Back in 2004, the National Treasury on behalf of the government asked some of the best brains in the world to come and study South Africa, and give some frank advice on how to improve our long-term economic performance.

This so-called Harvard Group came, looked us over and finally reported back in recent months, after much data gathering and debate, with South Africans from all walks of life as well as among themselves.

From the Group?s perspective, South Africa is but another struggling middle-income country, one though with a strange combination of first world and emerging world characteristics.

That at least makes us interesting, especially the fact that we have one of the lowest economic participation rates in the world, with exports that hardly perform. The main challenge facing us is how to change that, increase the growth rate and noticeably reduce unemployment within a short space of time.

The Harvard Group was partly chosen because it has no vested interests at all in this country, except perhaps a burning academic need to publish papers, and we being a heaven sent opportunity to do so.

But other than that, the only real question was whether they could come to understand us and our contorted history and institutions well enough to correctly discern our problems and come up with some imaginative solutions.

We should of course realize that South Africa is not the first client of these global academics based in the US. They are daily grinding their way through a host of country problems and have done so for years.

Also, the Group is not solely peopled with political innocents. Its leader has in his time been a planning minister responsible for the national budget in Venezuela. If you have cut your teeth on such a country in your younger days, that certainly must have been one of the better schools of hard knocks.

The Group therefore lacked little, by way of analytical ability and political acumen. Above all, though, deeply ingrained in its global street-wise smarts is a certain understanding of the realities it would face in a country like South Africa.

If they were called in for advice, it could only be because of mistakes being made, resulting in long-term underperformance. This suggested a certain entrenchment of old mistaken ideas, concepts, philosophies, policies.

Disruptor of the status quo

Such entrenched ideas are not easily dislocated. The Group therefore also ultimately sees its contribution as disruptor of the status quo. For how else could it achieve a mindset shift leading to a change in policies?

Thus we should be prepared to be stirred, if not shaken to our core, by this wild bunch of world class academics on a mission to dissect, diagnose and propose workable solutions, while all the while having a lot of fun, writing a lot of needed academic papers for the never ending paper mill, and getting handsomely paid and entertained into the bargain.

When a country like South Africa finally turns to outside advice for an honest down to earth assessment, it must be because we locals have little agreement among ourselves about how we should address our most burning issues.

By implication, whatever the Group came up with would likely meet with disagreement, intellectually as much as from vested interests. Any other response would probably have deeply disappointed the Group.

It is going to be an interesting test to list all the local objections raised against the Group?s analysis and recommendations, whether actively or passively, and how much of its advice will survive as practical policy implementation.

Besides an awful lot of detailed good advice, it is the main piece of thinking that should have our most direct attention. On it is leveraged a sustainable stronger growth performance and a rapid structural economic transformation.

The Group observed our low economic participation rates, concluding that a more normalized condition would absorb at least seven-million more South Africans into the labour force. It also noted that our tradable sector (exports and import-competing local production) employ in fact proportionally more low skilled labour that our other economic sectors.

By getting exports to outperform longer term, our growth performance would improve as would our labour absorption, resulting in a drastic decline in unemployment.

The advice that follows from these observations is possibly as counterintuitive to most South Africans as was the proposition eighty years ago to leave the gold standard. Therefore brace yourself for what follows.

The key proposal is to run much larger budget surpluses, obtained mainly by spending less in the short term. This will create the national savings that households have difficulty in generating while constraining overall demand within disciplined limits, funding high fixed investment from domestic sources and not run much of a current account deficit.

With these disciplines in place, monetary policy could run a more relaxed regime with lower interest rates, in the process assisting in obtaining a lower valued and more stable exchange rate. Rand stability could be further anchored by a greater willingness to accumulate foreign exchange through currency intervention, especially whenever the rand threatened to firm unduly.

Once so positioned, export competitiveness would be greatly enhanced, further assisted by intelligent industrial and trade policies as proposed.

The country would now be ready for action and ready to run, driven forward by export-led growth, and especially absorbing lowly skilled labour of which we have the largest surpluses. Further intelligent labour market interventions, such as a wage subsidy for the young, would assist in reducing structural unemployment in crucial areas, potentially at a rapid rate.

Further contributions could come from a somewhat refocused BEE policy aimed to reinforce the growth agenda while minimizing negative tradeoffs.

Listening to these expositions, the archaic and still deeply entrenched nature of a century of economic policymaking comes into focus.

One could see how a Singaporean, Korean, Malaysian, Polish or Finnish audience of civil servants, academics, labour representatives and businessmen would after some soul searching respond enthusiastically to these proposals.

Dogged by ancient dogmas

Whether South Africans have it within them to take on board such advice and experiment with our national livelihood in a politically demanding condition dogged by ancient dogmas remains to be seen.

Countries allegedly get the political dispensations, governments and results they deserve. Whether or not our torturous history has prepared us sufficiently for a more fundamental overhaul of our economic thinking and doing business remains to be seen.

Perhaps the country hasn?t suffered enough yet, and have all vested interests not been sufficiently humbled yet by our underperformance and the structural hiatus it promises longer term if we don?t at some point change more fundamentally than we have done to date.

Locally, there remain many who think they monopolise truth and have just the kind of answers that will solve all the country?s many and deep problems. Often, though, there clings too much history, vested interest and misunderstanding to such parochial ideas.

Besides, such archaic thinking often calls forth deeply antagonistic responses from others who see their vested interests and our national salvation differently, giving rise to a never ending condition bordering on low intensity civil war.

We have been presented the best advice in the world today, most of it tested in environments other than our own. We are not unique, even if our underperformance has some pretty unique characteristics.

With so many countries outperforming us today, many of them peers, we should learn from others rather than remain preoccupied with the entrenched set of ideas from the past still guiding us today.

It will require a leap of faith for many, and a tour the force in changed thinking for others.

The alternative is to remain with our relative underperformance and the slow transformation it yields us, and the political risks this poses longer term in someday not being able to prevent serious dissension in the ranks, and grave backsliding, one model example today being a neighbouring country.

Cees Bruggemans is FNB's chief economist.