Hendrik van Broekhuizen

Position: Researcher

Institution: Department of Economics, Stellenbosch University

Expertise: Higher Education, Labour Econometrics

Hendrik van Broekhuizen is a PhD student in the Department of Economics at Stellenbosch University and works as a full-time researcher for the Research on Socio-Economics Policy (ReSEP) group (http://resep.sun.ac.za). As a ReSEP member, he has been involved in various projects relating to poverty, inequality, labour markets, and education. His research interests include behavioural economics, applied microeconometrics, labour economics, and the economics of education and his current research focusses on the linkages between tertiary education, skill-formation, and labour market outcomes in South Africa.

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Editor's Corner

Better cities can lift the economy

The African continent is at a critical juncture, write HSRC researchers, Ivan Turok and Justin Visagie, in this edition of Econ3x3.

The urban population of the continent is projected to double in the next two decades and triple by 2050. And urbanisation could well be an important opportunity to accelerate economic and social development, they argue.

In their article, which is based on a longer research paper for the SA-TIED/UNU-WIDER programme, the authors make the case for the South African government to support trade in integrated urban services. Such services should go beyond simply building shopping centres or office blocks (their paper is aptly titled: ‘Building Malls or Metros’). Productive urban environments comprise some key elements, including a strategic allocation of land, investment in urban infrastructure, and the building of public utilities. Necessary services include civil engineering, architecture, urban design, and land-use planning expertise. And new technologies involved in urban design must adapt to pressing environmental concerns.

Ideally, urban environments should be liveable spaces, productive for business, and resilient to the ever-increasing shocks of climate change, not simply “blank spaces on which discrete projects are placed. “Sprawling and haphazard urban growth undermines economic activity and industrialisation on the continent.”

South Africa, they argue, should focus on exporting such urban services to other parts of the continent. There are several reasons for this. Firstly, the country needs to expand its trade basket beyond predominantly primary commodities such as minerals, metals, and agricultural products. Secondly, the rate of urbanisation means there is growing demand for well-coordinated urban services. And thirdly, tradeable urban services could become part of a continental strategy to improve living standards and increase stability and social cohesion.

But there are major challenges in doing this. One is uncertain property laws in other African countries, another is unpredictable regulations, and a third is growing competition from other parts of the world. Local South African businesses widely perceive that their own government’s support as weak compared with other countries whose businesses provide similar services.

Government could do much more – for example through forging relationships with other African governments, through encouraging city-to-city relationships and joint ventures, and through promoting ways for companies with diverse skills and resources to pool their capabilities. Such an initiative could also involve professionals and other elements of civil society, such as universities.

Thus, government could play a pivotal role in opening the door to increased trade in services that would also contribute to better functioning cities across the continent.

In the last edition of Econ3x3 we also focused on trade but through the prism of how tariffs and anti-dumping duties on frozen chicken affects poorer consumers.

In their careful econometric analysis, Lawrence Edwards and Matthew Stern, measured the impact of tariffs on three consumer products – frozen chicken, pasta, and frozen chips. Of these, frozen chicken is by far the most important item for poorer consumers.

Their results – contrary to what the SA Poultry Association argues – shows that the impact of tariffs on frozen chicken has been largely negative for poorer consumers. It is consumers – and importers – who have borne the costs of the tariff increases, rather than exporters absorbing some of the increase by lowering costs.

Tariffs are estimated to have raised consumer prices of frozen chicken products by around 16% above what they would otherwise have been over the 2012-2021 period. Poorer households, as the authors point out, spend a large proportion of their income on frozen chicken. The tariffs mean they are spending about 2% more on their food budgets to retain the same level of welfare.

The study is an important example of how careful research can assess the effects of trade and industrial policy, and why policymakers should take note.

Pippa Green, February 2, 2023

Working Papers from the REDI3x3 project are available HERE

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Hendrik van Broekhuizen

Articles

Better cities can lift the economy

READ, WRITE & REASON

Creating jobs, reducing poverty I: Why the informal sector should be taken seriously and enabled properly

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Adcorp’s employment and unemployment figures are not taken seriously by researchers – yet they can do much harm

Informal settlements: poverty traps or ladders to work?

Why are foreign-run spaza shops more successful? The rapidly changing spaza sector in South Africa

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How high is graduate unemployment in South Africa? A much-needed update

A job in the informal sector reduces poverty about as much as a job in the formal sector

Who creates jobs, who destroys jobs? Small firms, large firms and labour market rigidity