This paper investigates the Black Economic Empowerment (BEE) program in South Africa and its economic justification by analyzing the trends in both, intra- and interracial inequality, since the implementation of BEE. Even though inequality is driven by many different factors, this paper attempts to analyze whether BEE was able to effectively reduce inequality in the way that it was intended. My findings suggest that BEE might have helped to reduce inequality between different races, but that it increased inequality among black people.
During Apartheid, black people were excluded from major parts of South Africa’s economy. This resulted in an unequal income distribution in South Africa. Even after Apartheid ended in 1994 income was distributed unequally between races. In order to reduce this inequality and equalize opportunities between the different races in South Africa, the government implemented an affirmative action program called Black Economic Empowerment (BEE) in 2003. In this case and in the following sections, the word “black” defines a racial group, including Africans, coloreds and Indians and can thus be used as synonym for “non-whites.”
BEE introduced a scorecard which rates companies based on their economic inclusion of black people. If the respective company receives a low rating on the scorecard, there will likely be a negative effect on their profit compared to a company with a high rating. The basic critique of BEE is that its main beneficiary is a small elite. Studies about the actual effects of BEE are rare, as data on this topic is limited.
Table of Contents
1. Introduction
2. Background
2.1 Economic inequality before the implementation of BEE
2.2 Black Economic Empowerment
3. Theory
3.1 Basic labor theory
3.2 Need for an affirmative action program in South Africa
4. Main findings
4.1 Trends in South African Economy since the implementation of BEE
4.2 Beneficiary and payers of BEE
5. Conclusion
Research Objective and Scope
This paper investigates the economic impact and justification of the Black Economic Empowerment (BEE) program in South Africa. The primary research question centers on whether the BEE, as an affirmative action initiative, has been effective in reducing racial income inequality and equalizing economic opportunities.
- Historical context of economic inequality post-Apartheid.
- Theoretical analysis of labor markets and the necessity of affirmative action.
- Empirical examination of economic trends and income distribution since 2003.
- Evaluation of the beneficiaries and economic "payers" of BEE policies.
Excerpt from the Book
2.2 Black Economic Empowerment
In order to decrease the interracial inequality caused by colonialism and Apartheid, some affirmative action programs were considered by the new government of South Africa. One of these programs is the Black Economic Empowerment (BEE) which supports Africans, coloreds and Indians. Before explaining the BEE program, the following paragraph will illustrate the evolution of black empowerment.
The idea of black empowerment was widely-spread in the society. The term “black economic empowerment” was already present in 1988. The idea originated from three different groups. The first group was the Pan Africanist Congress (PAC), a movement which advanced a view of black liberation. This was viewed as the most radical group, as they supported the view that South Africa should get rid of all white people. The second group had a view of equality and human rights that did not take race into account. In accordance with this view the second group supported national liberation. The third group, consisting of Marxists and Socialists, completely supported the view of the second one, but they were more concerned about classes. The African National Congress (ANC), the party which runs the country since Apartheid, combined these three groups. Hence, to decrease the inequality and to equalize opportunities between the different races, the ANC introduced BEE in 2003. As there was no program such as BEE in the world yet, many people recognized that the effects of it might be difficult to foresee and that the big hopes would be accompanied with large risks.
Chapter Summary
1. Introduction: Outlines the persistence of economic inequality in South Africa post-Apartheid and introduces the BEE as a government policy to address these disparities.
2. Background: Provides a historical overview of income distribution and introduces the structure and legal framework of the Black Economic Empowerment initiative.
3. Theory: Explores basic labor market theory to establish the economic rationale for affirmative action and the potential trade-offs regarding efficiency.
4. Main findings: Analyzes empirical data on unemployment, wage trends, Gini coefficients, and Lorenz curves to assess the impact of BEE on income distribution.
5. Conclusion: Synthesizes the findings, suggesting that while BEE helped reduce interracial inequality, it inadvertently increased intraracial inequality and reduced economic efficiency.
Keywords
Black Economic Empowerment, BEE, South Africa, Racial Inequality, Income Distribution, Apartheid, Affirmative Action, Labor Market, Unemployment, Gini Coefficient, Lorenz Curve, Economic Efficiency, Broad-Based Black Economic Empowerment, Interracial Inequality, Intraracial Inequality.
Frequently Asked Questions
What is the primary objective of this work?
The study examines the effect of the Black Economic Empowerment (BEE) program on racial income inequality in South Africa to determine if it has successfully equalized economic opportunities.
What are the central themes discussed in this paper?
The core themes include the historical legacy of Apartheid, the mechanics of BEE scorecards, labor market theory, and the resulting shifts in both inter- and intraracial income equality.
Which research methodology is applied?
The author uses a descriptive and analytical approach, synthesizing existing statistical data and economic literature to evaluate trends in the South African economy following the implementation of BEE.
What is the main argument regarding BEE?
The author argues that while BEE likely contributed to reducing interracial inequality by increasing real wages for the black population, it simultaneously caused inefficiencies and increased inequality among black people by primarily benefiting an established elite.
How is the BEE scorecard structured?
The BEE scorecard rates companies across four main categories—Direct Empowerment, Human Resource Development/Employment Equity, Indirect Empowerment, and Socio Economic Development—to determine their economic inclusion of black people.
What is meant by the term "payers" in the context of BEE?
The author defines "payers" as those who bear the costs of the program, including white people who may face negative wage effects and the national economy, which suffers from reduced market efficiency.
What do the Lorenz curves reveal about the South African economy?
The Lorenz curves indicate that income inequality remains a significant challenge and is highest within the African population, while also showing that the inequality ranking across racial groups remained relatively stable over time.
What role does the ANC play in the BEE narrative?
The African National Congress (ANC) is identified as the political party that synthesized various historical movements of black empowerment into the formal BEE program introduced in 2003.
- Citar trabajo
- Korbinian Stinglhamer (Autor), 2016, The effect of Black Economic Empowerment (BEE) on racial inequality in South Africa, Múnich, GRIN Verlag, https://www.grin.com/document/377206
