Has the disinvestment issue been carefully considered?

This paper considers the question of disinvestment to put economic pressure on the South African government. It is often proposed as a means of resolving the political crisis in South Africa, with a view that disinvestment will weaken the South African economy, causing the regime to collapse, or that disinvestment will lower economic growth in South Africa and impoverish the community, forcing the government to negotiate. Both these viewpoints overlook key factors and the argument is characterised by misconceptions regarding the political economy of South Africa. Firstly, the misleading perception that South Africa possesses a modern developed economy capable of providing a western standard of living, and that apartheid is responsible for the discrepancies between the advantaged and the disadvantaged. Secondly, the nature of the political crisis in South Africa, which is regarded as a civil rights struggle. However, this conception seldom acknowledges the Marxist basis of political groups who have little interest in a peaceful solution. Thirdly, there is little awareness of the debate on the relationship between economic growth and political change in South Africa. Fourthly, neglecting the impact on neighbouring states as well as countermeasures by the South African authorities. Finally, the idea that investment can be cut off and then resumed without long-term implications. With political impediments on investment from abroad, the economy will likely deteriorate to the point where it cannot attract new investment even when political constraints are removed. In conclusion, those who advocate disinvestment should reflect that implementing such a strategy is likely to visit poverty and hardship on generations of people.