FACULTY OF MANAGEMENT SCIENCES
DEPARTMENT OF PUBLIC MANAGEMENT
&
ECONOMICS
DIPLOMA IN PUBLIC ADMINISTRATION (DIPAP1)
DIPLOMA IN LOCAL GOVERNMENT (DIPAL1)
Study Guide
2021
MODULE: Public Sector Economics
MODULE CODE: PSEC101
SAQA CREDITS: 12
This module was revised on December 2017 – Mr J.S.Davis
1
Name of Lecturer
Campus location
: Nikiwe Madonsela
: Riverside Campus - PMB
Telephone
: 031 373 5489
Fax No
: To be confirmed
E-Mail
: NikiweM@dut.ac.za
Consultation times with Lecturer: To be confirmed
Departmental Secretary / Programme secretary
: To be confirmed
Contact details
: 0733210021
Lectures
:3
Tutorials
:1
Lecture Venue
: Online
Tutorial Venue
: Online classes – MS Team
Duration
: 14 weeks
classes – MS Team
Relevant Policies and rules: See Departmental Handbook
2
TABLE OF CONTENTS
Page
WELCOME
4
USING ONLINE THINKLEARNZONE CLASSROM
4
INTRODUCTION
4
LEARNING OUTCOMES AND ASSESSMENT CRITERIA
4-6
LEARNING, TEACHING AND ASSESSMENT STRATEGIES
6-8
SCHEME OF WORK
8-9
COPYRIGHT AND PLAGIARISM
9
STUDENT SUPPORT
9
WORK INTEGRATED LEARNING (WIL), INDUSTRY, COMMUNITY,
AND OCCUPATION-RELATED INFORMATION
9
QUALITY ASSURANCE
MODULE CONTENT
ANNEXURE 1: DUT PLAGIARISM POLICY
9
10 - 22
23
3
Welcome
Welcome to this module, Public Sector Economics. This study
guide has been designed to guide you through the teaching,
learning and assessment procedures and requirements for this
module.
1.
Using your onlineThinkLearnZone (Moodle; MS Team)
classroom
All taught subjects/modules have their own online classroom on the
ThinkLearnZone. You can access your classroom at
https://thinklearnzone.dut.ac.za
To log in, ask your lecturer for guidance or check out “how to log in” on the
DUT e-learning website http://elearning.dut.ac.za/faq/faq_students/
The e-learning website also has contact information for help and technical
assistance http://elearning.dut.ac.za/contacts/
You can call the e-learning helpdesk on 031 373 6758 or email them on
edtechadmin@dut.ac.za
2.
Introduction
The Diploma in Public Administration aims to prepare students with a
theoretical and practical basis so that administrative and management
functions can be effectively and efficiently performed.
The public sector encompasses institutions and departments at national,
provincial and local levels, as well as parastatals, research bodies,
universities and technology universities. The public sector environment is
both dynamic and challenging.
The module syllabi equips students with the skills, knowledge and
competencies necessary to handle challenges in administration and
management, more specifically relating to programme management.
The purpose of this module is to equip students with the ability to examine the
institution of government and the role it plays in a modern mixed market
economy.
3.
Learning outcomes and assessment criteria
Describe how society can use different economic systems to solve the
economic problem.
Illustrate diagrammatically how a four sector, open economy works.
Analyse the five macroeconomic objectives in most economies.
Discuss why government participates in the economy as a result of market
failure.
4
Discuss the fiscal policy, provincial budget and its relationship to the national
budget.
Analyse public expenditure and debt management.
Learning outcomes
Assessment criteria
Assessment
methods
Describe how society can
use different economic
systems to solve the
economic problem.
Illustrate diagrammatically
how a four sector, open
economy works.
Analyse the five
macroeconomic objectives in
most economies.
Discuss why government
participates in the economy
as a result of market failure.
Discuss the fiscal policy,
provincial budget and its
relationship to the national
budget.
Analyse public expenditure
and debt management.
Discuss how society can
use different economic
systems to solve the
economic problem.
Explain with aid of
diagram(s) how a four
sector, open economy
works.
Discuss the five
macroeconomic objectives
in most economies.
Explain why market failure
causes the government to
participate in the economy.
Analyse the relationship
between fiscal policy,
provincial budget and
national budget.
Discuss the relationship
between public expenditure
and debt management.
