This paper examines recent contributions to the study of economic growth and attempts to draw inferences relevant to agriculture in the developing regions of South Africa. New growth theory suggests that physical and human resource endowments are wasted if government does not establish the correct economic and political institutions. Indeed, recent empirical findings suggest that rapid growth observed in certain low-income colllltries has more to do with economic policy and institutional change than with public investment in physical and human capital. A brief comparison between institutions in the homelands and those recommended by new growth theory reveals some fundamental problems facing local policy-makers and researchers. These include identifying and implementing strategies that will produce the institutional changes needed to strengthen property rights in land, reduce legal uncertainty in commercial transactions, and ensure that local authorities are exposed to both the economic and political consequences of poor governance.