External Trade and the Balance of Payments, 1910–33
Two features of the foreign trade of South Africa stand out — the dominance of primary products in the exports and the importance of foreign trade when measured as a proportion of the national income. This pattern did not significantly change in this period, despite the difficulties faced by the farmers and the fixed price of gold. The Union had a very open economy and, as part of the British Empire, had few impediments to the exchange of goods and services with Britain in 1910. The imposition of tariffs specifically designed to foster industrialisation, in 1925, discouraged the growth of certain imports, but the volume of gold pouring out of the South African mines removed potential balance of payments constraints and encouraged the growth of imports. Gold, followed by agricultural products, dominated exports. The pattern of imports was more varied, but maintained its importance in the economy. In 1910 imports accounted for 26 per cent of the national income. Seventy-six years later, in 1986, they still accounted for 26 per cent of the national income. In between they had changed their relative position marginally, when in the late 1950s the moves towards industrialisation via import substitution had had the effect of increasing their relative importance. On balance, the pattern revealed is one of long-term stability that not only held up throughout this period, but lasted until disinvestment and sanctions began to distort the picture in the late 1980s.
KeywordsCurrent Account National Income Capital Account External Trade Gold Price
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