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 industrialised 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 manufacturing, services, mining, and agriculture, is well developed.
Until about 1870 the economy of the region was almost entirely based on agriculture. With the discovery of diamonds and gold in the late 19th century, mining became the foundation for rapid economic development. In the 20th century the country's economy was diversified, so that by 1945 manufacturing was the leading contributor to the gross national product (GNP). By the 1990s, services contributed almost 60% of the GNP, while industry contributed over 35% and agriculture only about 5%. The economy is largely controlled by whites, but non-whites make up more than 75% of the workforce. Working conditions and pay are often poor, and many non-whites work as subsistence farmers.
South Africa has a limited amount of arable land (about 10%) and inadequate irrigation; production is diminished during periodic droughts. The chief crops grown are corn, wheat, sorghum, potatoes, peanuts, citrus fruits, cotton, tobacco, and sugarcane. In addition, large numbers of dairy and beef cattle, sheep, goats (including many Angora goats), and hogs are raised. There is a large fishing industry and much fish meal is produced.
The main industrial centres are Johannesburg, Cape Town, Port Elizabeth, Durban, Pretoria and Germiston. The principal manufactures include processed food, beverages (including wine), textiles, clothing, forest products, chemicals, iron and steel, metal products, machinery and motor vehicles. South Africa is a world leader in the production of gold, diamonds, aluminosilicates, chromium, manganese, vanadium and platinum. Other leading minerals extracted are copper ore, coal, asbestos, iron ore, silver and titanium. Uranium is also mined.
The country has good road and rail networks. The chief seaports are Durban, Cape Town, Port Elizabeth, East London, Saldonha Bay and Mossel Bay, where natural gas is now extracted offshore. The Orange River Project, a major hydroelectric and irrigation scheme, began in 1963 in central South Africa and was fully operational by the mid-1980s.
The main imports are machinery, transport equipment, consumer goods, chemicals, petroleum and petroleum products, industrial raw materials and foodstuffs. The chief exports are manufactured goods, precious metals, chemicals, arms, foodstuffs and diamonds. The principal trade partners are Germany, the United States, Great Britain and Japan. South Africa carries on a large-scale foreign trade and generally maintains a favourable trade balance. It is a member of the Southern African Development Community.
Disapproval of apartheid policies and increasing social unrest among black South Africans in the 1970s and 80s led to the withdrawal of investments by some members of the international business community. A number of nations (European Union members, Japan and the United States) imposed sanctions on South Africa, banning new investment and selected South African exports. These trends were reversed with the political changes of the 1990s. Tourism also began to make a comeback, and now contributes significantly to the economy.
Economy - overview
South Africa is a middle-income, emerging market with an abundant supply of natural resources; well-developed financial, legal, communications, energy, and transport sectors; a stock exchange that ranks among the 10 largest in the world; and a modern infrastructure supporting an efficient distribution of goods to major urban centres throughout the region. However, growth has not been strong enough to lower South Africa's high unemployment rate, and daunting economic problems remain from the apartheid era - especially poverty and lack of economic empowerment among the disadvantaged groups. South African economic policy is fiscally conservative but pragmatic focusing on targeting inflation and liberalising trade as means to increase job growth and household income.
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