Since I'm in South Africa this month as a Fellow of the Stellenbosch Institute for Advanced Study (about which more later), I came across this interesting article from a main South African paper, Business Day, about Joseph Stiglitz' involvement in South African economic issues. According to the article he "voiced strong support for the government’s R840bn infrastructure programme, which he said could create a "virtuous circle" of investment and growth and set SA on the path to a more productive and equal society." (Link added.) 840 billion rand is 108 billion US dollars at today's rate. That is roughly 25% of South African nominal GDP as forecast for 2012, but this article, also in Business Day, refers to it as a 20-year rolling program, in which case it is on the order of 1% of GDP annually, depending on the spending profile, future GDP growth, and how the total nominal value of R850bn in planned spending is calculated. Also interesting is the plan to finance it with mandatory retirement plan savings; while there are probably further details, it sounds on the face of it similar to a social-security type plan. However it lacks, one suspects, the (rather inappropriate, in my view) feature of US social security as currently (but rather recently, in historic terms) formulated, of being officially described as a trust fund invested entirely in central government securities. From the second Business Day article cited above:
In the final session of the conference, business leader Bobby Godsell and Zwelinzima Vavi, general secretary of the Congress of South African Trade Unions, both made guarded commitments to this. Mr Godsell said a society-wide discussion was needed on the concept of "a reasonable return" for investment, while Mr Vavi said he backed plans to introduce mandatory savings for all employees.
This sounds like how it should be done.
I have picked up a widespread sense that there is a lot of corruption and siphoning off of funds in the awarding and performance of goverment contracts in South Africa. Obviously a big infrastructure programme provides big opportunities for more of this, which can of course be damaging economically and perhaps even more, politically; I suspect, and certainly hope, Stiglitz has factored in this aspect of the South African scene, and still thinks the plan worthwhile but it would be interesting to see it addressed directly as it is certainly not a minor issue.