TIPS_Working_Paper_Small_business_in_industrial_policy_March_

We can understand the depth of inequality in South Africa through a comparison of income shares with other countries using José Gabriel Palma’s broad definition of classes (Palma 2018:1140).1 This definition compares the share of household income going to the poorest 50% of households with the middle class, defined as the next four deciles in the income distribution, and the richest class in the t. [...] That would require a shift from the prioritisation of internationally competitive and innovative producers that has been entrenched in South Africa’s approach to industrial policy since the opening of the economy in the early 1990s. [...] In the second half of the 2010s, the slowing economy led to accelerated growth in the informal sector in general, and in micro-enterprise in particular. [...] The initial pandemic lockdown in the second quarter of 2020 saw a particularly sharp fall in the number of informal own-account workers, with a relatively rapid recovery and then a plateau from the first half of 2022. [...] In contrast, the spatial distribution of informal business largely paralleled the population, with around a third each in the large metros, the historic labour-sending regions, and the rest of the country.