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Why South Africa'S Apartheid Economy Failed


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    South Africa's apartheid system was enormously costly and ultimately collapsed because the inefficiencies created by apartheid policies escalated as the economy's structure changed. Labor market regulation and industrial decentralization policy inhibited efficient resource utilization, especially as the manufacturing sector became dominant. Apartheid educational policies generated skill shortages. A mercantilistic development strategy distorted trade patterns, exacerbated dependence on foreign capital inflows, and created chronic balance of payments difficulties. The administrative and defense costs of implementing apartheid were onerous and rising. These internal weaknesses enhanced South Africa's vulnerability to capital flight, changes in world prices and business cycle conditions, and political changes abroad. Ultimately, apartheid was abandoned because its costs came to exceed its benefits to white South Africans. The internal dynamics of the system dictated the retrenchment of apartheid, which in all probability would have occurred even without foreign sanctions Copyright 1997 Western Economic Association International.

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    Article provided by Western Economic Association International in its journal Contemporary Economic Policy.

    Volume (Year): 15 (1997)
    Issue (Month): 3 (07)
    Pages: 62-72

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    Handle: RePEc:bla:coecpo:v:15:y:1997:i:3:p:62-72

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    Blog mentions

    As found by, the blog aggregator for Economics research:
    1. Why apartheid ended
      by Johan Fourie in Johan Fourie's Blog on 2013-03-15 15:43:46
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    Cited by:
    1. Michelle Westermann-Behaylo, 2009. "Institutionalizing Peace through Commerce: Engagement or Divestment in South African and Sudan," Journal of Business Ethics, Springer, Springer, vol. 89(4), pages 417-434, March.
    2. Truett, Lila J. & Truett, Dale B., 2003. "A cost function analysis of import demand and growth in South Africa," Journal of Development Economics, Elsevier, Elsevier, vol. 70(2), pages 425-442, April.
    3. Philip I. Levy, 1999. "Sanctions on South Africa: What Did They Do," Working Papers, Economic Growth Center, Yale University 796, Economic Growth Center, Yale University.
    4. Levy, P.I., 1999. "Sanctions on South Africa: What Did They Do?," Papers, Yale - Economic Growth Center 796, Yale - Economic Growth Center.


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