Impact of Apartheid on Economic Growth: Implications and Empirical Evidence from South Africa

Abstract

Even with the end of apartheid in South Africa, the impact of apartheid-like policies on economic growth remains an important policy issue. Our results, from two panels of ‘peer’ countries, which were roughly comparable to South Africa, show that apartheid policies that led to insufficient investment in physical and human capital and high shares of government consumption contributed to South Africa's poor growth performance during apartheid. We also find some support for the hypothesis that apartheid policies caused low productivity and inefficient use of inputs, but South Africa's abundance of natural resources at times obscured this effect.