The Rise of Liberal Economics in South Africa

Abstract

BETWEEN 21 AND 28 MAY 2000, THABO MBEKI paid his first visit to the United States since his election as president of South African. Though he stressed the many positive dimensions of United States-South Africa bilateral relations, he lamented the absence of foreign investment in Africa, where 'wars, military coups, and instability within countries cannot but contribute to the dampening of investors' appetites.'(f.1) In particular, he stressed globalization's failure to address effectively the needs of developing countries. Indeed, in one speech he noted that developing countries were constantly told to undertake economic and trade reforms to become more compatible with, and attractive to, the developed world. In South Africa, where the government had endorsed and pursued liberal economics aggressively, and where the country's political and economic fundamentals were stable and sound, Mbeki said: 'in spite of this, investment flows into South Africa have been disappointing, helping keep poverty and unemployment levels high.' 'Many of us [in Africa] are punished,' he continued, 'by the development and trade structures in place, which benefit the wealthy countries that wrote them and continue to impact negatively on us.'(f.2)THINGS AREN'T ALWAYS QUITE WHAT THEY SEEMThis was not the first time in recent memory that a South African official had made disparaging remarks about the prevailing economically liberal international order, of which the United States is a major champion and proponent. During President Bill Clinton's historic visit to Africa in March 1998, the president of South Africa at the time, Nelson Mandela, said, with Clinton at his side: 'Our people have welcomed President Clinton with open arms. This is one of our proudest moments ... I hold him in high respect. [But] the fact that we have respect for him does not mean we have no differences.'The contentious issue to which Mandela was referring was the very thing American officials hoped would be at the heart of United States engagement with Africa: the African Growth and Opportunity Act (AGOA). In brief, the 1997 AGOA sought to: 1) lift American import duties on African apparel and textiles; 2) expand the number of subsaharan African countries eligible for the United States general system of preferences for developing nations; 3) create a US$650 million investment fund (to be administered by the Overseas Private Investment Corporation); and 4) establish a United States-Africa trade and co-operation forum to improve communication on trade issues. All, however, would hinge on the willingness of African countries to undertake economic reform and to increase trade. 'This [requirement] is a matter over which we have serious reservations,' Mandela said. 'To us it is not acceptable.'(f.3)Mbeki, Mandela's deputy president, laid out exactly what was unacceptable in an interview with the French quarterly, Politique Internationale, some of which was broadcast on South African radio during Clinton's visit. In that interview, Mbeki insisted that Africa and South Africa alike needed trade and aid, not trade instead of aid, as the AGOA emphasised. 'It [the AGOA] is wrong,' Mbeki said bluntly. 'Africa needs both.'(f.4) Mbeki argued that if the South African 'economy today cannot generate the resources that are required to address all these urgent problems of poverty which face us,' South African businesses could not be expected to compete against American producers, with infinitely more resources, in American markets. It stood to reason, Mbeki added, that if this were the case with South Africa, subsaharan Africa's largest and most advanced economy, then it would also be true for other African countries.(f.5)All contention aside, however, South African policy-makers had begun to pursue economic reform and increased trade long before Clinton's 1998 visit.GEAR AS THE WAY FORWARDIn June 1996, the South African government unveiled its Growth, Employment, and Redistribution (GEAR) strategy. …