By: Paul Holden, The Enterprise Research Institute
Published in G. Maasdorp (ed.) Can South and Southern Africa Become Globally Competitive Economies? Macmillan, London. 1999

This paper addresses the question of whether the business environment in South Africa is sufficiently conducive to private sector activity. Activity that is necessary to promote investment and the resulting growth rates to begin to eradicate the poverty in which a large section of the population lives. If it is not, then the consequences are serious because there is substantial experience that the state cannot replace the private sector in bringing prosperity to its citizens. State ownership of resources or of productive units has invariably been associated with low productivity and high cost which has harmed rather than helped economic activity. Furthermore, the possibility of aiding the less fortunate through wholesale redistribution of wealth is not a sustainable option- there is ample evidence that while the state can confiscate wealth, it cannot redistribute it. Therefore, the private sector which is made up of firms and markets, has to be the engine for growth. This paper examines the business environment in South Africa through the perspective of the experience in Latin America ov