South Africa
A Development and Economic Overview

Introduction I chose South Africa as the topic for this research paper. I have always wanted to visit South Africa but have never had the opportunity to travel there. My involvement in international development has given me an interest in this country, as it has many ties to the developing world and the history of developing countries through colonialism. South Africa is influenced by all levels of economic activity including the primary, secondary, tertiary, quaternary and quinary sectors which determine if South Africa’s commercial economy. These economic levels, along with the indicators of development, show whether or not South Africa is a developed nation and if so, how developed they are. This paper will present an overview of the economic activities in South Africa and analyze its state of development. Major Economic Activity in South Africa

South Africa has a lot of influence throughout multiple levels of economic activity; from primary production to quinary services. Regarding the primary level of economic activity, they have a agriculture sector that covers both subsistence farms and commercial farms. Subsistence farms by definition consume what they produce in order to survive, whereas commercial farms produce a good in excess in order to sell it in a market for the purpose of gaining a profit (Doberstein, 2011). Through the influence of modern innovation and technology, South African farms are able to produce crops both for commercial trading and for local markets (Geography of Africa, 2008). Although the majority of these farms are commercial, South Africa also has a subsistence farming sector. Another primary industry is South Africa’s mining industry that produces a majority of Africa’s minerals (Geography of Africa, 2008). In this country, a lot of the products produced in the primary level of economic activity stay within the country and are also manufactured and processed in industries through the secondary level of economic activity. With a highly developed manufacturing sector, South Africa produces a large assortment of goods ranging from processing foods to creating complex machinery (Geography of Africa, 2008). South Africa has an extremely large influence in exporting and importing around the world, which makes the service sector the largest in its economy. The services employ more than any other sector in South Africa, employing 65% of the workforce (South Africa, 2011). Tertiary activities provide information that is essential to knowing the market demand, which benefits South Africa’s commercial economy. The quaternary and quinary sectors of South Africa are also present throughout the country although as “statistics do not always have a clear distinction between tertiary service employment and the higher level quaternary and quinary services” (Fellman, 2009, page 368), it is difficult to determine how large of a role they play within the country.

History of the South African Economy

South Africa has always mainly been a commercial economy. The effects of European colonialism caused South Africa to become a commercial trading economy. It began with the Dutch creating the city of Cape Town in 1652 as a stopover location on one of their spice routes (Hallet, 1974). Cape Town was then seized by the British in 1806 who later found diamonds and gold which lead to wealth in South Africa for the colonizers (Comaroff, 1997). This caused all the natives in the area to adapt to the colonizers’ ways of conducting economic exchange which lead to the change of a subsistence economy to a commercial economy. The city of Cape Town remains today a city of commercial trade, as trade is conducted through the port in Cape Town to other countries around the world (Economy, 2011). Although many people in South Africa still rely on subsistence agriculture to live, the majority of the South African economy is commercial. They have a plentiful supply of natural resources, which enable them to process those resources and trade them with the rest of the world in the free trade market (South Africa, 2011). In 1948, South Africa faced many problems as a policy of apartheid was implemented by the elected National Party (South Africa, 2011). This meant that there was a separate development of the African Americans and Caucasians, which favored the Caucasian minority (Comaroff, 1997). The apartheid caused many economic problems such as poverty, a lack of public transportation and “a lack of economic empowerment among the disadvantaged groups” (South Africa, 2011). South Africa’s economy also suffered major blows in 2007, when there was an electricity crisis, and in 2009, from the global financial crisis. During this time South African GDP dropped 2 % (South Africa, 2011). This being said, the South African stock exchange remains strong and is now the 18th largest in the world (South Africa, 2011).

The Economic Base of South Africa

Primary
In the primary level of economic activity, South Africa produces many crops through the agriculture sector. These agriculture outputs include corn, wheat, sugarcane, fruits, vegetables, beef, poultry, mutton, wool and dairy products (South Africa, 2011). South Africa has many farms that are among the most productive farms in Africa (Geography of Africa, 2008). Through mining production South Africa produces the most platinum, gold and chromium in the world (South Africa, 2011). It is one of the only African countries to have the ability to afford the intricate machinery, skilled technicians and large financial investment needed for large scale mining. Although this is mainly primary level of economic activity, South Africa also deals with a lot of manufacturing and processing that is needed for a secondary level of economic activity.

Secondary
In South Africa there are also many different industries including automobile assembly, metalworking, machinery, textiles, iron and steel, chemicals, fertilizer, foodstuffs, and commercial ship repair where a large quantity and variety of goods are produced (South Africa, 2011). The goods range from processed foods to intricate industrial machinery. This industrial work reinforces South Africa’s secondary level of economic activity. Transportation in South Africa has also helped influence the secondary level of economic activity. South Africa has the most advanced level of transportation systems throughout Africa (Geography of Africa, 2008). It benefits from the railways providing the only transcontinental route in Africa (South Africa, 2011), and from the principle port in the city of Cape Town established by the European colonizers in 1652 (Hallet, 1974). No economy can survive and grow without the establishment of an efficient transportation network (Fellman, 2009).

