VI Международная научно-практическая Интернет-конференция «ПРОБЛЕМЫ ФОРМИРОВАНИЯ НОВОЙ ЭКОНОМИКИ ХХI ВЕКА» (19–20 декабря 2013 года)

Kaimashnikova K. S.

Kyiv National Economic University named after Vadym Hetman, Ukraine




The process of globalization has a great impact on economies of developing countries. It gives a lot of opportunities to raise the level of competitiveness and increase the investment attractiveness of these countries.

South Africa is the most developed region of the African continent. Nevertheless as any other developing economy it has weak points that make the improvement of economic performance of the country impossible. The root of the problems can be explained by historical circumstances. It has the beginning from the policy of apartheid. The system of racial segregation imposed by the ruling party from 1948 to 1994 has led to internal conflicts and violence. After general elections in 1994 the period of total racism and economic downturn has ended. However social resistance is the main reason that pulls down the economic development and the country is still suffering from high level of unemployment and high crime rates.

South Africa has well-developed financial, legal, communications, energy and transport sectors. Its stock exchange is one of the largest in the world. The rate of SA’s GDP in the total GDP of Africa is about 24 %. The average GDP growth rate for the last three years is about 3 %. The economy is well-diversified. GDP composition by sector of economy comprises services – 68 ,1 %, industry – 29,3 % and agriculture – 2,6 % [1]. A company of the highest influence in the sector of services is MTN Group Ltd that operates in the sector of telecommunication in 21 countries across the Middle East and Africa . The leading industries of South Africa are mining, automobile, metal, machinery, textiles, iron and steel and chemicals. The country dominates the African electricity market through the company of Eskom that has improved power grid reliability. A large chemical plant operates in the country – Sasol Limited that was the pioneer in coal-based synfuels manufacturing. Agriculture sector is represented by production of corn, wheat, sugarcane, fruits, vegetables; beef, poultry, mutton, wool, dairy products.

Current account balance of South Africa is negative. The major import commodities are machinery and equipment, chemicals, petroleum products, scientific instruments and foodstuffs. As South Africa is one of the largest producers of platinum, gold and chromium, the main products to export are gold, diamonds, platinum and other metals and minerals. Key international partners of the country are China , Germany and the United States .

In consequence of the global financial crisis during the period of 2009–2012 South Africa was in economic recession. The fiscal account changed from a surplus of 1 ,75 % of GDP in 2007/2008 to a deficit of 6,7 % of GDP in 2009/20105 due to a significant drop in tax revenues at the height of the crisis, rather than an increase in discretionary spending [2]. However the country is still struggling with the high level of fiscal deficit and the Southern African Customs Union (SACU) provides economic programs to overcome the problem not only in SA, but all over the Africa . Fiscal deficit is partially covered by foreign direct and portfolio investments. International organizations as well as developed countries have a great interest in South African development especially in mining and metal industry. One of the most interesting industries for foreign investments is gold mining.

In spite of the fact that about 25 % of population is unemployed it still remains the most progressive and emerging market of the continent. The high level of unemployment can be explained by poor health system, low quality education and inefficiency of settlements patterns. On the one hand, the economy of South Africa has a great innovation potential with high-skilled population and qualified human resources. On the other hand, it is suffering from poverty, inequity and unemployment. Overcoming the dualism of national economy along with the improvement of the quality of primary, secondary and higher education should be priorities for the government when building the national strategy.

The level of competitiveness of South African economy still remains rather low. Such situation is related to concentration and strengthening positions of state and private ownership which are under the control of the government. As a consequence it complicates the process of new business entering the market. Moreover along with the high barrier of entering the market there are also other weak points in the economy such as bureaucracy, corruption and crime, that are needed to be improved by the government.

Nevertheless South Africa becomes a member of powerful political and economic union that incorporates countries with the emerging economies and has the name of the BRICS. It supports South Africa through project aid, loans, credits and grants. Cooperation between SA and BRICS countries is based on three main activities: trade, foreign direct investments and development assistance. Thus intensification of trade relations inside the group helps SA to develop its internal market and lower cost on basic commodities. Growing inflows of FDI from the BRICS to South Africa give the opportunities to strengthen its economic infrastructure and develop the most profitable and export oriented industries. The BRICS’s aid is the source of information and finance that serves as a support to fight against unemployment and corruption that helps to improve socio-economic and political environment.

Thus we can highlight the following strategic direction of SA’s economic development: governmental support, social infrastructure, labor relations, entrepreneurial support and international cooperation.

The key strategic priorities of economic development of South Africa are:

1)       Governmental support. Building a harmonious and prosperous society through livelihood improvement, and regionally balanced and environmentally sustainable growth [3].

2)       Social infrastructure. Increasing investment in social and economic infrastructure in order to lower costs, raise productivity and bring more people into the mainstream of the economy [3].

3)       Labor relations. Raising the level of education through grant system and vocational training. Realization of programs aimed on increasing employment and based on close cooperation between the leading corporations and high-skilled and qualified human resources.

4)       Entrepreneurial support. Ensuring closer cooperation with the companies that operates in the export oriented sectors of highest performance. Supporting small and medium-sized enterprises through providing aids and better cooperation with business agencies and financial institutions.

5)       International cooperation. Raising export relations and strengthening cooperation within the BRICS group. The government of South Africa should promote the welfare of the country through pursuing sustainable business opportunities for African entrepreneurs though BRICS countries cooperation.

All the strategic tasks mentioned above are needed to be investigated and provided by state agencies and the National Planning Commission of South Africa.

Summing up it is needed to be said that SA went through a long way from fighting with social inequity and racial segregation to the leading country of the continent. Despite the high level of unemployment and social imbalances South Africa has all the opportunities to get better economic performance along with China , Brazil , Russia and India . Integration of South Africa to the world economic community will encourage the country to use the best international experience in the field of business management and social affairs.


The list of references:

1.              South Africa Economy Profile 2013 [Electronic resource]. – Mode of access: http://

2.              South Africa Country Strategy 2013–2016 [Electronic resource]. – Mode of access: http://

3.              Sustainable governance in the BRICS. Country report South Africa [Electronic resource]. – Mode of access: