The Decline of the South African Economy

The Decline of the South African Economy

Edited by Stuart Jones

South Africa’s leading economists adopt within this volume a sectoral approach in their analysis of the drastic changes that have occurred within the South African economy since 1970. The book illustrates how, despite its sophisticated infrastructure, the South African economy has shared in the economic decline – resulting from misguided economic policies – that has been the experience of Sub-Saharan Africa.

Chapter 1: Introduction

Stuart Jones

Subjects: development studies, development economics, economics and finance, development economics


Stuart Jones By 1970 the South African economy had experienced two decades of vigorous growth. The mining sector had declined in relative importance, notwithstanding the development of new gold mines in the Free State and the Far West Rand, as manufacturing industry set the pace, protected by tariffs and import controls. South Africa’s manufacturing base widened and deepened considerably in the two decades prior to 1970. Agriculture, too, had experienced farreaching changes, as grain growing was modernized with the introduction of tractors, combine harvesters, chemical fertilizers, irrigation and the building of huge grain silos. Pig and poultry production was also mechanized at this time. In the financial sector the beginnings of a local money market took shape with the founding of the country’s first merchant banks and discount houses, supported by an expansion of instalment finance houses, new insurance companies and a new American-type bank. Transport stood out as the laggard in 1970. Admittedly there was some cause for alarm on the political front. However, in 1970, this did not appear to be insuperable, despite the arrival of large numbers of new African states at the United Nations. In other words, in 1970, there was cause for optimism on the part of both business and the authorities - an optimism that reflected the economic successes of the two previous decades and which had been underlined by the arrival of two new Londonbased merchant banks in 1969. What happened after 1970 did not live up to the expectations of that year...