Various
assessment
methods are
adopted within
the programme
inter alia:
projects, tests,
assignments,
seminar
presentations,
debates, role
plays, report
writing, case
studies.
Scheme of work:
5
•Define and explain an economic system.
State the characteristics, objectives and importance of:
Traditional economic system
Command (planned) economic system
Market economic system
“Mixed” economic system
Use the characteristics of the various systems to suggest an appropriate
economic system for South Africa.
Describe the circular flow of production, income and spending in a four sector,
three market economy.
Describe the government sector and show how it interacts with households
and firms.
Describe how the foreign sector and show how it interacts with the domestic
economy.
State the major economic objectives.
Identify and explain those economic objectives that are positively related to
each other.
Identify and explain those economic objectives that are negatively related to
each other.
Identify the major macroeconomic indicators.
Identify and explain the following reasons for market failure:
Monopoly and imperfect competition;
Public Goods;
Externalities;
Asymmetric information;
Common property resources;
Income distribution;
Macroeconomic growth and stability.
Explain how government intervention may alleviate the effects of market
failure, in terms of the distributive, allocative and stabilization functions of
government.
Define fiscal policy.
Identify the main components of the national budget.
Outline the major expenditure and revenue proposals as detailed in the
national budget.
Outline the major expenditure and revenue proposals as detailed in the
provincial budget.
Discuss the trends in size, growth and composition of government
expenditure in South Africa.
Identify the main similarities and differences in government expenditure
patterns between South Africa and other countries.
Consider the long-term effects of government spending.
Define public debt.
Describe the characteristics of the size, composition and nature of public debt
in South Africa.
Explain and compare different theories of public debt and evaluate them
critically.
Define public debt management.
Identify and describe the different types of public debt costs.
Discuss the different types of taxes.
Identify the criteria in terms of revenue, efficiency and administrative
simplicity.
Illustrate how the consumer/producer of a good may bear the burden of an
excise tax.
4.
ear
nin
g,
tea
chi
ng
and
ass
ess
me
nt
stra
tegi
es
L
a)
ear
nin
g
Acti
vitie
s
6
L
Learning activity
% learning
time
Lectures
70
Tutorials, group-work and independent online 30
learning
b) Graduate attributes



Ability for critical analysis and decision making.
Application of basic mathematical skills in the business environment.
Appreciation of the dynamic nature of the business environment.
c) Assessment
Continuous assessment based on three assessments.
The final mark comprises two continuous assessments as follows:
 Test 1: 50%
 Test 2: 50%
_____
100%
Test dates: to be confirmed
Students who miss the test due to illness may write a make-up test on
presentation of a Medical Certificate within 7 days of having missed the
test. If the test is missed for some other reason, this should be discussed
with the lecturer who may then grant permission to write the make-up test.
During the tutorials, students will be required to complete a tutorial
exercise in class, selected sections of which will be marked by the
lecturer/tutor.
Feedback will be given to students on their performance
using comments on assessment scripts, class discussions
on assessments, and during tutorials.
d)
Activities to promote learning
In addition to the prescribed and recommended materials, Case Study
DVD’s, guest lecturers, and/or field trips may also be used. Online tutorials
and tests can be accessed via the online learning platform called
ThinkLearnZone.
You
can
access
your
classroom
at
https://thinklearnzone.dut.ac.za
7
You must check the departmental notice board on a regular basis in order to keep up
with any news or changes such as test dates and venues. Alternatively, if your
lecturer employs internet resources you may access the electronic notice board on
your lecturer’s online classroom.
We will send information about the survey to your DUT4life email account.
Go to http://www.dut.ac.za/student_portal. Under Student Services, click
DUT4lifeEmail. You can also access your email via
https://www.outlook.com/dut4life.ac.za. Log in, by entering your username:
studentnumber@dut4life.ac.za, Password: Dut+first 6 digits of your RSA
ID number (no spaces).
e) Library orientation
Please ensure you are familiar with the library environment, subject
librarians, internet and research facilities as you will need to access the
library when completing assignments and preparing for assessments.
5.
Scheme of Work [14 weeks = 36 lectures & 12 tuts]
There are approximately 14 weeks in the semester: about 36 lectures and 12
tutorials. Below is a rough guide of how the module content will be taught.
Use this to plan your studying, but note that the schedule may change due to
unforeseen circumstances.
