TRADING ON JOHANNESBURG'S financial markets reached a new all-time high on April 26, 1994, reflecting the buoyant mood of voters of all races who were about to participate in the country's first democratic elections. As South Africa emerged from the ec
onomic stagnation and international isolation of the apartheid era, the new government and its theme of economic reconstruction received international acclaim and encouragement. At the same time, however, it faced conflicting pressures to speed economic g
rowth, to strengthen South Africa's standing among international investors and donors, and, at the same time, to improve living conditions for the majority of citizens.
South Africa's economy had been shaped over several centuries by its abundant natural resources and by the attempts of immigrant populations to dominate and to exploit those who had arrived before them. For most of the twentieth century, its mineral w
ealth had surpassed that of almost any other country in the world, except the Soviet Union. South Africa produced nearly half of the world's gold and ranked among the top ten producers of a dozen other valuable minerals, including diamonds and copper. The
mining industries provided the foundation for the strongest economy on the continent, which, by the mid-twentieth century, included a comprehensive transportation system, an extensive electric power grid, and a significant manufacturing sector. South Afr
ica's main resource deficiency is oil, and as a result, many industries rely on coal rather than on imported fuels.
By the mid-1980s, the economy was distorted by government policies designed to bolster the economic and political power of a small minority and to exclude many of South Africa's citizens, selected by race, from significant participation in the nation'
s wealth. Basic needs were unmet, resulting in hunger, malnutrition, and undereducation, especially in rural areas. Industrial development could not be sustained through domestic resources, and there was stagnation in some areas when foreign capital was r
educed in the face of strong international pressures for political reform. Because the mining industry continued to dominate the economy, wide fluctuations--especially in the price of gold--eroded currency values and reduced the country's ability to impor
t goods. At the same time, keeping black wages low, which was crucial to profits in all areas of the economy, perpetuated the discrimination that provoked widespread protests and condemnation.
By the early 1990s, the weaknesses in the economy were increasingly evident despite the country's dazzling mineral wealth. Some segments of the population were poorer, and living in more difficult circumstances, than many people in far less developed
African countries. Moreover, a poorly educated, impoverished majority of the population could not provide the skills and the resources that the country's infrastructure and labor market required. The government cast off the constraints of apartheid (see G
lossary) in the early 1990s, in part to confront the serious economic problems caused by that system. The new government in the mid-1990s faces the enormous challenges of improving living standards and managing the country's resources profitably.
Data as of May 1996