The problems of the mining and manufacturing sectors outlined in the previous chapter converged to create acute crises at two points at which the South African economy was most vulnerable. The development of these problems provides the main topic for this final chapter. A chronic balance-of-payments crisis compelled the authorities to restrain economic growth, while falling investment and a stagnant economy drove unemployment to intolerable levels. These were the critical symptoms of a more fundamental, chronic disease which fatally weakened the economy and helped to force the retreat from apartheid. The chapter ends with a brief discussion of the abiding fallacy of the benefits of ‘cheap’ labour, and of the principal reasons why the apartheid regime was ultimately unable to sustain a successful economy.

Sanctions, capital flows, and the balance-of-payments crises

The country's problems with respect to investment and the balance of payments were made more difficult to overcome by the growing momentum of anti-apartheid campaigns for sanctions, trade boycotts, and an end to investment in South Africa just as the temporary gains from the commodity price boom of the 1970s were coming to an end.

The earliest calls for sanctions were made in the 1960s, including a resolution of the General Assembly of the United Nations, but the movement had little effect until the mid-1980s. In 1985 and 1986 the European Community, the Commonwealth, the US Congress (which overrode President Ronald Reagan's veto to pass this legislation), the United Kingdom, and other individual governments voted to ban trade with South Africa in a wide range of products.