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Crime, Justice, and Growth in South Africa: Toward a Plausible Contribution from Criminal Justice to Economic Growth

Literature › Works

Christopher Stone (2006). Crime, Justice, and Growth in South Africa: Toward a Plausible Contribution from Criminal Justice to Economic Growth. CID Working Paper No. 131 (South Africa Growth Initiative), Center for International Development, Harvard University. Center for International Development, Harvard University.
Type working paper
Scope Post-1994 South African economy
Method policy analysis
Period studied 1994–2006
Regions South Africa, Mamelodi (Pretoria), Madina (Accra, Ghana), Western Cape, KwaZulu-Natal, Gauteng
Themes transition post apartheid, inequality poverty unemployment, macro fiscal finance debt, comparative theory
Citation key stone2006

Argument

Stone asks whether high violent crime constrains growth in post-apartheid South Africa and whether criminal justice policy can loosen that constraint. He argues that the mechanisms are poorly understood and that justice institutions can only reliably reduce specific crimes in specific places. He therefore narrows seven commonly asserted crime-growth channels to two testable hypotheses: crime costs to business (especially household-based enterprises in low-income settlements) and perceptions of uncontrolled violent crime. He proposes iterative, experimental innovation targeted at those two problems, with each local success leveraged into wider public confidence. Growth should remain a secondary goal of justice policy.

Evidence and method

World Bank 2005 Investment Climate Survey; 2003 National Victims of Crime Survey (Burton et al. 2004); SAPS crime statistics and annual report; comparisons with US state and city crime rates; a Gough, Tipple and Napier household-based enterprise study in Mamelodi and Madina; PwC 2005 corruption survey; studies of domestic violence and women's employment (Lloyd 1997; Lloyd and Tulac 1999); and Brazilian and US city growth studies. Also uses the author's discussions with South African officials and business leaders.

Findings

  • The World Bank survey ranks crime among the top constraints on investment for South African firms. (p. 3)

    30 percent of enterprises in South Africa rated crime as a major or very severe constraint on investment, putting crime among the four most frequently mentioned constraints.

  • Overall victimization is not unusually high by international standards, and fell between 1998 and 2003. (p. 5)

    shows a one-year victimization rate of 22.9 percent, down from 24.5% in 1998.

  • The distinctive feature of South African crime is violence; the murder rate remains among the world's highest despite falling since 1994. (p. 5)

    it was last reported through March 2005 to be at 40.3 per 100,000, among the highest national rates in the world.

  • Existing evidence suggests crime affects growth indirectly via perceived instability rather than directly. (p. 14)

    high volumes of crime contribute to general perceptions of government instability which in turn constrain investment, but that crime volume does not exercise an independent influence on economic activity.

  • Crime costs to formal firms are substantial but similar to those in other middle-income countries. (p. 11)

    the costs of crime in South Africa for firms at the median are 1.1 percent of sales, 3 percent of net value-added, and 5 percent of labor costs.

  • Private security employment and reported corruption are both rising, so business costs of crime may grow. (p. 12)

    the number of people employed in private security rose by 150 percent from 1997 to 2005.

  • Household-based enterprises in informal settlements are especially vulnerable to crime, as shown by the Mamelodi-Madina contrast. (p. 13)

    But while crime was virtually unknown in Madina, it dominated conversation in Mamelodi. There the researchers found that shops closed early, business had to be conducted indoors

  • Plausible links between crime and labour-market outcomes may not hold up under rigorous testing, as the domestic violence studies show. (p. 10)

    Current employment status appears unaffected by women's varying experiences of male aggression in intimate relationships

  • Policy should pair targeted crime-reduction successes with communication to build public confidence. (p. 14)

    the first small victories be used to begin a cycle in which successes built trust, which in turn helps government achieve more small victories