The S.A. Economy: Public and Private Sectors
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Copyright 2011 The McGraw-Hill Companies 14-1 Land Area and Population Households as Income Rec eivers Households as Spenders Legal Forms of Busi ness The Public Se ctor: Governm ent’s Role Government Ex penditure Government Re venue Last Word Key Terms End Show 14 The S.A. Economy: Public and Private Sectors
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14. The S.A. Economy: Public and Private Sectors. Chapter Objectives. Land area an Population of S.A. Important Facts About S.A. Households and S.A. Businesses Principle - Agent Issues Economic Role of Government in the Economy - PowerPoint PPT Presentation
Transcript of The S.A. Economy: Public and Private Sectors
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Land Area and PopulationHouseholds as Income ReceiversHouseholds as SpendersLegal Forms of BusinessThe Public Sector: Government’s RoleGovernment ExpenditureGovernment RevenueLast Word
Key Terms
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14The S.A. Economy: Public and Private Sectors
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Chapter Objectives• Land area an Population of
S.A.• Important Facts About S.A.
Households and S.A. Businesses
• Principle - Agent Issues• Economic Role of Government
in the Economy• Categories of Government
Spending and the Sources of Government Revenues
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Land Area and PopulationHouseholds as Income ReceiversHouseholds as SpendersLegal Forms of BusinessThe Public Sector: Government’s RoleGovernment ExpenditureGovernment RevenueLast Word
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S.A. Land Area and Population (%)Eastern Cape
Free State
Gauteng
Kwazulu Natal
Limpopo
Mpumalanga
Northern Cape
North West
Western Cape
South Africa
10 20 30 40
Source: StatsSA
(169 500) Land area per sq/km
(129 480)
(17 010)
(92 100)
(123 910)
(79 490)
(361 830)
(116 320)
(129 370)
(1 219 090 sq km ) (49320 million)
(6 648) Population ‘000
(2 902)
(10 531)
(10 449)
(5 227)
(3 606)
(1 147)
(3 450)
( 5 356)
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Households as Income Receivers
Functional Distribution of Income-2005/6
Income from work
Income From
Capital
ImputedRent
Social and
Insurance Grants
Other Income
Inco
me
By
Fu
nct
ion
Per
form
edNational Income Received (Percent)
0 10 20 30 40 50 60 70
74%
1%
6%
6%
9%Source: StatsSA
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Land Area and PopulationHouseholds as Income ReceiversHouseholds as SpendersLegal Forms of BusinessThe Public Sector: Government’s RoleGovernment ExpenditureGovernment RevenueLast Word
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Distribution of Household Consumption expenditure
Food and Bev
Alcohol & Tobacco
Clothing and Foot
Fuels and water
Furniture & H Equip
Health
Transport
Communication
Recreation & Cultu
Education
Restaurant & Hotels
Miscellaneous
Unclassified
5 10 15 20 25 (%)
Source: StatsSA
R8 105
R647
R2 781
R13 245
R3 868
R933
R11 180
R1 969
R2 582
R1 356
R1 232
R8 081
R172
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Distribution of Household Income per decile (Mean rand per annum )
(see also Chapter 11 p – Table 11.1)
1 2 3 4 5 6 7 8 9 10Source: StatsSA
50
40
30
20
10
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Households as SpendersComposition of Consumption -2009
Durable Goods
Semi Durable Goods
Services
0 10 20 30 40 50 60 70 80 90
7%
9%
40%
Source: Bureau of Economic Analysis
Non- DurableGoods
44%
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The Business Population
• Sole Proprietors
• Partnerships
• Closed Corporations
• Companies–Private
–Public
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Legal Forms of Business
• Corporate Securities–Stock–Bond
• Limited Liability• Hiring of Specialists• Unlimited Lifetime• Principal-Agent Problem
Advantages of Companies
14.1
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The Public Sector: Government’s Role
• Providing the Legal Structure
• Maintaining Competition
– Monopoly
– Regulation
– Regulated Monopolies
• Competition Commission
• Competition Tribunal
• Competition appeal board
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The Public Sector: Government’s Role
• Redistributing Income–Transfer Payments
–Market Intervention
–Taxation
• Reallocating Resources–Market Failure
• Externalities or Spillovers
• Negative or Positive 14.2
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The Public Sector: Government’s Role
• Correcting for Negative Externalities– Legislation
– Specific Taxes
• Correcting for Positive Externalities– Subsidize Consumers
– Subsidize Suppliers
– Provide Goods Via Government
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The Public Sector: Government’s Role
• Public Goods and Services• Private Goods
– Rivalry– Excludability
• Public Goods– Nonrivalry– Nonexcludability– Free-Rider Problem
• Quasi-Public Goods • The Reallocation Process
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The Public Sector: Government’s Role
• Promoting Stability– Unemployment– Inflation
• Government’s Role: A Qualification– Political Context– Overregulation– Underregulation– Benefits and Costs– Not Perfectly Carried Out
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R93.2
R85.6
R135.4
R33.8
Government FinanceExpenditures-2010/11
0 40 80 120 160 200
Education
Economic Affairs
OtherSource: www.treasury.gov.za
R165.1
R154.8
R130.9
R102.1
Eigth Areas of Spending (R billions)
Health
Social Protection
Housing & Com
Order & Safety
Defence
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R22
Government FinanceGovernment Tax Revenues-2010/11
0 50 100 150 250 300
Personal Tax
VAT
Company Tax
Fuel Levy
Source: www.treasury.gov..za
R230.1
R164
R151.1
R31
Customs Duties
Basic Revenue Sources (billions)
R20.5
R29.2
Excise Taxes
Other
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Ke NakoLast
Word
• “I think as South Africans, we need to remember that we are a teenager in the world of nations and for us this has been a proud moment since 1994 and from the economic point of view all the investment was money well spent,” Gordhan said at a FIFA press conference.
He is adamant that for South Africa, the tournament’s benefits will not only be seen in terms of economic legacy but could help the country increase its delivery capacity while demonstrating to the world its ability to host major events.
The national government spent more than R33 billion over a period of four years on infrastructure and preparation for the World Cup. Close to R12 billion was spent on stadia infrastructure with another R11 billion spent on transport and R1.5 billion spent on event broadcast and telecommunications.
Source: http://www.sa2010.gov.za/node/3330
•
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Key Terms Page• Land area and popul
ation• Household Income• Household spending• durable goods• nondurable goods• Services• Legal Forms of Busi
ness
• limited liability• principal-agent problem• externality• negative externalities• positive externalities• public goods• quasi-public goods• government purchases• transfer payments• personal income tax• corporate income tax• sales and excise taxes• property taxes• Government
Expenditure
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MeasuringDomestic Output and National Income
