ABSTRACT
Restraint cannot by itself restructure the economy of South Africa and ensure social stability in the transition phase. Nevertheless, it is equally correct, as pointed out in Chapter 2, that unless the much needed redistribution and satisfaction of basic human needs go hand in hand with renewed growth, the necessary increase in the purchasing power of the African population cannot take place. The base run put forward in this chapter therefore involves a shift to a new growth path. Hence, it is assumed that South Africa will be able to pursue a successful growth strategy. Higher growth requires as a critical precondition a substantial increase in existing physical capital as well as investments in human resource development. Consequently, domestic savings–investment balances are bound to come under pressure in the medium-term, in particular since the government must play an active role in the transition and restructuring process. South Africa will therefore have to rely on foreign savings. Nevertheless, the base run demonstrates that such a result is not in contradiction with the goal of keeping macroeconomic balances in check provided the underlying moderately optimistic assumptions are fulfilled.
