Should South Africa Stay with BRICS and CIVETS or Focus on Africa?

I am interested in the growth and development of South Africa and so that is why I chose something to do with the economy of South Africa. Another reason behind me choosing this topic is because it is and will originate from a place close from home, Durban. South Africa can grow through trade and this project promotes that in that there is the Dube Tradeport and The King Shaka International Airport. The goods that are at the Dube tradeport and come from the tradeport, will be what will be exported and imported in South

South Africa as the name sounds is located at the south side of Africa (CIA). It is about the size of Columbia (CIA). A country that rest between two great oceans, South Atlantic Ocean and Indian Ocean. Being partially surrounded; West, East and South, by water. It is regarded as the 25th largest nation in the world with a population of 48.6 million people (CIA). The average temperature for the country is warm, in the winter it’s dry and sunny, and in the summer it’s wet, rainy. The country is a diversified society that comprises of various cultures and demographics.

South Africa is a located at the very bottom of the continent of Africa. It is surrounded on three sides by the Atlantic Ocean by the West and South and the Indian Ocean to the East. To the North it boarders Namibia, Botswana, Zimbabwe, Mozambique, and Swaziland. One interesting thing is that there is a landlocked, surrounded on all sides by land, country of Lesotho. This is evident by Map 1, shown below, that shows South Africa in the red box and the darker brown country within South Africa being Lesotho. Which still remains true today, Lesotho is still its own country with an unsettled relationship with South Africa.

“Originally the first four were grouped as “BRIC” (or “the BRICs”), before the induction of South Africa in 2010. the BRICS members are all leading developing or newly industrialized countries, but they are distinguished by their large, sometimes fast-growing economies and significant influence on regional affairs...”3

Developed countries are countries which obtain a great level of income and are also referred to as industrialised countries. Developed countries are in support of free market principals, are very advanced in their education levels, technology. They also have high standard of living, and also have a declining rate of population. Least developed countries are not economically stable, their development process is very slow and are known to be very poverty stricken. These LDCs standard of living is very poor thus they are exposed to many economic and social problems. A clear description of least developed countries would be low economic growth, huge problem in unemployment, institution capacity is very vulnerable, poverty stricken, and have poor infustructure, inadequate education, climate implications, lower income as well as per capita income. LCDs have minimal savings and investment opportunities. Emerging countries are nations that are not extremely poor but have low or medium per capita income, these countries are very capable of having great economic growth but are still referred to risk economies, where they are classifies as nations that are not yet fully stable to invest in or do other kinds of trading with.

According to Thirlwall, A. (2000) the question for Africa is not whether to trade but in what to trade and the terms on which it trades with itself and the rest of the world.

The dominance of the traditional global economic powers has been challenged in the past two decades with the rise of a number of countries known as Emergent Market Economies (EMEs). These countries already account for a substantial amount of the world economic output and have been the major force behind the global economic growth in the last decade. The BRIC countries (Brazil, Russia, India and China), the largest contributors to this growth, represent a greater share of the economic growth than the G7 countries (Michaelson, 2010). Between 2001 and 2013 the economic output of non-developed countries doubled from almost 20% to 39% and is expected to exceed 41% by 2019. (IMF, 2014). This doesn’t mean that the developed economies of the world have been eclipsed. Far from it, the traditional economic powers still maintain a disproportionately large influence in the global economic landscape. However, the rapid progress of the emerging economies has changed the dynamics in such a way that traditional power imbalances are receding fast. The situation is best described by President Barack Obama’s speech to students at the St. Xavier College in Mumbai in 2010, where he said “The fact of the matter is, for most of my lifetime, the U.S. was such a dominant economic power. We were such a large market. Our industry, our technology, our manufacturing were so significant that we always met the rest of the world economically on our terms. And now, because of the incredible rise of India,

As we can see in Figure 1, the share of emerging markets in global output has increased from below 20% in the early 90’s, to more than 30% today. Considering the cost of living differences, the share of emerging economies in world GDP already exceeds 45%, which is 13 percentage points higher than in the early 90’s. According to the International Monetary Fund’s (IMF), World Economic Outlook, this share will exceed 50% in 2013.

