South Africa: The Effects of Foreign Investment
This research paper discusses the effects on foreign investment on government policies in South Africa, historically and with special reference to the post-apartheid period (1993-present).
“Even since it became a part of the global economy, foreign investment, both portfolio and direct investment, has played a critical role in the development of South Africa’s mineral rich economy and has impacted the nature of that nation’s political and social structure. The enforced segregation and backwardness of South Africa’s black and colored (mixed race) and majority population, and the accompanying system of political and legal oppression (apartheid) was a logical consequence of the manner in which foreign and domestic capital was employed. By the mid-1980s South Africa’s social structure inhibited the health of the economy and hastened the end of apartheid. The new, black-African dominated government led by President Nelson Mandela after the 1994 elections was faced with unpleasant policies because of the effects of apartheid. It has thus far opted for policies that have been designed to encourage foreign investment in South Africa; however, not much new foreign investment has entered the country since 1994 and conditions have only improved marginally for the black and colored majority. This leaves open the possibility that serious conflicts will arise between the interests of private foreign investment and other sectors of the economy. ”