South Africa is one of the five countries (along with Brazil, Russia, India, and China) that are predicted to grow as economic powers in the world. This article discusses the effect of South Africa opening its economy to international trade and relationships and becoming an international competitor in the process. During Apartheid, sanctions were put on trade with South Africa and this severely hurt trade and the economy more generally. Since the end of Apartheid (1994), exports have become an increasing percentage of the countries economy with a large percentage of exports going to the U.S. and Europe. South Africa now has a trade surplus which continues to grow as the country comes further and further out of the Apartheid Era.
As we started to discuss in class, international trade is an important part of growing economies. Upon reading the list of reforms suggested as a part of the Washington Consensus, I noticed a few that strongly related to the post-Apartheid economy of South Africa. Reordering public expenditure priorities, trade liberalization, privatization, and deregulation were among the ones I first noticed. South Africa has worked to liberalize trade with other countries however, it was not all in their hands to trade sanctions. The political reasons for economic sanctions against a country can be seen time and time again throughout the world as the U.S. and Europe sanction countries with large amounts of abuse of workers, child labor, etc. These sanctions proved effective in the case of South Africa though this has not always been the case. Trade is becoming more and more instrumental to having a strong economy in the world and South Africa refuses to be left out of the competitiion. The countries who have closed off their economies or who import substantially more than they export are the ones who are falling behind. This can be seen throughout the developing world as they try (and fail) to compete with industrialized nations low prices.
There is actually a large literature on whether or not (and if so on what issues?) sanctions work that we may try to get into later in the semester. Clearly the sanctions against South Africa were not for economic reasons.
ReplyDeleteCan you think of one specific economic liberalization and how it has effected South Africa? Trade? Finance? Are they always positive or has it just been an net positive?
South Africa has been becoming more and more like modern Europe in terms of luxury good they trade natural resources and lower level products for with Europe. I would say that the economic gain of the country is there. However, for South Africa (and many other countries) it is hard to see the national economic gain without looking at who as citizens is gaining economically and the labor exploitation and high levels of poverty that still exist due to the privatization of resources including land, water, and electricity (much of which is used for production of goods to trade).
DeleteYes I do agree sanctions in South Africa proved to be successful in the Apartheid. In response to Apartheid many countries including South Africa used trade and financial sanctions to help while at the same time withdrawing significant amounts of foreign investment. After these use of sanctions South Africa experienced economic difficulty and the only way to change it was through a political change. Luckily Nelson Mandela when elected in 1994 was able to lead a democratic change. Post-Apartheid however, proved that these sanctions were unsuccessful leading to what I said an economic hardship. Sanctions are not also looked at as a great tool to ordinary people, hurting them more than political leaders. Sanctions only put pressure on political leaders sometimes not affecting their decisions at all and leave civilians out to dry. Therefore I don’t necessarily agree that it should be a tactic used at all even if it inevitably is a better decision for a country.
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DeleteI agree with much of what you said including that post- Apartheid South Africa has economic hardships. However, the people as individuals are doing better in both economic as well as political terms since the election in 1994. Of course, this is a new government that is still in a great deal of economic and political upheaval and remains relatively corrupt so only time will tell what comes next for the country.
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ReplyDeleteI agree with you stating that Trade has become an important tool in the global economy. Sanctions against a country that takes parts in unacceptable behavior. But as you said earlier this is not always effective, so what do we as a global society do when economic sanctions do not work? One thing I do not necessarily agree with is that countries who import more than they export fall behind. For example the US imports almost $1 Trillion more than it exports, does mean that the US economy is falling behind?
ReplyDeleteWell I do think that sanctions should only be used in extreme circumstances in the case of trying to change a countries behavior. As for if it doesn't change a countries behavior that would be case by case. If it involves something related to human rights on a global scale, stronger actions may be considered. I believe falling behind was the wrong term. I more meant that countries that depend on international trade more due to necessities needing to be imported from other countries
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ReplyDeleteThere can definitely be an argument about how much trade deficits hurt countries and prevent them from being world powers (i.e. USA and Britain). Aside from that, my question is that were those sanctions opposed strictly economic and based on trade or were they on social terms? If it was based on something like child labor than wouldn't that pertain more to social reform than strictly liberalizing trade?
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