South Africa as an aspirant 'developmental state' : lessons from the steel industry.
Schoon, Herman Frederik.
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The South African government is eager that it be branded as a developmental state. However, most analysts are sceptical about the appropriateness of South Africa being classified this way. In addition to lacking many of the features that developmental states have traditionally possessed (such as dynamic bureaucracies, supportive and reciprocal relations between the state and the private sector, and astute utilisation of industrial policy), post-apartheid South Africa has not experienced particularly impressive industrialisation or social upliftment successes. Accordingly, this study is of the view that South Africa is currently an aspirant developmental state. The study – which was a case study of the government’s industrial policy towards the steel industry, and in particular of the government’s endeavours to actualise a developmental flat steel price in the domestic market – adopted a critical social science approach, and thus sought to garner understanding and insight; not necessarily to corroborate or negate specific hypotheses. In broad terms, the study sought to understand what factors are impeding South Africa from attaining legitimate developmental state status, and what sorts of measures might the government consider adopting if it is to realise its stated objective of being a bona fide developmental state. The study has used the government’s handling of the steel industry as a platform from which to derive insights to the mentioned concerns. Subsequent to the privatisation of Iscor (the Iron and Steel Corporation of South Africa) the South African steel market came to be dominated by ArcelorMittal South Africa (AMSA) – a subsidiary of the world’s largest steel company. AMSA’s dominance in the domestic market has enabled it to utilise import parity pricing in the domestic market; to the detriment of steel using industries. In spite of the significance of steel to the rest of the economy the government has to date not managed to bring a developmental steel price to pass. In December of 2012 the government announced a handful of measures it intended to invoke; these measures are yet to be enacted though. That the government has to date not managed to realise a developmental steel price provides confirmation that South Africa is currently not a veritable developmental state. If South Africa is to become a bona fide developmental state then the capacity of the state needs to be increased, as do the degrees of both inter and intra departmental coherence. Additionally, the government – whom have to date been inclined to adhere with economic orthodoxy – needs a change in mind-set, and to be more open to the heterodox perspectives that underpin successful industrial policy. At a theoretical level this study sheds light on the fact that – while lessons can still be extracted from the experiences of the East Asian developmental states – contemporary developers are faced with different opportunities and challenges to those which the East Asian development states were, and thus that the concept of the developmental state needs to evolve, so as to be more pertinent to, and utilisable in, contemporary developing countries.
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