Sources of Growth in the South African Economy, 1945-1975¶
K A [Munro?] (1990). Sources of Growth in the South African Economy, 1945-1975. History Workshop, University of the Witwatersrand: Structure and Experience in the Making of Apartheid, 6-10 February. University of the Witwatersrand, History Workshop.
| Type | conference paper |
| Scope | Economics and economic history of apartheid |
| Method | synthesis review |
| Period studied | 1945–1975 |
| Regions | South Africa, comparative: Japan, Russia, Western Europe, USA, Africa |
| Themes | comparative theory, macro fiscal finance debt, manufacturing industrial policy, business and state, inequality poverty unemployment, labour markets wages, bantustans removals influx, education human capital, politics ideology elections, sanctions divestment, demography urbanisation |
| Citation key | uncertain1990 |
Argument¶
The paper asks what generated South African economic growth between about 1945 and 1975. It treats growth as a sustained rise in real per capita income, distinct from structural development. It argues that the 1970s liberal vs revisionist (apartheid vs capitalism) debate was too narrowly focused on labour and race. It rejects both capitalist and neo-Marxist frameworks in favour of an empirical, goal-oriented 'Benthamite utilitarian' approach that stresses property rights, openness and factor mobility. It reviews growth statistics and international comparisons, then the factors of production, the state, the international economy and the business cycle. It concludes that growth came mainly from increased inputs (capital, imported technology, labour), not productivity. It holds that the state both promoted and restricted growth. Apartheid's restrictions on factor mobility and property rights were anti-growth, but the evidence cannot prove either that growth depended on discrimination or that it was incompatible with it.
Evidence and method¶
Secondary and published statistical sources: Nattrass's output tables, Kuznets's cross-country computations, Abramovitz's comparative growth table, Nedbank Group (Dagut) appraisals, Union Statistics for Fifty Years, Houghton, McGrath on income shares, Simkins on unemployment, and the Lombard et al. report on government participation. Official commission reports (Tomlinson, Viljoen, Reynders, Riekert, Kleu) are discussed. There is no archival or original data work.
Place in the debates¶
- Liberal vs revisionist/neo-Marxist on apartheid and growth (see Liberal vs revisionist: was apartheid functional or dysfunctional for capitalist growth?). Distances itself from both camps. It argues the 1970s debate was too labour-oriented to scrutinise the growth evidence. It treats the liberal view (discrimination is dysfunctional for growth) and the neo-Marxist view (growth reinforces white supremacy) as unproven, leaning to the view that restrictions on mobility and property were anti-growth.
- Race vs class as explanatory framework (see Liberal vs revisionist: was apartheid functional or dysfunctional for capitalist growth?). Suggests racial categories in statistical tables constrain analysis and that class analysis by income or education might better explain growth. It also cautions that racial income gaps mix in many non-discriminatory differentials.
- Underdevelopment / dualism (internal colonialism) vs orthodox dualism (see Liberal vs revisionist: was apartheid functional or dysfunctional for capitalist growth?). Criticises Frank-style zero-sum 'Black poverty caused by White wealth' arguments. It says both dualism theories overstate labour's role and the isolation of the two sectors.
- Capital widening vs deepening; elitist vs generalist education (see Did the apartheid economy fail? Growth, productivity, investment and the post-1970s crisis). Presents these as unresolved policy disputes. It notes that capital widening predominated until the 1970s, limiting productivity gains.
- Import replacement vs export promotion; open vs closed economy (see Industrialisation, protection and industrial structure). Notes mixed consequences. Tariff-protected import substitution limited scale economies and raised mining costs, and the arms embargo prompted costly self-sufficiency.
Findings¶
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Long-run real output growth of about 5% p.a. (1920-1980), implying roughly 2% per capita growth. (p. 6)
increased from R 3 258million in 1920 to approximately R60 000 million in 1980, equating to an average annual compound growth rate of 5% per annum
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Nattrass's 1911-79 growth rate is lower, and growth was concentrated in some decades; slumps in per capita growth set in during the 1970s. (p. 6)
Nattrass thus calculates an annual average rate of growth of output between 1911 and 1979 at a price constant rate of 3,8 %
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Per capita growth collapsed in the decade after 1973. (p. 6)
the growth of G D P per head at constant prices averaged only 0,79 per annum
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Postwar capital was initially imported but later domestically financed, so capital supply was not a binding constraint. (p. 13)
However between 1954 and 1982 98 per cent of domestic liivestment was financed with domestic savings.
