PB04/2017

Intergenerational mobility during South Africa’s mineral revolution

Stellenbosch Policy Brief No. 04/2017

Author(s): Jeanne Cilliers, Johan Fourie

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Abstract:

For much of the nineteenth century, the territories that made up South Africa were largely agricultural. Cape Town and to a lesser extent Port Elizabeth were the only manufacturing centers. This changed with the discovery of diamonds in 1867 and, twenty years later, the discovery of gold in the South African interior, shifting the locale of economic power from the south-eastern coast to the northern interior.

We want to know more about who benefited from this shift in economic prosperity. We know that the mineral revolution resulted in ethnic inequalities – we can see this for example in the growth and then spectacular decline of the Basotho economy – and we know about the opulence of the Randlords. Whites, who held the political power in the four states that would in 1910 become the Union of South Africa, clearly benefited most from the diamond and gold boom but within this group we do not really know who the main economic beneficiaries of South Africa’s mineral revolution and consequent industrial take-off were. This is important because periods of rapid economic growth tend to be associated with reductions in poverty and improved social mobility. Yet as we show here, it is not always the poorest members of society who benefit most.