Economy of South Africa

South Africa has a two-tiered economy; one rivaling other developed countries and the other with only the most basic infrastructure. It therefore is a productive and industrialized economy that exhibits many characteristics associated with developing countries, including a division of labour between formal and informal sectors--and uneven distribution of wealth and income. The formal sector, based on mining, manufacturing, services, and agriculture, is well developed.

Related Topics:
South Africa - Developed countries - Infrastructure - Formal sector

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The transition to a democratic, non-racial government, begun in early 1990, stimulated a debate on the direction of economic policies to achieve sustained economic growth while at the same time redressing the socioeconomic disparities created by apartheid. After the 1994 elections that marked the end of apartheid, the new ANC-led Government of National Unity's initial blueprint to address this problem was the Reconstruction and Development Program (RDP). The RDP was designed to create programs to improve the standard of living for the majority of the population by providing housing--a planned 1 million new homes in 5 years--basic services, education, and health care. While a specific "ministry" for the RDP no longer exists, a number of government ministries and offices are charged with supporting RDP programs and goals.

Related Topics:
1990 - Apartheid - 1994 - ANC - Government of National Unity's

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The Government of South Africa demonstrated its commitment to open markets, privatization and a favourable investment climate with its release of the crucial Growth, Employment and Redistribution (GEAR) strategy--the neoliberal economic strategy to cover 1996-2000. The strategy had mixed success. It brought greater financial discipline and macroeconomic stability but has failed to deliver in key areas. Formal employment continued to decline, and despite the ongoing efforts of black empowerment and signs of a fledgling black middle class and social mobility, the country's wealth remains very unequally distributed along racial lines. South Africa's budgetary reforms such as the Medium-Term Expenditure Framework and the Public Finance Management Act--which aims at better reporting, auditing, and increased accountability--and the structural changes to its monetary policy framework--including inflation targeting--have, however, created transparency and predictability and are widely acclaimed. Trade liberalization also has progressed substantially since the early 1990s. Average import tariffs in South Africa have declined to 14.3% in 1999 from more than 30% in 1990. These efforts, together with South Africa's implementation of its World Trade Organization (WTO) obligations and its constructive role in launching the Doha Development Round, show South Africa's acceptance of free market principles.

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