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 2: Economic survey, 1970-2000

Gavin Maasdorp

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


Gavin Maasdorp INTRODUCTION At the beginning of 1970, the last year of the seventh decade of the twentieth century, South Africa’s economy appeared on the surface to be in reasonable shape. There had been a high rate of growth since the end of the Second World War, the major export - gold - sold at a fixed (albeit low) price, political stability appeared to prevail, and foreign investment was flowing into the expanding manufacturing sector. Yet, all this masked a number of disturbing features: a race-based economy (highly regulated with state socialism to advance the interests of Afrikaners) was causing structural problems (including a lack of skills), the opportunity costs of social engineering to separate the races were high, and there was seething black resentment. In the last three decades (1971-2000) of the century, the country’s economic policy and performance would be significantly shaped by political developments both domestic and external - by the interaction of growing internal unrest, the response of the government, the response of the international community, increasing isolation, growing influence of trade unions and other radical groups, the change from minority to majority rule, globalization and transformation. This chapter is an eclectic account of how the economy responded to these forces. 2.2 ECONOMIC GROWTH Population growth peaked in the 1960s at about 3 per cent per annum. The two most accurate population counts pertaining to the last three decades of the century were those of 1970 and 1996. Censuses of 1980, 1985 and 1991 were rendered...

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