Agriculture: Beginning the Transformation, 1933–61

In these last years of the open economy, when money could be transferred out of the country relatively freely, South African agriculture began to be transformed along the lines of a modern developed country, rather than on the pattern of an underdeveloped country. In most developing countries it is usual for government policies to make agricultural prices lower than they would otherwise be, while subsidising the production of manufactured goods,1 whereas in developed countries agricultural prices are often maintained at above world price levels, particularly in those countries that do not have comparative advantage, such as the European Economic Community, Japan and South Africa. Developed countries can afford the luxury of heavily-subsidised agriculture, because of their high per capita incomes and their broad tax base. South Africa could afford it because of favourable factor endowments in the form of gold mines. This was true throughout this period. The South African experience, therefore, was not typical of a developing country, and South African White agriculture went through the first stages of an agricultural revolution in the 1950s on the model of a developed country.