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Economy must focus on production: Patel

Mar 01 2011 17:57 Sapa

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Cape Twon - Economic Development Minister Ebrahim Patel on Tuesday said the new growth path meant a departure from a consumption to a production-driven economy, where growth was not an aim in itself but a means to job creation.

"It is not a conventional growth strategy where you hope that the jobs that come from that growth target would be sufficient. We see growth as vital... but what we put at the centre of our objectives are the employment outcomes."

In keeping with recent ANC statements, Patel stressed that government would not let a long-held concern with decent work get in the way of putting as many people as possible in jobs.

He said the blueprint sought to "address both the quantity of jobs and the quality of employment".

Massive change to the economy was needed to achieve the ambitious target of creating 5 million jobs by the end of the decade, Patel added.

"When we look at jobs our fundamental thrust of what we seek to do is to rebuild the foundations of our economy, namely the productive sectors.

"In some ways I would say this marks a shift away from an old growth path that was too consumption driven. Successful economies are ones where the consumption is underpinned by a strong productive sector."

Patel said the global economic crisis had made it clear that South Africa could no longer afford to have the success of its economic performance rest on demand for its products in Europe and the United States.

'New scramble for Africa's resources'

"The global economic crisis underlined how fragile that model was. Our historical markets were no longer generating the kind of fast growth that we could feed with our products. Here is an example of a need to reposition."

He said South Africa needed to benefit from "the new scramble for Africa's resources", both directly and through stronger economic ties with fast-growing African nations as the continent's gross domestic product increased.

"There is a space to negotiate new relations, both with old trading partners and with new ones."

Repositioning the economy would entail speeding up mineral attraction, producing instead of importing industrial components and reviving agriculture.

"We have recognised that agriculture has enormous potential and it needs active policies and it needs strong partnerships and instead of committing the general decline of agriculture that we have witnessed, there is an opportunity to turn it around," the minister said.

"In the resource sector, we have focused on how to dig more of what we have, to increase the rate of extraction but also to build new industries around the processing of those minerals."

Patel appealed to economists to leave behind what he termed "the old debate between state and market" as job creation depended on an interplay between the two.

"Even if we were to double employment in the public sector, which would be an enormous feat, we would not nearly reach our 5 million new jobs target.

"So it is not an ideological choice, it is a very practical choice to say that the private sector has to play a critical role in driving South Africa’s job targets."

He said the sectors that his department had identified as crucial to growth - agriculture, mining, manufacturing and tourism - were dominated by the private sector.

"So I think the argument is compelling. The private sector has access to enormous resources, investable funds, that it can bring to growth and to jobs and the private sector represents a very big part of the entrepreneural energy in society.

"So if we are to achieve the 5 million jobs, we have got to see how the private sector can contribute. But it is not to say there is not a role for the developmental state.

"It is not a zero sum game in that by recognising the one you have to underplay the other," Patel said.



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