Dealing with Inequality in SACU

1
Dealing with Inequality in SACU

• Dirk Hansohm
• Jonathan Adongo
• November, 2005

2
OUTLINE

• POLITICAL
• FISCAL
• ECONOMIC
• Evidence
• Reasons for Inequality
• How to Deal

3
POLITICAL

• History
• Sovereignty

4
FISCAL

• Common Revenue Pool
• Impact of Trade Liberalization
• Necessary to appease Politics

5
ECONOMICS

• Evidence
• Reasons for Inequality
• How to Deal

6
Evidence

• Macroeconomic Convergence
• Long-run Convergence

7
Macroeconomic Convergence
8
Long-run Convergence
9
Long-run Convergence (excl.) SA
10
Reasons for Inequality

• South Africa is the dominant economy
• Initial Endowments
• Transaction Costs

11
How to Deal

• Development Fund
• EU Cohesion Fund
• Infrastructure Fund
• Joint Policies-Part 8
• Geopolitical realities of BRIC
• Liberalized Capital Flows
• Supply-side Policy at the National Level

12
Thank You