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Why South Africa'S Apartheid Economy Failed




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.

Suggested Citation

  • Anton D. Lowenberg, 1997. "Why South Africa'S Apartheid Economy Failed," Contemporary Economic Policy, Western Economic Association International, vol. 15(3), pages 62-72, July.
  • Handle: RePEc:bla:coecpo:v:15:y:1997:i:3:p:62-72

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    References listed on IDEAS

    1. Thomas W. Hazlett, 1988. "Economic Origins Of Apartheid," Contemporary Economic Policy, Western Economic Association International, vol. 6(4), pages 85-104, October.
    2. Lingle, Christopher, 1990. "Apartheid as Racial Socialism," Kyklos, Wiley Blackwell, vol. 43(2), pages 229-247.
    3. Lowenberg, Anton D, 1989. "An Economic Theory of Apartheid," Economic Inquiry, Western Economic Association International, vol. 27(1), pages 57-74, January.
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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 20:43:46


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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, vol. 89(4), pages 417-434, March.
    2. Philip I. Levy, 1999. "Sanctions on South Africa: What Did They Do?," American Economic Review, American Economic Association, vol. 89(2), pages 415-420, May.
    3. Truett, Lila J. & Truett, Dale B., 2003. "A cost function analysis of import demand and growth in South Africa," Journal of Development Economics, Elsevier, vol. 70(2), pages 425-442, April.
    4. Gregory N. Price, 2003. "South African Apartheid, Black-White Inequality, And Economic Growth: Implications For Reparations," South African Journal of Economics, Economic Society of South Africa, vol. 71(3), pages 611-630, September.

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