Gains for the poorest did little to alter their difficult economic and social realities. There were, however, some stark limitations in what was achieved. Increased fiscal space made it possible to broaden access to public services and to social grants, which reduced absolute poverty. Growth began to accelerate, which created new opportunities for expanding the middle class. This enabled the country to move beyond counterproductive conflict and pursue win-win outcomes. The result can be a cascading set of pressures and an accelerating downward spiral.įor the first fifteen years of democracy, South Africa enjoyed the advantages of both effective institutions and a shared willingness of stakeholders believed in the power of cooperation. However, such a benign scenario does not reckon with the ways in which persistent high inequality, accompanied by unresolved tensions between the distribution of economic and political power, can both put pressure on institutions and quickly change hope into anger. Together, ideas and institutions provide credible commitment, which fuels economic growth. Institutions assure that the bargains underpinning cooperation will be monitored and enforced.
Ideas offer hope by encouraging cooperation and the pursuit of opportunities for win-win gains. Ideally, ideas, institutions, and growth all reinforce one another in a virtuous developmental spiral. Understanding why this collision occurred and worsened over time is relevant not just for other middle-income countries but also many higher-income democracies wrestling with similar tensions between a declining tolerance for high or rising inequality and institutions that seemed strong in the past but find their legitimacy increasingly being questioned. The collision intensified across the 2010s, resulting in economic stagnation and increasing threats to institutional integrity. Yet starting in the mid-2000s, the country began to experience a disruptive collision between its strong political institutions and massive economic inequality. South Africa was one of the 1990s iconic cases of democratization.
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