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Is There a Resource Curse in South Africa?

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Submitted By micahdaniels
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Is there a resource curse in South Africa?
Introduction
Collier (2007) introduced the concept of the natural resource trap, a situation in which countries have access to natural resources that should enable a country to benefit and develop economically, but has the opposite effect by enslaving the country in poverty. In my analyses of Collier’s (2007) argument on why countries are subject to a resource trap, I focus on the concept of Dutch Disease within the South African primary sector and the aggravating factors caused by economic shocks. I analyse the degree to which the South African has indeed become reliant on the primary sector for sustaining its economy, with emphasis on the mining and agricultural components of the primary sector.
However, I also extend on Collier’s (2007) argument by incorporating the views of other authors. An important view and one also central to my argument is that of Grimsley and Hay’s (2004), who refers to a “balanced economy” (p. 97) in the context of the “equity and mutual benefit” (p. 98) for the society as a whole.
Translating the Collier (2007) argument to the South African context
Collier (2007) indicates that Dutch disease, in combination with volatile commodity prices, is a significant contributor towards the natural resource trap. Barder (2006) describes the original concept of Dutch Disease in which the Dutch experienced large foreign exchange earnings due to the export of the gas. This led to a shift in the Dutch currency exchange rate and increase in Dutch prices in the local and international markets. Dutch exporters of other goods, especially labour intensive industries, were no longer competitive and lost market share. Collier analyses the appearance of Dutch Disease in Nigeria during Nigerian oil boom, and the crowding out of other primary sector contributors, such as peanuts and cocoa. Frankel (2010) refers to

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