Did the Apartheid Economy 'Fail'?¶
Terence Moll (1991). Did the Apartheid Economy 'Fail'?. Journal of Southern African Studies, Vol. 17, No. 2. Taylor & Francis.
| Type | journal article |
| Scope | Economics and economic history of apartheid |
| Method | descriptive quantitative |
| Period studied | 1920–1985 |
| Regions | South Africa |
| Themes | manufacturing industrial policy, business and state, labour markets wages, comparative theory, methods data sources, politics ideology elections, transition post apartheid |
| Citation key | moll1991c |
Argument¶
Moll tests the common claim, made on both right and left, that the apartheid economy grew 'exceptionally rapidly' until the 1970s. He applies four criteria: growth before versus after 1948, growth against 20 comparable middle-income developing countries, export performance, and total factor productivity (TFP) growth. South Africa meets none of them. Growth after 1948 was barely faster than before despite a global boom, and the comparative record is mediocre. Manufactured exports lost share steadily and TFP growth was very low. He attributes the 'failure' partly to the apartheid superstructure (inefficient use of black labour) and partly to poor state industrial and trade policy, namely inefficient import substitution with no export strategy. He argues for better-directed state intervention rather than free markets.
Evidence and method¶
South African national accounts (South African Statistics, the Du Plessis/Du Piesanie GDP series, Chamber of Mines ore-milled data) used to build a 'gold-recalculated' GDP series. World Bank World Tables growth rates for a sample of 20 developing countries drawn from Summers and Heston purchasing-power-parity data. UNCTAD trade statistics. Maddison's TFP and growth-accounting data for other countries, plus Moll's own TFP calculations from his 1990 Cambridge PhD thesis. The article also draws on secondary literature, commission reports (Reynders) and case studies (Kaplan on capital goods).
Place in the debates¶
- Liberal vs revisionist/radical views on apartheid and growth (apartheid boom) (see Liberal vs revisionist: was apartheid functional or dysfunctional for capitalist growth?). Rejects the premise of a successful 'apartheid boom'. Argues the aggregate evidence supports the liberal critique that apartheid hampered efficient resource allocation and the full use of black workers. Also faults the radical 'cheap labour' case for ignoring how controls on black workers subsidised inefficient, low-productivity firms.
- Was apartheid-era South African growth exceptional by international standards? (see Did the apartheid economy fail? Growth, productivity, investment and the post-1970s crisis). No. Compared with similar developing countries, South Africa ranked around 12th-13th of 21 over 1950-85, and well below the newly industrialising countries.
- Free market vs developmental state (see Industrialisation, protection and industrial structure). The critique of apartheid does not imply that free markets are preferable. The East Asian experience suggests directed state intervention is essential, so the quality and intentions of intervention are what matter.
- Dependency paradigm (closer links with advanced economies impede growth) (see Industrialisation, protection and industrial structure). Sceptical, citing the fast growth of most developing countries after 1945 in an opening world economy, while stressing that state capability is crucial.
Findings¶
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Both government and many left-wing analysts asserted exceptional post-war growth, often without evidence. (p. 2)
Steyn has high words of praise for South Africa's 'exceptionally rapid economic expansion' at over 5 per cent per annum between 1946 and 1968
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On the gold-recalculated GDP measure, growth did not accelerate after the National Party took power in 1948. (p. 6)
By contrast, according to the recalculated indicator of GDP there is virtually no difference in average growth-rates between the periods before and after 1948.
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Given the post-1950 world boom, there was no post-1948 growth surge. (p. 7)
there is certainly no sign of an economic surge after 1948
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South Africa's growth is consistently mediocre relative to comparable developing countries. (p. 10)
It can thus be concluded that South Africa's overall growth-record is consistently mediocre within this group of countries.
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Even the 1960s boom lagged far behind the fastest-growing newly industrialising countries. (p. 10)
South Africa's 5-6 per cent per annum growth rate during the 1960s cannot compare, for example, to the average of 7.6 per cent per annum
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South Africa's share of world manufactured exports fell by more than half from 1955 to 1985, so the post-war export boom bypassed it. (p. 12)
South Africa's share of world manufactured exports fell by more than half between 1955 and 1985, from 0.8 per cent to 0.3 per cent.
