An Assessment of the Investment Climate in South Africa by Vijaya Ramachandran, George Clarke, David E. Kaplan, James

By Vijaya Ramachandran, George Clarke, David E. Kaplan, James Habyarimana, Mike Ingram

Such a lot points of South Africa's funding climate―the location-specific components that form possibilities and incentives for companies to speculate productively, create jobs, and grow―are favorable. the vast majority of huge, registered organisations think that the criminal approach is ready to safeguard their estate rights. Infrastructure is trustworthy. Tax premiums are rather low. the load of law is similar to different middle-income countrries. Few corporations pay bribes. And so much agencies have enough entry to credits. in lots of dimensions, South Africa has an excellent funding climate.

Consistent with this, huge South African corporations are very efficient. exertions productiveness is much greater than within the best low-income nations in Sub-Saharan Africa and compares favorably with different middle-income nations similar to Brazil, Lithuania, Malaysia, and Poland. And even though exertions productiveness in South Africa is a little below within the most efficient towns in China, it's over thrice greater than in China as a whole.

So, why hasn't South Africa been becoming swifter? As this identify explores, whereas the funding weather is mostly favorable, a few difficulties stay. corporations seem to be really enthusiastic about 4 components: trouble hiring expert and expert employees, inflexible hard work rules, alternate expense instability, and crime. utilizing rigorous statistical details on those and similar themes, the ebook goals to aid coverage makers and personal region stakeholders in constructing reforms that may enhance enterprise functionality and progress.

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2). Labor productivity is also notably higher in corporate-owned firms (that is, firms whose main owner is a domestic or foreign-owned enterprise rather than a family or individual). Differences among firms owned by white, Asian, and black or colored individuals and families are small. In contrast to most other countries, where labor productivity increases with size, South Africa has no noticeable trend with respect to enterprise size. Although large firms appear more productive than small or mediumsized firms, they also appear more productive than very large firms.

6 Cross-Country Comparison of Capacity Utilization median capacity utilization 100 80 60 40 20 d ia an Po l ia Li th u an il ay s al Br az M (a ve ra ge H ) n an (C gz hi ho na u ) (C hi na ) he Sh e na C hi nz al eg Ke ny a Se n S Af out r ic h a 0 Source: Investment Climate Surveys. Note: Data for all countries is for 2002. All values are medians for enterprises with available data. Capacity utilization is directly reported by enterprise managers and is defined as the amount of output that is actually produced relative to the maximum amount that could be produced given current capital stock and employment.

S. 4 Cross-Country Comparison of Capital Intensity Source: Investment Climate Surveys. Note: All values are medians for all enterprises with available data. Capital is the net book value of machinery and equipment at the end of 2002. Workers include both permanent and temporary workers. S. dollars using average exchange rates for 2002 from World Development Indicators. 5 Cross-Country Comparison of Capital Productivity Source: Investment Climate Surveys. Note: All values are medians for enterprises with available data.

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