Effects of Globalization on South Africa Isa

Topics: Economics, Globalization, International Monetary Fund Pages: 5 (1609 words) Published: April 30, 2013
Economics ISA
Globalization and South Africa
April 23, 2013

Globalization is the process of expanding social and economic ties between nations, and benefits each partner through enabling it to concentrate on its competencies (GPF). From thousands of years ago when Silk Road connected Asia, Africa and Europe to speed the transfer of goods, the idea of globalization fermented in the minds of every merchant. Heading towards the 19th century this idea progressed further as new ways of transportation and communication came to pass including railroads, steamships and telecommunication. In the 21th century this idea of globalization has increased tremendously with the addition of commercial vehicles, airplanes, cellular phones and most notably, the Internet. Organizations such as the World Trade Organization (WTO) and the International Monetary Fund (IMF) make it their mandate to give aid to developing countries as they strive to globalize. South Africa has been integrated in the movement of globalization as it re-entered the international economy in 1990 after being faced with trade sanctions. At that time emerging market economies were booming at a greater rate than the world economy (CIA). However the South African economy only began to show signs of benefit about four years later. Moreover with the addition of South Africa into the BRICS countries in 2010 (originally known as BRIC in 2001) brings opportunity to South Africans, who deal with the notion of globalization. (BRICS) South Africa has a tremendous amount of potential due to its abundance in natural resources such as gold, diamond, coal, natural gas and many other rare earth elements (CIA). Globalization has proven to be a positive development in South Africa because it has improved trade partners including China and India, brings potential foreign investors, and gives trade rights to South Africa.

Globalization makes it possible for countries to remove trade barriers, which benefits both the consumers and producers of each participating country. South Africa’s socio-economic relationship with China and India has much improved as a result of globalization. South Africa’s socioeconomic relationship with China has been booming and since 2010, China has been one of South Africa’s most prominent trading partners (Loots). The official relationship formed in the late 1990s when there was a fall of apartheid in South Africa. This made it possible for South Africa to form a tactical economic relationship with Taiwan (officially the Republic of China) (CIA). Additionally in 1997 when the British transferred the sovereignty over Hong Kong (also known as “the Handover”) to China this sped up the recognition of the socio-economic relationship between South Africa and China. Prior to these relations South Africa and China only traded $14 million (USD) in 1992, however once the relations started to gain way in 1998 trade between the two increased to $1.4 billion (USD). Moreover by 2010 trade between China and South Africa flourished to $25.6 billion (USD), which shows a remarkable progression of trade over time (BRICS). Similarly to China, South Africa’s relationship with India showed analogous results. The culmination of apartheid in South Africa in 1994 made it possible for South Africa to gain global relations. Furthermore in 1994 Nelson Mandela (South African leader at the time) won the Mahatma Gandhi Peace Prize from the Indian government. Moreover economic activity between India and South Africa also expanded at an exponential rate from 1993 of $3 million (USD) to $4 billion (USD) in 2006. This progression stayed constant even through 2010 where the trade between the two is $12 billion (USD). The trade is maintained through a free-trade agreement that both South Africa and India signed (Ministry of External Affairs India). Globalization enabled South Africa to expand its trade towards other nations and as a result South Africa’s gross domestic product (GDP) went...
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