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Elaborate scaffolding, weak foundations: Business–government relations and economic reform in democratic South Africa

Working paper 105

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Alan Hirsch and Brian Levy
This paper explores the evolution of the business–government dimensions of South Africa’s democratic political settlement. It details how and why market-based reforms were embraced by both political and economic actors in the 1990s as part of a broader commitment to a rule-bound political settlement. It explores two aspects of the subsequent play of the game: the rise and decline of a ‘corporatist’ elite bargain; and the evolution of initiatives to foster black economic empowerment. Overall, rule-bound, disciplining reforms were embraced more readily than pro-active initiatives to build capability. The result has been that South Africa became mired in a combination of economic stagnation and the strengthening over time of forces antithetical to market-based reform.