Services
The service sector of South Africa is the largest of all the sectors. The tertiary level of economic activity provides the primary and secondary sectors with services as well as the general community with services. This is an extremely large portion of the South African community. Since South Africa is a commercial economy, the tertiary activities are used to provide the information needed for market demand, so that the right decisions on the market can be made. It is important to note that tourism is normally a large factor of the tertiary sector and within South Africa, the government has found that “Tourism has been identified as one of the key economic sectors with excellent potential for growth” (Tourism, 2011). Recently South Africa hosted the 2010 Fifa World Cup, which created a boost in economic activity, primarily in the tertiary level. The quaternary economic sector (also known as the knowledge sector) within South Africa is of great importance. Although it is hard to find statistics on how large of an importance it really has on South Africa, it can be determined that the quaternary tasks are being fulfilled throughout South Africa. This knowledge sector is a necessity for a country to replace the primary and secondary employment on an economic growth level and to be classified as a highly developed country. This specialized sector would be useful for the large quantities of importation and exportation found in South Africa.

As in all economies there are those who are employed in the quinary sector who control and decide how the companies and government will proceed and grow. South Africa is no different, and has its share of the quinary sector although as in elsewhere, it does not employ a large amount of people. Even so, this does not mean that the level of importance is any less significant to South Africa as quinary positions always affect a great magnitude of people either through governmental decisions that affect the whole country, or through large business decisions that affect the economy. As South Africa advances economically, the share of employment throughout the sectors shifts more towards the trade, personal and professional services of the tertiary sector as well as the information and decision making activities of the quaternary and quinary sectors.

Analysis of Development

The Gross Domestic Product (GDP) per economic sector of South Africa is composed of 2.5% towards agriculture or the primary level, 30.8% toward the industry or secondary level and 66.7% towards the service sector or the tertiary, quaternary and quinary levels (South Africa, 2011).When it comes to employment figures, we see 9 % of people working in the agriculture sector, 26% in industries and 65% in service level sectors (South Africa, 2011). Some future economic activity factors that seem to be growing would be tourism in South Africa, which relates to the tertiary level as well as basic services to areas where the income is low and jobs are scarce. The advancement of the tourism sector is an effort to provide more jobs to the South African economy in the tertiary level, and to the more impoverished, disadvantaged groups.

South Africa was ranked 123 (out of 169) in the latest Human Development Index (HDI) report (UNDP, 2011). According to the United Nations Development Program (UNDP), this indicates a medium level of development and South Africa is on an upwards trend. They also had a multidemsional development index of 0.057% (UNDP, 2011), which shows that the country has some level of poverty, although this figure is relatively small compared to other developing countries. South African Gross National Income (GNI) per capita in Purchasing Power Parity (PPP) terms is 9469$ (UNDP, 2011). This indicator shows that South Africa is still in a medium level of development, although it is very close to being categorized as a high level of development, as high level of development GNI is 11,579$ (UNDP, 2011). In South Africa, a child at birth has a life expectancy of 52.8 years old (UNDP, 2011). This compared to the rest of the world and the developing world in general is low. Most other medium level of development countries have a higher life expectancy than South Africa because it is located in the Sub-Saharan Africa, which is “more heavily affected by HIV and AIDS than any other region of the world”(HIV and AIDS in Africa, 2011). Like South African GNI, their Education Index (anticipated and mean years of education) is very close to being in a high level of development at 0.705 (UNDP, 2011).

Through looking at South Africa’s indicators of development, we see that they have many variations in what is developed in their country. The life expectancy is very low, however their GNI and Education Index are just below the ‘high level’ classification. All of these indicators put South Africa at a medium level of development compared to the rest of the world. Although it has a large, growing economy, there are many other factors that push one to believe that South Africa is not completely in a high level of development. The indicator that best shows South Africa’s level development is the HDI index. This is because the HDI takes into account 3 different factors; a long and healthy life, knowledge and a decent standard of living (UNDP, 2011). These three factors give an overall standing of how developed the country is and place South Africa in the medium level of development, which is a perfect fit.
Conclusion

South Africa has a very large economy compared to its neighboring countries. It relies heavily on its importation and exportation to other countries to boost its economy. This being said, the service sector in South Africa is its main economic activity level, through industrial management, tourism, information and knowledge sectors. Although South Africa has a high service level of economy, this does not mean that it is highly developed. Still suffering from the consequences of apartheid, South Africa is slowly dealing with its issues of poverty and inequality. This places South Africa in a medium level of development where they look forward to help the more impoverished, disadvantaged groups of their economy and improve all the ratings associated with development.

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