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South Africa's share of developing-country manufactured exports collapsed from a high base. (p. 13)
South Africa's share plummets from a highly respectable 12.6
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Policy favoured inefficient import substitution over exports, with apartheid-specific features. (p. 14)
But economic policy in South Africa was directed instead towards an inefficient import-substitution industrial model in the 1950s and 1960s, with local touches due to the apartheid system.
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Political-economic interests (fear of black proletarianisation, white service-sector workers) plausibly discouraged an export strategy. (p. 16)
It is not impossible to suspect that such a spectre discouraged active industrial exports policies in South Africa.
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TFP growth in 1950-73 was the lowest among the comparison countries. (p. 17)
In the earlier period, South Africa's near-zero productivity growth is the lowest shown
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Counterfactual: Brazil-level TFP growth would have made the 1973 economy about 50 per cent larger. (p. 19)
its GDP growth-rate would have been 1.9 per cent per annum higher, and by 1973 the economy would have been 50 per cent larger.
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Moll reinterprets the 1980s 'crisis' as the visible end of a long slump, and the aggregate evidence is read as supporting the liberal critique of apartheid. (p. 21)
the South African economy has suffered from a prolonged economic slump since the 1940s
Evidence ledger¶
Sources used¶
| Source | Kind | Period | How used |
|---|---|---|---|
| Du Plessis (Du Piesanie), 'Die Bepaling en die Gebruik van Kapitaalopbrengsverhoudings' (M.A. thesis, Pretoria, 1968), chapter 4 – real GDP 1920-48 at 1958 prices | secondary literature compilation | 1920-1948 | Supplies pre-1948 real GDP series for the before/after-1948 growth comparison in Table 1. |
| South African Statistics 1976 and 1982 (Pretoria), p. 21.7 – real GDP series 1948-69 (1963 prices) and 1969-74 (1975 prices) | official statistical series | 1948-1974 | Provides the official conventional real GDP growth series used in Table 1 and to build the recalculated series and Table 2 adjustments. |
| Chamber of Mines of South Africa, 1988 Statistical Tables (Johannesburg, 1989), p. 12S – gold-bearing ore milled series | chamber of mines or recruiting records | c.1920-1974 | Tons of ore milled replaces ounces of fine gold as the gold-sector output indicator to construct the 'recalculated' real GDP. |
| Moll, 'Output and Productivity Trends in South Africa: Apartheid and Economic Growth' (Ph.D. thesis, Cambridge, 1990), chapters 3-6 | author survey or fieldwork | 1920s-1980s | Underlies the recalculated GDP, TFP estimates, labour-force sectoral shares and elasticity estimates; only summarised here, details 'on request'. |
| Summers and Heston, 'Improved international comparisons of real product and its composition: 1950-1980' (Review of Income and Wealth, 1984) – UN International Comparison Project data | international trade or finance data | 1950-1980 (1960 base year) | Population and PPP-based per capita GDP in 1960 used to select the 20 comparable middle-income developing countries. |
| World Bank, World Tables 1976, 1983, 1987 (Economic Data Sheets / country tables) | international trade or finance data | 1950-1985 | National-accounts output figures give GDP growth rates and South Africa's ranking among 20 developing and 10 developed countries (Table 2). |
| World Bank, World Development Report 1980 (Washington, 1980), p. 111 | international trade or finance data | 1980 | Justifies excluding Iran and Iraq as capital-surplus oil exporters from the comparison sample. |
| Chung-In Moon, 'The future of the Newly Industrialising Countries' (1990), Table 7.2 | secondary literature compilation | 1960s-1970s | Source of NIC average growth rates (7.6% in 1960s, ~8% in 1970s) contrasted with South Africa. |
| UNCTAD, Handbook of International Trade and Development Statistics 1976, 1983, 1988, Tables 4.1, A6, A9, A10 | international trade or finance data | 1955-1985 | Supplies manufactured export data to compute South Africa's shares of world and developing-country manufactured exports (Table 3). |
| Maddison, The World Economy in the 20th Century (Paris, 1989), pp. 81, 91 – TFP, capital stock, labour data for comparator countries | secondary literature compilation | 1950-1984 | Provides growth-accounting and TFP figures for other countries against which South Africa's TFP is compared (Table 4). |
| Report of the Commission of Enquiry into the Export Trade of the Republic of South Africa (Reynders Commission, RP69/72) | commission or official report | 1972 | Quoted to show foreign exchange was a binding constraint on growth, tying slow exports to growth limits. |
| Social and Economic Planning Council, Economic Aspects of the Gold Mining Industry (Report II, UG32/48), p. 51 | commission or official report | 1948 | Cited as evidence that policy-makers felt devaluation would be inflationary and ineffective. |
| South African Statistics 1970 (Steyn) and SARB Quarterly Bulletin, September 1971 – official statements of post-war growth | official statistical series | 1946-1968 | Cited as official claims of 'exceptionally rapid' growth that the article tests and challenges. |
| Population Censuses (educational stock numbers; 1951 census) and employment/sectoral labour data as described in Moll thesis pp. 196-199 | population census | 1950-1985 | Used to cross-check labour quality assumptions in TFP and to compute shares of white and black workers in services. |
| David Kaplan studies of the South African capital goods sector (1987, 1989) | secondary literature compilation | 1960s-1980s | Evidence that capital goods exports were poor and technological capabilities low and declining. |
New data¶
Author-constructed 'recalculated' real GDP series for South Africa (gold output measured by ore milled), an adjusted World Bank-based growth comparison with 20 middle-income developing countries, South African TFP growth estimates, and white/black sectoral employment shares, all from his Cambridge PhD thesis; only summary tables presented.
