Degree Name

Master of Arts (MA)

Semester of Degree Completion

1996

Thesis Director

Lawrence W. Bates

Abstract

Poverty in South Africa is a rural and urban problem. It is endemic to the rural environment where the majority of the people live. It is transferred to the urban areas through labor migration.

Rural people depend on agriculture for subsistence. Apart from subsistence farming there are no employment opportunities. The choice for a rural young man is to be a subsistence farmer or a migrant laborer. The industrial sector is unable to offer a job for everyone. Thus, the rural migrant’s dream of a city job often becomes an unemployment nightmare.

I argue, therefore, that poverty can best be treated through development programs targeted at the rural area. Most writers on poverty in the developing countries support this hypothesis. A vibrant rural environment will have the effect of improving the living standards of the rural people. Some of the labor force will be retained in the area provided there is hope for a better life. As the standard of living rises in the rural area the benefits will spill over to the cities through backward and forward linkages.

Economic theorists for the alleviation of poverty emphasize growth as a prerequisite for poverty reduction. They argue that no country can achieve poverty reduction without economic growth. However, critics call this trickle-down economics. The argument of the theorists is extended to encompass other societal values such as efficiency, security, freedom and equity. To achieve growth countries mobilize savings for investment. The productivity of investment promotes growth and overall development.

To test whether a rural development program will not slow down economic growth, I used a cross-section study of 33 developing countries. The result showed that a country can achieve economic growth while having a rural development program. Therefore, all other things the same, on average a rural development program will not slow down economic growth.

I conclude, therefore, that by developing the rural area South Africa can reduce poverty and promote growth.

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