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Parastatal investment rose sharply, driven by strategic and military needs. (p. 14)
In 1960 public corporation investment accounted for a mere 6,2 per cent of total fixed investment spending but by 1979 the figure was close on 25 per cent.
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Manufacturing depended heavily on imported technology. (p. 12)
73 per cent of the firms surveyed stated that 90% of the technology they used came from abroad.
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Racial income shares stayed essentially constant 1920-70, with white share about 70%. (p. 15)
racial shares in income remained remarkably constant with the White- share amounting to approximately 70 per cent and Blacks about 30
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Migrant labour and influx control are framed as consequences of denying property rights to Africans, which entrenched dualism and reduced openness. (p. 17)
Migrant labour and influx control were the corrolloraries of the denial of property rights to the majority of the people.
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Growth was input-driven rather than productivity-driven. (p. 19)
Productivity increases played a relatively minor role in growth. In other words, measurable increased factor inputs rather than productivity.
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Racial earnings gaps for employed workers narrowed from 1973. (p. 20)
from 1973 onwards the position changed with income differentials for employed workers narrowing on a racial basis
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Diversification into manufactured exports was limited in the 1970s. (p. 18)
Capital good exports comprised only 5.3% of merchandise exports between 1976 and 1979.
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Whether growth depended on, or was undermined by, discrimination cannot be demonstrated from the evidence. (p. 23)
It is a much more complex problem to prove that economic growth was a consequence of discrimination or alternatively that economic growth was incompatible with racial discrimination.
Evidence ledger¶
Sources used¶
| Source | Kind | Period | How used |
|---|---|---|---|
| Jill Nattrass, The South African Economy: its growth and change (1981) - GDP output and sectoral shares 1911-79 table | secondary literature compilation | 1911-1979 | Supplies the long-run GDP growth rates by decade and sectoral shares (agriculture, mining, manufacturing) used to describe growth performance and structural change. |
| Nedbank Group Economics Unit, South Africa: An Appraisal (M Dagut ed.), 2nd edition 1983 | secondary literature compilation | c.1946-1982 | Main compilation of macro statistics (GDP per head, sectoral shares, savings, investment, population, balance of payments, business cycle) used throughout the paper. |
| Simon Kuznets, Six Lectures on Economic Growth (1959) and Modern Economic Growth (1966) - cross-country per capita product growth | secondary literature compilation | 1860-1954 | Provides international comparison of long-run per capita product growth, placing South Africa's 2.4% among fast growers. |
| Moses Abramovitz, 'Rapid Growth Potential and Its Realisation', in Malinvaud (ed.) Economic Growth and Resources vol 1 | secondary literature compilation | c.1900-1971 | Table of annual per capita product growth rates across countries and sub-periods for postwar comparison. |
| Hollis Chenery and Moises Syrquin, Patterns of Development 1950-1970 (World Bank, 1975) | secondary literature compilation | 1950-1970 | Cross-country regression patterns used to describe structural transition and, via the Kuznets-Myrdal hypothesis, income shares during growth. |
| D Hobart Houghton, The South African Economy, 4th ed. 1976, and Nedbank 1983 - population statistics by race 1946-1980 | secondary literature compilation | 1946-1980 | Table of population size and racial composition used to discuss demographic trends, market size and labour supply. |
| Union Statistics for Fifty Years, Jubilee Issue 1910-60 | official statistical series | 1910-1960 | Cited for wartime and postwar manufacturing establishment, employment and census data. |
| 1951 Population Census (economically active population) | population census | 1951 | Used for the size of the economically active population (4.6 million, 58.5%). |
| Department of Statistics racial growth-rate breakdowns | official statistical series | 1946-1982 | Population growth rates by race used to show accelerating overall and differential population growth. |
| J Nattrass and R P C Brown, 'Capital Intensity in South African Manufacturing', Black/White Income Gap Project Interim Report no 4, 1977 (1973 manufacturing survey) | author survey or fieldwork | 1973 | Survey evidence that firms drew most technology from abroad. |
