Australian-South African economic/trade relations present & future considerations

Kotorac, Mark (1985) Australian-South African economic/trade relations present & future considerations The University of Queensland:

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Author Kotorac, Mark
Title of report Australian-South African economic/trade relations present & future considerations
Formatted title

Publication date 1985
Place of publication The University of Queensland
Total pages 68
Language eng
Subjects 1503 Business and Management
Formatted abstract
The dismantling of apartheid and the political reform process now underway in the Republic of South Africa (RSA), which is expected to lead to democratic, majority rule government (scheduled to occur in the first half of 1994), marks the transition of that country from its recent status as a "pariah-nation". Whilst Australia and South Africa are different in many ways, their respective economies share a number of similarities.

Both are commodities exporting nations with reasonably well-developed infrastructure, a small manufacturing base with limited local/domestic markets. South Africa should provide an enormous opportunity for Australian business and investment and a possible threat to Australian exporters in the medium to long. term. The Asia-Pacific region (excluding North America) is South Africa's second largest market (between 25 and 30 per cent of total exports), and like Australia, continues to grow in volume and importance. Whilst the opportunities are enormous, so are the problems and challenges that will be faced by a new, post-Apartheid government, after the proposed April 27, 1994 elections.

After four decades of "separate development", or apartheid, and nearly a decade of mandatory economic sanctions (which included restrictions placed on South African produce in many of its traditional export markets, and the withdrawal of landing rights for South African Airways in many parts of the world) and financial / investment sanctions (ie. bans placed10n new foreign investment and loans, combined with a process of divesting South African based interests by many multi-national companies). Many sanctions officially remain in force, mainly from Commonwealth nations like Australia, who await the outcome of the proposed 27 April 1994 democratic elections, as a signal to lift their remaining trade and investment sanctions.

Firstly through choice and then by necessity, South Africa's post-World War II history is one of import substitution that has resulted in strategic self-sufficiency, but at the cost of a manufacturing sector that, with some exceptions, is inherently inefficient. The need for social and economic reforms are widely recognised across the political and business spectrum. The South African economy must restructure and attract foreign investment; its exports, especially manufactured goods, must become internationally competitive in order to expand existing domestic and overseas markets, to seek and build new ones. This will be its greatest challenge in coming years. These are familiar themes to the Australian business community.

To do so, however, a successful political solution must be found and agreed upon; there must be an end to the level of violence that has become a familiar pattern of life, not only in the black and coloured communities, but has now spread to the white community as well. If not, South Africa will continue to face a low level of private business, and foreign investor confidence, together with a continuing exodus of mainly white business people and professionals.

Here lies the dilemma. The evidence obtained indicates that without a reasonable level of business and investor confidence, economic expansion and restructuring will occur, either too slowly or not at all; there will be little or no increase in exports, or new opportunities created in domestic markets. As long as the gap between rich and poor remains so great, mainly along racial lines, and the level of poverty so great for the majority of its people (by GECD and "first world" standards), instability will continue and the required levels of new investment and economic growth will not materialise.

Nevertheless, Australian business should recognise that South Africa is a possible future market for its exports, and at the same time, a competitor in other overseas markets.

Document type: Research Report
Collection: MBA reports
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Created: Fri, 07 Jan 2011, 09:58:04 EST by Ning Jing on behalf of The University of Queensland Library