urgently review the implementation of our strategies to create work and fight poverty, particularly those agreed at the recent Growth and Development Summit.


 * AGRARIAN REFORM AND RURAL DEVELOPMENT**

15. As part of building a people's contract to advance the vision of the Freedom Charter, we must re-affirm the charter's call that 'The Land Shall be Shared Among Those Who Work It". 16. Both commissions stressed the centrality of agrarian reform in our developmental vision. In particular there is a need to accelerate the process of agrarian reform, which would require a more assertive implementation of our current programme. This should include further consideration of the manner in which the constitutional provisions relating to land reform are realised in policy practice, including the 'willing buyer - willing seller" approach. We should also monitor and limit foreign ownership of land. 17. At the same time, our developmental vision must continue to integrate rural development, which empowers our people and advances the economic development of the rural masses.

**THE DEVELOPMENTAL STATE**
19. The task of building a developmental state in South Africa must address a number of challenges, including: 19.1. Identifying the kind of institutional reform, at the level of the state, which we would need to undergo to establish an effective developmental apparatus. 19.2. Building the requisite capacity and skills within the state to manage the tasks of development 19.3. Ensuring that development finance institutions act in concert to back our overarching developmental approach, particularly as it relates to the transfer of resources from the 'first' to the 'second' economy. 19.4. Improving the capacity of local government and integrating our development plans across all spheres of the state.
 * 1) The developmental state must be conceptualised in concrete terms. It is a state with a programme around which it is able to mobilise society at large. It is also a state with the capacity to intervene in order to restructure the economy, including through public investment.
 * 1) In many international cases, the developmental state has been characterised by a high degree of integration between business and government. The South African developmental state has different advantages and challenges. While we seek to engage private capital strategically, in South Africa the developmental state needs to be buttressed and guided by a mass-based, democratic liberation movement in a context in which the economy is still dominated by a developed, but largely white, capitalist class.


 * THE COST OF CAPITAL**

21. The discussion document addresses the question of factor prices (i.e. the cost of labour and capital), which is an important issue for us to consider further. However, our debates should not focus exclusively on factor prices: we should also address the social and property relations that undergird these economic realities. 22. As important as the 'cost of capital' is, it was felt that more attention should be focussed on the key constraints to sustaining a high rate of investment. These include, amongst other factors, the skills shortage, the need for infrastructure development, and the need for clearer sector strategies. 23. With respect to the exchange rate the commissions reaffirmed the need for a stable and competitive currency. 24. The conduct of monetary policy, including the operations of the Reserve Bank, should seek to complement our developmental vision.


 * LABOUR MARKETS**

25. The Freedom Charter affirms that "There Shall be Work and Security!" Since 1994, the legislative and regulatory environment of the labour market has been radically transformed, and in the process many of the Charter's demands have been realised. The labour market framework now in place builds stability, and reduces tension, conflict and strikes. It has allowed for massive social transformation without significant disruptions to production, which must be regarded as a major achievement of the democratic order. 26. In this context, whatever recommendations we make on the question of labour market reform should be informed by deeper understanding of labour markets that takes account of a broad range of inputs. 27. Further research is required to quantify the effects of labour market regulation for job creation, particularly in the second economy. This research must answer questions about the efficiency of institutions and labour market outcomes, in order to identify the broader inefficiencies in the labour market and their impact on labour absorption and job creation. 28. In the context of answers to these questions, labour market reform should be considered as one part of a broader developmental vision, which links industrial policy, macroeconomic policy and social policy to our objectives of halving unemployment by 2014.


 * EDUCATION, TRAINING**

29. The long-term solutions to the problems of unemployment clearly include education and training. Significant progress has been made over the last ten years in building and improving the skills profile of our people.We need a clear assessment of the progress we have made and the challenges that remain. 30. We must increase our investment in skills development and also act to improve the efficiency of that investment. 31. At the same time, we must continue to build and strengthen the institutions that we have recently created to promote skills development and labour absorption, particularly amongst the youth.


 * YOUTH AND WOMEN**

32. The challenge of youth unemployment is vast and complex, and cannot be resolved through seemingly simple solutions. It requires a wide range of targeted developmental interventions, which require a greater degree of coherence in relation to government strategy. 33. This should include the creation of a dedicated Youth Development Agency, building upon current initiatives and established on the basis of a feasibility study. 34. We must also intensify the roll out of learnership and internship programmes. Furthermore, to ensure that educational institutions, especially at tertiary level, are able to contribute to the tasks of development, will require ongoing work to re-orientate curricula. 35. The majority of women, especially black and working class women, form part of the second economy. 36. Our decision to institute a quota of 50% women in the ANC's lists of candidates should be backed by a clear programme which accelerates the economic development and empowerment of poor and working class women, and articulates a clear strategy towards the economic empowerment of women, that will enable them to participate effectively in the economy.


 * TOWARDS THE 52ND CONFERENCE OF THE ANC**

37.1. Building the capacity of ANC cadres to engage in economic debates at every level. We should ensure that economic debates do not become the preserve of a few 'experts'. 37.2. Intensifying the debates within our movement, our alliance and society at large with a view to developing and adopting a clear and coherent development strategy that will take us towards the goals of halving unemployment and poverty by the year 2014.
 * 1) As we approach the 52nd conference of the ANC, we should pay particular attention to the following:

From: http://www.anc.org.za/ancdocs/ngcouncils/2005/consolidated_report.html