Inference¶
Quantification: Statistical analysis.
Comparative and time-series descriptive analysis against four proposed criteria: growth before vs after 1948 (peak-to-peak rates, with an ore-milled recalculated GDP), cross-country growth rankings against a selected sample of 20 middle-income developing countries, share of world and developing-country manufactured exports, and growth-accounting TFP comparisons with Maddison's countries; supported by qualitative argument about resource endowments and policy failures, without causal econometrics.
Key claims¶
| Claim | Basis | Strength |
|---|---|---|
| South African GDP growth after 1948 was barely faster than before, and no faster on the recalculated measure, despite a far more favourable world economy. (p. 275) | Table 1: Du Plessis/Du Piesanie, South African Statistics series and Chamber of Mines ore-milled series, peak-to-peak growth rates. | Partial data |
| South Africa's output growth was mediocre relative to 20 middle-income developing countries (tie 13th of 20 over 1950-85). (p. 279) | Table 2, World Bank World Tables growth rates, country selection by Summers and Heston, with South African recalculation. | Systematic data |
| South Africa's share of world and developing-country manufactured exports fell steadily from 1955 to 1985, indicating exports were not used to stimulate growth. (p. 281) | Table 3 computed from UNCTAD Handbooks with SITC-based definitions and adjustment for unclassifiables. | Systematic data |
| South Africa's TFP growth in 1950-73 was near zero, the lowest among comparator developing countries. (p. 286) | Table 4: Moll's thesis estimates for South Africa compared with Maddison's figures for seven other countries. | Partial data |
| The slow growth is explained partly by import-substitution industrialisation, protection, quotas and failure to adopt an export strategy, driven by political-economic interests including white labour. (p. 283) | Reynders Commission, SEPC report, secondary literature (Franzsen, McCarthy, Lipton, Kaplan) and Stolper-Samuelson reasoning; no direct testing. | Illustrative or anecdotal |
| Aggregate evidence supports the liberal critique that apartheid hampered efficient resource allocation, including use of black workers. (p. 290) | Inference from the aggregate comparisons plus Moll's thesis pp. 144-159 and selected secondary sources. | Asserted |
The author's caveats¶
The author notes the GDP numbers are 'questionable', with 1950s-60s figures 'rather shaky' and 1930s-40s figures estimates rather than measures; the cross-country comparisons and TFP are described as 'intrinsically dubious' and the TFP indicator as highly uncertain in what it measures. Export data are complicated by a large 'unclassifiables' item after 1974, and the Maddison labour-force proxy for Latin America biases TFP comparisons. Educational data for blacks were not available in comparable form.
Gaps in the evidence¶
The causal claim that apartheid and state policy, rather than other factors, depressed growth is not tested; firm-level or sectoral microdata on protection, quota allocation, technology adoption and labour use would be needed, and some of this (e.g. industrial censuses, tariff records, Board of Trade and Industries reports) existed at the time. The key recalculated GDP, TFP and sectoral labour estimates are only in an unpublished thesis and are available only on request. Counterfactual potential growth rests on a judgmental country sample and loose resource-endowment reasoning rather than a formal model.
Replicability: Data described but not public.