The South African economy is second largest economy in Africa following Nigeria (which recently overtook South Africa according to the Economist) (Mail & Guardian, 2014). From the early 2000s, Former President Thabo Mbeki promoted economic growth and foreign investment by relaxing labour laws, increasing the pace of privatisation, and reducing unnecessary governmental spending. His policies faced strong opposition from organised labour. From the mid 2000s, economic growth picked up significantly; both employment and capital formation increased which resulted in South Africa to be considered as an emerging market; formally joining BRICS in 2010 (World Bank, 2014). The policy exhibited over the past few years has resulted in macro stabilization successes and enhanced policy legitimacy. However, the growth and unemployment challenge facing South Africa is significant one. Investment rates are currently low, furthermore the legacy of apartheid is evident in the persistent distortions in all factor markets: for labour, as evident in the scale and persistence of unemployment and inadequate investment in human capital; for capital, in the low savings/investment rates (Lewis, 2012).

The perception of Africa is often limited to poverty, disease, starvation and inequality. In 1999, extreme poverty affected 58% of the African population. That number has now fallen to 35%. With over 500 companies generating a turnover involving billions of dollars each year, Africa is not emerging – it’s already here.

Emerging markets (EM’s) can be defined as a term which individuals mostly investors use to describe a growing economy or country (developing country) where their investments is anticipated to make larger returns however the returns come with a great risk due to the fact that the market is still a developing one and can not easily be predicted, emerging markets (EM’s) can be considered to be in between developed markets like the united states, japan, united kingdom, frontier markets etc. Greece can also be regarded as an emerging market despite the fact it is has a small developed markets (Financial times, n.d.) Most countries that are still developing and have emerging markets, they tend to apply more flexible exchange rate regimes

Emerging countries are the ones that change their status from less developed to developed countries by achieving a rise in GDP per capita and economic growth. This term is also stated as “convergence”. Due to a brief and precise history available in data bases, people argue about the limited data available on emerging markets.

Emerging markets are those lower-incomes but rapid-growth countries that are using economic liberalization as their primary engine of growth, and these fall into two groups: developing countries in Asia, Latin America, Africa, and the Middle East and transition economies in the former Soviet Union and China (Hoskisson et al. 2000). Early research

South Africa (SA) was distant from many other major markets and production centers. This made it complex for international trade to compensate for these conditions, even though trade has expanded since 1994, mainly with the European (EU) and the United States (US). Tariff levels have declined on average, but anti-dumping duties protect key industries such as steel, where the state has long had an interest and an exclusive export agent can prevent arbitrage between export and local markets. SA’s history of import substitution and the attendant habits of business practice and government policy favored local insiders thus challenging other market entrants. This encouraged the new SA government to review the SA competition law regime in the White Paper on Reconstruction and Development in 1994. The need for a new competition policy in SA was because of excessive economic concentration and ownership, collusive practices by enterprises and the abuse of economic power by firms in dominant positions. A need for further transition emanated from the effects of globalization and trade liberalization and the need to redress past inequality and non-participation in the national economy. Thus fundamental principle of competition policy

As the nation is a developing economy, the government has to play a critical role to guide and control the nation (Nove and Gerschenkron, 1963). For instance, the part of government in enhancing general financial and social welfare ought not be expelled or belittled, even in developed, mature economies (Reich, 1989). Developing markets are countries that are investing in more productive capacity. They are moving far from their conventional economies that have depended on agribusiness and the export of raw materials. Leaders of developing countries want to create a better quality of life for the citizens. Subsequently, they are rapidly industrialising and embracing a free market or mixed economy (Amadeo, 2016). Developing economies frequently seek to restructure their economies along market-oriented lines and offer a wealth of opportunities in trade, technology transfers, and FDI (Heakal, 2015). Emerging markets are important because they drive growth in the