Sony Thăng on South Africa
Having spent considerable time in South Africa, this is one of the very best overviews that I have ever seen. There are issues that are debatable, but overall, this is the part of the development (rather non-development) since the 1994 freedom election that is the most difficult to explain to others. This also is complex and leads to one faction accusing another faction without understanding the nuance. Excellent, Sony!
The question was: “How is that possible when during apartheid, sanctioned South Africa had to be almost entirely self sufficient? And now, the post apartheid era suddenly no one knows how to climb the ladder?”
Sony Thăng;
South Africa under apartheid is one of the most instructive cases in modern economic history, and it actually proves the ladder argument rather than refuting it. Sanctions forced South Africa to do exactly what Ha-Joon Chang says rich countries did: protect domestic industry, build behind walls, develop local manufacturing capacity because it had no choice.
Under those conditions, South Africa built the most industrialized economy on the continent. Steel. Chemicals. Armaments. Energy from coal. Synthetic fuels. A pharmaceutical industry.
It was ugly. It was built on the most brutal labor exploitation in the twentieth century. (Note, highly debatable and yes, there was labor exploitation.)
But the industrial logic worked exactly as the historical evidence says it works: protection produces industrialization.
Then sanctions ended. The ANC came to power. And South Africa signed structural adjustment-style commitments as part of its reintegration into the global economy. (Note, this was not innocent, and I personally saw part of it. Much money and mining stocks changed hands).
Growth, Employment and Redistribution (GEAR), 1996, was essentially the Washington Consensus voluntarily adopted.
Open capital account. Trade liberalization. Fiscal austerity. The ANC implemented it without being forced to because the Treasury was staffed by people trained in the same economics departments that designed every other program that failed everywhere else.
South African manufacturing as a share of GDP has declined almost every year since 1994. The walls came down and the industry hollowed out. Exactly as the pattern predicts.
Now your corruption point. You’re right. The ANC has systematically looted the state. The resource export structure absolutely benefits a connected political class with no interest in moving up the value chain, because raw material rents are easier to capture than manufacturing profits. This is real and it matters enormously. But here’s where your logic has a gap: those two explanations are not competing. They are collaborating.
The international structure creates the rents. The local elite captures them. The international financial system recycles the captured money. Everyone in the arrangement profits except the population. The corruption doesn’t disprove the ladder argument. It’s what the ladder argument predicts.
When you design a system that rewards extraction and punishes industrialization, you produce a political class that extracts and doesn’t industrialize. The incentives are downstream of the structure. Sankara said this explicitly before he was assassinated in 1987: you cannot fight imperialism while your own elite is integrated into it.
The external structure and the internal capture are the same problem at different altitudes. So the answer to your question, could it be government incentives to export resources for personal profit, is yes, absolutely. And the question that has to follow is: Who designed the incentive structure that makes that corruption so easy, so stable, and so profitable? Who benefits from it continuing?
And why did South Africa’s manufacturing survive sanctions but not survive the Washington Consensus? The ladder is gone and the local elite isn’t building stairs. Both are true. Anyone who needs one to be false is protecting a conclusion they already decided on.
(Note: When South Africa was invited to join BRICS, the country as a whole was still benefiting from the era of iniital industrialization and it looked like a thriving business at the time. “South African manufacturing as a share of GDP has declined almost every year since 1994.” The local governent stole even the ‘ladder’. )
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