Topic 1:
Topic 2:
Topic 3:
Topic 4:
Topic 5:
Topic 6:
ECONOMIC SYSTEMS
(Lectures 1 - 4)
PRODUCTION, INCOME AND SPENDING IN A MIXED
ECONOMY
(Lecture 5 - 8)
MEASURING THE PERFORMANCE OF THE ECONOMY
(Lecture 9 - 15)
THE GOVERNMENT
(Lectures 15 – 21)
FISCAL POLICY
(Lectures 22-28)
PUBLIC DEBT AND DEBT MANAGEMENT
(Lectures 29-36)
Prescribed reading from relevant chapters of the following books:
The following books are available on short loan in the library.
Mohr P, Fourie L and associates (2011) Economics for South African
Students, 5th Edition,J L van Schaik.
Black P, Calitz E and Steenekamp T (2010) Public Economics, 4 th Edition,
Oxford University Press.
8
Useful Websites:
Statistics South Africa: www.statssa.gov.za
South African Department of Finance/Treasury: www.treasury.gov.za
South African Reserve Bank: www.reservebank.co.za
South African Department of Labour: www.labour.gov.za
During the course of the semester, you should read as much as economics
and current affairs as possible to get a feel for economics. Read the articles
supplied daily on the economics Moodle, online, in the newspapers and in the
library.
6.
Copyright and plagiarism
The DUT, Faculty and Department emphasize the need for academic integrity
in all student learning and assessment activities. The DUT plagiarism
declaration must be completed and submitted with assignments. See
Annexure 1.
7.
Student support
Academic support is provided via tutorials and one on one student
consultation sessions with your lecturer. Do see your lecturer to discuss any
problems with understanding the module material. You also have other
support services such as Student Counselling, Student Health services,
Library courses, Financial Aid and other courses offered by Student
Governance. An informal system of monitoring and tracking is implemented at
the module level based on tutorial and test performance. Students who are at
risk of failing or who require support may be given additional homework tasks
to improve their understanding of the material.
8.
Work Integrated Learning (WIL), industry, community, and occupationrelated information.
There is no WIL in this introductory module.
9.
Quality assurance and enhancement
The quality and standard of this module are maintained through subject and
lecturer evaluation, staff-student meetings and informal feedback, internal
moderation of assessments and other DUT approved quality assurance
methods. A class representative and deputy representative will be elected by
the class and will report any issues pertaining to the teaching and learning
experience in this module to the lecturer.
9
SUMMARY OF TOPICS:
The following Topics 1-4 are from Mohr P, Fourie L and associates
(2011)
TOPIC 1:
ECONOMIC SYSTEMS
TOPIC 2:
PRODUCTION, INCOME AND SPENDING IN A MIXED ECONOMY
TOPIC 3:
MEASURING THE PERFORMANCE OF THE ECONOMY
TOPIC 4:
THE GOVERNMENT
The following Topics 5-6 from Black P, Calitz E and Steenekamp T
(2010)
TOPIC 5:
FISCAL POLICY
TOPIC 6:
PUBLIC DEBT AND DEBT MANAGEMENT
10
TOPIC 1: ECONOMIC SYSTEMS
Duration: Lectures 1-4
Learning outcome:
Explain different economic systems and use the characteristics of the
various systems to suggest an appropriate economic system for South
Africa.
CHAPTER 2
2.1
2.2
2.3
2.4
2.5
2.6
PAGES 26 - 33
Different economic systems
The traditional system
The command system
The market system
The mixed system
South Africa’s mixed economy
Assessment Criteria
Learners must be able to:
 Define and explain an economic system.
 State the characteristics, objectives and importance of:
Traditional economic system
Command (planned) economic system
Market economic system
“Mixed” economic system
 Use the characteristics of the various systems to suggest an
appropriate economic system for South Africa.
