The Impact of Growth and Redistribution on Poverty and Inequality in South Africa

Abstract

This country study evaluates the experience of the South African economy with respect to growth, poverty and inequality trends since the advent of democracy in 1994. The post-apartheid government took a definite turn toward greater spending on social security, while job creation and a narrowing of the gap between the so-called first and second economies – the latter defined as the informal part of the economy that is also largely removed from formal sector activities – enjoyed priority in its economic strategy. Despite this focus on uplifting the poor, it remains unclear to what extent the government has been successful. Some controversy exists around whether relatively fewer South Africans are poor ten years after the democratic government came into power. There seems to be greater consensus among analysts that inequality has in fact increased. This study attempts to shed some light on these issues, drawing on recent South African literature and data.