A Heterodox Developmental Economics Understanding of Systemic Corruption:The Case of South Africa

Abstract

This article applies a heterodox developmental economics framework to understanding corruption and state capture in post-apartheid South
Africa. A central insight of heterodox development economics is that developmental states must manage economic rents by disciplining
vested interests and directing capital toward productive investment. States unable to discipline large corporations create conditions for
extractive, rent-seeking elites, while financial liberalisation and financialisaton intensify speculative and rent-seeking behaviour. The
article argues that the failure of the post-apartheid government to build a developmental state capable of disciplining corporate power and
influencing the allocation of capital contributed both to poor economic performance and to persistent corruption. Large corporations
have retained significant control over the economy while investing relatively little in productive domestic development and continuing to
extract wealth. At the same time, limited legitimate economic opportunities encouraged sections of an aspiring elite, consisting of politically
connected individuals and private business interests, to pursue rents through corruption and state capture within the public sector and
state-owned enterprises. The article contends that corruption and state capture in South Africa should not be understood primarily as the
cause of economic decline, but rather as symptoms of a broader systemic corruption rooted in an extractive political-economic structure.