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improve labour through training, and increase capital available for investment as a result of
greater savings. However, private companies focus on efficiency and profits. To cut costs
they often reduce the amount of labour used thus contributing to increased unemployment.
Public facilities such as transport and healthcare become expensive because the emphasis is
on profits. The drive for profits often means that social and environmental concerns are
ignored. Only the wealthy can buy government operations. Therefore the wealthy become
wealthier. Despite the abovementioned pitfalls of the neo-classical revival perspective, the
absence of political interference, the general increase in efficiency and corporate profit­
mindedness as well as the responsible use of public taxes cannot be overemphasized as
advantages to economies (Brett et al., 2005).
In this research, much attention is paid to the efficacies ofmarket orientated policies as part of
partnership attempts to diversitY the economy of Vlundi. This thesis further acknowledges
the need to allow a certain degree of government's intervention to avoid setbacks like
unemployment and high transport costs that are associated with the quest for more profits in
neo-classical revival model. Given the prescripts of the neo-classical model, the socio­
economic conditions of the majority of the rural folk in Ulundi may face developmental
challenges.
3.3.5 Tbe new growth tbeory
This model was a reaction to the neo-classical model. It suggested that while investment in
developing countries provided high profits for investing companies, both locally and
internationally, it did not mean that there was an overall improvement in the standard of living
for all people. The reason for this was a lack ofinvestment in:
• Human resources and the development of education and skills amongst people in
developing countries;
• Infrastructure such as roads and the development ofnew products and industries.
This model required government investment in the development ofskills and infrastructure as
well as in research and development (R & D) (Brett et al.. 2005). It must be noted that
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