Ngiyabonga Phini likaSomlomo. [Thank you, Deputy Speaker.]
The question of whether the state or markets should lead national economic development continues to engulf economic discourse. History has proven that markets alone have failed to address socioeconomic challenges faced by society; hence the role of the state in leading a national development agenda to promote social justice and equity amongst social groups has been strongly advocated.
I would like to take cognisance as well of what Mr Skosana said, particularly that the role of Parliament in moulding a developmental state and its character should be highly recognized and placed at the centre of our work. In keeping with that, I would like to also share what I see as the key features of a developmental state.
Scholars globally have highlighted, amongst other things, that there is an emphasis on market share over profit when moulding a developmental state. They go on to talk about economic nationalism, protection of fledging domestic industries, focus on foreign technology transfer, ensuring that government's delivery or ability to deliver is effective, alliance between state, labour and industry, glaring scepticism on neoliberalism and the Washington consensus, and prioritisation of economic growth over political reform. The original conception and application of a developmental state, which came from East Asia, was characterized by authoritarianism and, with time, it has evolved to what is referred to as a democratic developmental state. The international community embraced a state-led model of development intended to bring about industrialisation and entrepreneurship through intensive and deliberate effort in state intervention.
Let us then look at our local context. Rene Gradwohl states that the fundamental policy shifts since 2003, using examples such as the 10-year policy review, the National Public Works Programme, the new role of state- owned enterprises, the Accelerated and Shared Growth Initiative for South Africa, broad-based black economic empowerment, focus on delivery, the new national skills development strategy, the ongoing review of state capacity by the Forum of Directors-General of South Africa are clear indications for the government of the second Mbeki Presidency seeking to refine the role of the South African state in the process of generating more equally shared development in the country.
However, I would like also to highlight that South Africa is a developmental state in the making, because if you look at the shortcomings of the neoliberal influenced economic policy, they have necessitated that a shift towards a more interventionist government role should be placed. The introduction and the application of Asgisa is one of the tools that indicates the state's intention to effect shared growth through active intervention but the question still remains: Why a developmental state?
As we engage in debate on the developmental state, it is important to understand that various developmental states were informed by diverse stages in human history; hence we have seen evolvement in the modelling and approach. Once again, Rene Gradwohl argues that widespread disillusionment with failed neoliberal policy and descriptions and the encouragement of efficient and successful states like Botswana and Mauritius paved the way for the conception of developmental states to be hesitantly embraced as an alternative development model for African states throughout the 1990s.
Obviously, amongst other things, is the fact that a developmental state is highly characterized by its responsiveness to a changing environment, which therefore means that, in moulding our state, we should ensure that we are building a developmental state that has the capacity to be responsive to changing conditions and, as such, should lead and manage economic relations.
With regard to the implications and impact, currently, there is an abundance of evidence as to how the state has focused on the indigent through social services such as housing, access to health, and improvement of social security through social grants, with particular emphasis on social cohesion. I would also like to highlight the building of a rainbow nation. Strong patriotism is fundamental in enabling a state to pursue a cohesive and sustained development-orientated policy.
I would also like to share implications around economic issues. I would like to start by saying that successful pursuance of a developmental agenda by the state is contingent upon rapid accumulation and diffusion of social capital and social construction of economic institutions. Recently, we have actually made a breakthrough by formulating the national industrial policy framework.
Obviously that would be coupled with the focus on ensuring that the practitioners in the second economy are empowered through programmes as driven by the Department of Trade and Industry as well as programmes as driven by all the departments in the economic cluster. Furthermore, the state has ensured, when it comes to international trade, that assisting African countries would in the long run help South Africa in its economic development. Amongst other things, issues such as removal of double taxation have also been addressed.
One of the things that characterise a developmental state is its ability and propensity to deepen democracy. We have seen in the current dispensation the emergence through either legislation as well as implementation of organs of popular power or governance. Reference in this regard is made to ward committees, structures that help and assist ward councillors, community policing forums and school governing bodies as well as the erstwhile community development forums, although in certain areas they are still active. If one takes a look at all these structures, it is quite clear that that is a genuine attempt to ensure that democracy is not only confined to representative character, but is also moved to higher levels which one would call participatory democracy.
Our very Parliament has taken up annual programmes such as Taking Parliament to the People by the NCOP, the People's Assembly, the Women's and the Youth Parliament. We know from the executive side that there are izimbizo, as well as public hearings through the parliamentary committees. All those are practices and features that one would have only found in a developmental state in the making.
Whilst one looks with great admiration as to our genuine attempts to have tried to formulate, mould and implement a developmental state, there are also challenges that face us. First and foremost are the ability and the capacity of the state to deliver on its policies and programmes. Our President, in his state of the nation address, has time and again laid an emphasis on this matter, particularly on the improvement of service delivery and the ability of the government to optimally utilise the budgets allocated annually as well as the monitoring of implementation. We need to take note of the extent to which we can be able to mobilise people towards a better life for all. It is accepted that although the state has a primary role in upgrading these conditions for the poor, there is ample scope for civil society and the private sector also to play a role.
Focus on rural development is also an area that needs noting. There is unfortunately not much around rural development whilst there is an Integrated Rural Development Strategy. As a result, underdevelopment is still abundant in the rural areas. Inertia from established business together with those who resist change whilst they benefited from apartheid is still a glaring feature. Our ability to respond to environmental changes as a developmental state is an area that needs careful consideration.
Reference here is made to currency fluctuations which are beyond our control in addition to commodity prices which change erratically from day to day, trade imbalances, inflation, and widening wealth disparities. One can even make reference to a recent article by Mr Moeletsi Mbeki, where he warned of South Africa's industrial decline, which is leaving small islands of wealth in a sea of poverty. Whilst I may not claim authority to such an assertion, it is but an issue that is worth noting.
In conclusion, I would like to highlight that an alliance between the state, civil society and business is a fundamental necessity. The state should take the role of a leader in effecting a developmental agenda. A strong and democratic state with clear objectives, internal cohesion, popular legitimacy and the capacity to control economically powerful factions of the population and direct the use of their resources, can achieve democratic economic objectives much better than the market alone, however defined. I thank you. [Applause.]