| Charles Simkins, 'Measuring and Predicting Unemployment in South Africa 1960-77' | secondary literature compilation | 1960-1977 | Source for rising black unemployment rate estimates, questioned by Gerson. |
| M D McGrath, 'Income and Material Inequality in South Africa' in Schlemmer & Webster (1978) | secondary literature compilation | 1920-1981 | Racial income shares used to show constancy of white/black income shares to 1970 and subsequent change. |
| Lombard, Stadler & Du Toit, Government Participation in the South African Economy (Bureau for Economic Policy and Analysis, Univ. of Pretoria, c.1979) | secondary literature compilation | 1950-1979 | Source for public sector share of GDP rising from about 20% to 28.1%. |
| South African Reserve Bank, South Africa's Balance of Payments 1956-1975 (Quarterly Bulletin Supplement, March 1977) | official statistical series | 1956-1975 | Cited as reference for balance of payments, capital flows and export patterns. |
| Tomlinson Commission report (1954) | commission or official report | 1954 | Cited as showing awareness of reserve economy neglect and recommending restructuring. |
| Viljoen, Reynders, Kleu and Riekert commission reports; 1960 border-areas statement; 1967 Physical Planning Act | commission or official report | 1958-1982 | Used to read state development and industrial strategy shifts from commission recommendations and legislation. |
| C G W Schumann, Structural Changes and Business Cycles in South Africa 1806-1936 (1938) | secondary literature compilation | 1806-1936 | Referenced as the main study of the business cycle, which stops in 1936. |
Inference¶
Quantification: Descriptive tables.
A broad macro-level synthetic essay combining secondary compilations of aggregate statistics (GDP, savings, investment, population) with cross-country comparison and theoretical discussion of growth, institutions and property rights. Claims are mostly argued by interpretation and by juxtaposition with the international literature; there is no formal causal testing, and the conclusion concedes that causation cannot be proven.
Key claims¶
| Claim | Basis | Strength |
|---|---|---|
| South Africa's long-run growth was relatively rapid, around 5% a year in total output and roughly 2% per capita, comparable to the fastest-growing Kuznets countries before WWII but slowing sharply in the 1970s. (p. 6) | Nattrass GDP series, Kuznets cross-country computations and Nedbank compilations; descriptive comparison. | Partial data |
| Domestic savings increasingly financed investment after 1954, so capital supply was not a constraint on growth, with the public sector's investment share rising. (p. 13) | Nedbank Group and Nattrass savings/investment ratios and public corporation shares. | Partial data |
| Racial income shares stayed roughly constant (white about 70%) from 1920 to 1970, but racial discrimination is only one of several factors explaining income differentials. (p. 15) | McGrath's estimates as relayed, Kuznets-Myrdal hypothesis and Chenery; argument by qualification. | Partial data |
| Growth came mainly from measurable increases in factor inputs rather than productivity gains, with capital widening dominating until the 1970s. (p. 19) | Nattrass on capital deepening and the author's summary judgement; no growth-accounting data presented. | Asserted |
| State policy was ambivalent on growth: protection of property rights and infrastructure promoted growth, but apartheid restrictions, the denial of property rights in the reserves, and influx control were anti-growth. (p. 17) | Commission reports, legislation and institutional argument following North and Thomas; no quantitative test. | Illustrative or anecdotal |
| Manufacturing depended on imported technology and capital after 1945, and foreign exchange from mining was the key bottleneck. (p. 12) | Nattrass and Brown 1973 survey, Nedbank balance of payments data and capital inflow figures. | Partial data |
| It cannot be shown that growth resulted from discrimination or was incompatible with it, although evidence of discrimination is abundant. (p. 23) | Authorial synthesis and conclusion; no direct test. | Asserted |
The author's caveats¶
The author calls the work tentative and suggestive, notes that not everything lends itself to precise quantification, that the historian cannot study what might have happened, and that official population statistics are distorted by boundary changes. She also notes that Dagut and Nattrass differ on foreign capital figures.
Gaps in the evidence¶
The argument offers no growth-accounting or regression decomposition for South Africa to separate factor inputs from productivity or to test the role of apartheid institutions. Needed are disaggregated national accounts and census series, firm and mine-level data, and race-specific wage and employment data, most of which existed in official publications and have since been compiled. Without these the claims on property rights, state intervention and discrimination rest on secondary compilations and assertion.
Replicability: Data poorly documented.