11
TOPIC 2: PRODUCTION, INCOME AND
SPENDING IN A MIXED ECONOMY
Duration: Lectures 5 - 8
Learning outcome:
Use a diagram to explain how the economy works, identify all the
participants in the economy and describe the interrelationships between
them
Chapter 3
3.1
3.2
3.3
3.4
3.5
3.6
3.7
Production, Income and Spending in the Mixed
Economy
Pages 40 - 50
Introduction
Production, income and spending
Sources of production: factors of production
Sources of income: remuneration of the factors of production
Sources of spending: four spending entities
Putting things together: a simple diagram
Illustrating the interdependence: Circular flows of production,
income and spending
Assessment Criteria
Learners must be able to:
•
Describe the circular flow of production, income and expenditure in
an economy
•
List and describe the different participants and market interactions
in a mixed, open economy, namely:
•
describe the interaction between sectors within markets
•
describe how total production, total income and total spending in the
economy are related
•
describe the government sector and show how it interacts with
households and firms
12
•
describe the foreign sector and show how it interacts with the domestic
economy
•
distinguish between the circular flow of income/expenditure and circular
flow of economic activity (i.e. “real” flows)
13
TOPIC 3: MEASURING THE PERFORMANCE
OF THE ECONOMY
Duration: Lectures 9 - 15
Learning outcome:
Develop an awareness of the key macro-economic performance
indicators and objectives; interpret the values of the various indicators
and show how the objectives are inter-related
Chapter 3
13.1
13.2
13.3
13.4
13.5
13.6
13.7
Measuring the performance of the economy
Pages 234- 254
Macroeconomic objectives
Measuring the level of economic activity: gross domestic product
Other measures of production income and expenditure
Measuring employment and unemployment
Measuring prices: the consumer price index
Measuring the links with the rest of the world: balance of payments
Measuring inequality: distribution of income
Assessment Criteria
Learners must be able to:
•
Describe and explain the macroeconomic objectives
•
List, describe and explain the different measures for each
macroeconomic objectives
14
TOPIC 4:
THE GOVERNMENT
Duration: Lectures 15 - 21
Learning outcome:
Examine the institution of government and the role that it plays in a
modern mixed market economy.
Chapter 15
The Government Sector
Pages 276- 296
15.1 The government or public sector
15.2 The role of government in the economy: an overview
15.3 Market Failure
15.4 Further reasons for government intervention in the economy
15.5 How does government intervene
15.6 Government failure
15.7 Nationalisation and privatisation
15.8 Fiscal policy and the budget
15.9 Government Spending
15.10 Financing of government expenditure
15.11 Taxation
15.12 Tax incidence
Assessment Criteria
Learners must be able to:
•
•
•
•
•
•
•
Explain why government participates in the economy.
Describe and explain the effects of government intervention in the
economy as a result of market failure (existence of monopolistic
firms, public goods and externalities asymmetric information,
common property resources, income distribution and
macroeconomic growth and stability).
Describe the distributive and stabilization functions of government
Define and explain fiscal policy and its relationship to the budget.
Discuss the different types of taxes.
Identify the criteria in terms of revenue, efficiency and
administrative simplicity
Illustrate how the consumer/producer of a good may bear the
burden of an excise tax
15
TOPIC 5:
FISCAL POLICY
Duration: Lectures 22-28
Learning outcome:
Examine the features of fiscal policy in South Africa with regards theory
and practice in relation to international experience.
Chapter 15
15.2
15.3
15.4
15.5
15.6
Fiscal Policy
Pages 233- 260
Nature of fiscal policy
The macroeconomic role of fiscal policy
Discretion versus rules
Fiscal policy in South Africa
Fiscal reforms in sub-Saharan Africa
Assessment Criteria
Learners must be able to:
 Define fiscal policy and describe fiscal goals and instruments
 Discuss the views held focusing on the distinction between the
Keynesian and structural approaches
 Distinguish between the various definitions of the budget balance
and explain the significance of each economic analysis
 Describe the key features of fiscal policy in South Africa with
reference to theory against the backdrop of international
experience and aspects of performance of the South African
economy
 Describe some features of fiscal policy reform in sub-Saharan
Africa in recent years
16
TOPIC 6:
PUBLIC DEBT AND DEBT
MANAGEMENT
Duration: Lectures 29 -36
Learning outcome:
Define public debt and in characteristics in the South Africa
Chapter 16
16.1
16.2
16.3
16.4
16.5
Public Debt and debt management
Pages 262-283
The concept of public debt
Size and composition of public debt
Theory of public debt
Should government tax or borrow?
Public debt management
Assessment Criteria
Learners must be able to:
 Define public debt
 Describe the characteristics of public debt in South Africa
 Explain and compare theories of public debt and evaluate them
critically
 Argue the merits of debt and tax financing of government
expenditure
 Define public debt management
 Identify and describe the different types of public debt cost
 Identify the goals of public debt management and their relation to
South Africa
17