Government Policy and Economic Dualism in South Africa

Abstract

The persistence of the gap between these economies is due to many factors among which are the plethora of market imperfections found in the modern economy, migratory labour and the initial socio-cultural differences between the whites and those Africans resident in the Reserves. In addition, by reinforcing these factors instead of mitigating them, government policy has played a crucial role in perpetuating dualism in South Africa. This paper is concerned with an examination of that policy. The role that government policy has played in the perpetuation of dualism in South Africa can only be understood against the background of the racial policy to which South Africa's white polity has subscribed over the years. The Reserve economy is virtually all African, and therefore the central government's economic policy towards it has been closely linked to the country's overall racial policy. From an historical point of view, the evolution of this racial policy can be divided into two periods: the pursuit of segregation up to 1948 and the development of apartheid since then. This paper gives a summary of the main elements of the racial policy of each period, traces the economic policies that resulted, and then analyzes their impact on the modern and Reserve economies.