Some aspects of growth and income distribution in Namibia

Abstract

No abstract. The following is taken from the author's introduction:

There are good reasons for choosing Namibia's economy as the real world source of data and field of application. Development economics suffered in the past from the preconception that because data was scarce and perhaps of low quality (a view that might tend to overestimate the quality of economic data in developed countries, which even today leaves much to be desired), results of general applicability could not originate from a study of these economies. However, the varied and often extreme circumstances of developing economies make them a quasi-laboratory for economics, providing data under conditions that vary much more than in the developed economies. The experiments in this laboratory take place in a haphazard and unique way, but they expose inadequacies in existing theories more convincingly than can be expected in the gradualist environment of developed countries

This process has often led to a rejection of conventional economic analysis, either on the argument that the whole body of theory is exposed as irrelevant and misleading or that economic agents in these countries differ fundamentally from those in developed countries

To the first argument one may reply that no alternative convincing theories have developed and that conventional mainstream analysis, if successfully modified to take account of different circumstances, has proved remarkably successful in explaining many phenomena in developing countries

The second argument is analysed in a later section of this thesis, dealing with the "uneconomic culture" hypothesis, the conclusion being that the actions of economic agents can be explained falsifieably, ie in a non-tautological way, by utility-maximization

We conclude therefore that conventional economic analysis can be applied successfully in a developing country and that insights gained there may be applied fruitfully to developed economies

The relevant extreme condition of interest in Namibia's case is the past history of, it is fair to say, a conscious and sustained attempt to differentiate the distribution of income among groups not only distinguished by different economic attributes but also by the essentially non-economic criterion of race

Such an attempt is of course not unique to Namibia, but it has been pursued to the extent of at least partially causing a liberation war, and the concern of the United Nations, as well as western and eastern powers. It is therefore important to determine to what extent and through which channels this differentiation was successful

Namibia was further chosen because the author has spent many years in the territory and can supply first-hand knowledge when suitable statistical data do not exist or are unavailable. Although the academic and popular literature on Namibia is extensive, relative to its population size,... for a number of reasons there exists comparatively little economic literature, an indication of the lack of research undertaken and the large areas which can usefully be filled

Lastly, the author has an understandable personal interest in analysing whether there is a harmonious way of resolving the conflict between the aspirations of the black and white inhabitants of the territory, which has caused much human suffering and loss of life over the past years

1. 1. 2 Thesis structure. The first section of the thesis begins with a discussion of the concepts of income and inequality, which necessitates interpersonal comparisons of utility. It is interesting to note that Sir John Hicks excluded both the concept of utility and of income from his analysis, because he decided that they could not be defined in an operationally useful way.... In spite of this, his thoughts on income pioneered the modern concept of "permanent income", which is the basis of our intertemporal concept of income. Interpersonal comparison of utility is first discussed in a general way and later formally introduced in Atkinson's inequality index

An extended discussion of the limits which the data sources place on the interpretation of measures of inequality follows. These problems do not receive enough prominence in v other studies and have in part only recently been recognized. (This does not mean that the Namibian data are unusually bad - rather, since they were collected reasonably carefully, it is perhaps above-average in the African context.)

In the remainder, a statistical picture of the distribution of income in Namibia around the year 1975 is supplied, something which has not been attempted before. For this, various unpublished, mostly confidential sources of data were utilized. Various causes of this distribution are analysed and a solution to the conflict between efficiency and equity is discussed

The second part of the thesis, on growth, is more of a research agenda than a finished analysis. This is necessitated by the rudimentary data available. It was nevertheless thought useful and necessary to present this skeleton, since the thesis is the first stage of a future extended research programme in Namibia

The important result arrived at in this section is that a conflict between growth and equity, hampering development, is not inevitable. It is seen that this result follows only from an unduely narrow definition, of growth and a tendency to emphasize saving and capital accumulation as the source of growth in earlier literature, which led to the neglect of other important factors and therefore to misdirected policies for stimulating growth in developing countries