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Private Wealth in a Developing Country:Evidence from South Africa

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  • Anna Orthofer
  • Stan Du Plessis
  • Monique Reid
Abstract
The point of departure of Piketty's influential Capital in the Twenty‐First Century (2014) was the dramatic growth of private wealth‐income ratios in advanced economies between 1970 and 2010. Using official balance sheet data for South Africa—the first country to publish such data in the developing world—, this paper examines to what extent this re‐emergence of private wealth was also experienced in the developing‐country context. First, we find that the South African current wealth‐income ratio is very close to its 1975 level, and much lower than those of Piketty's sample of advanced economies. Second, we show that the discrepancy is explained not only by South Africa's relatively low savings rates, but also by the reduction of wealth before and during the transition to democracy in the 1990s. Since then, private wealth recovered significantly, but the U‐shaped relationship does not support the argument that there is a clear correlation between the capital‐income ratio and capital share.

Suggested Citation

  • Anna Orthofer & Stan Du Plessis & Monique Reid, 2019. "Private Wealth in a Developing Country:Evidence from South Africa," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 65(3), pages 632-656, September.
    • Handle: RePEc:bla:revinw:v:65:y:2019:i:3:p:632-656
    DOI: 10.1111/roiw.12361
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    Cited by:

    1. Johannes W. Fedderke & Neryvia Pillay Bell, "undated". "Characteristics of the South African retirement fund industry," Working Papers 880, Economic Research Southern Africa.
    2. von Fintel, Dieter & Orthofer, Anna, 2020. "Wealth inequality and financial inclusion: Evidence from South African tax and survey records," Economic Modelling, Elsevier, vol. 91(C), pages 568-578.

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