Investment in South Africa - a comment on recent contributions

This article questions the interpretation of investment made by Fedderke et al. in the October 2001 issue of Development Southern Africa, in particular the conclusion that the higher investment rates of manufacturing in the 1990s are associated with the reduction in state intervention. Rather than improved manufacturing investment, the striking feature of the 1990s is the low level of investment by the government and parastatals. After making a brief review of investment performance over the past decade, manufacturing investment at the sectoral level is assessed, highlighting the very large investments in heavy industries. It is state support in the form of development finance from the Industrial Development Corporation that underlies these patterns, and not the withdrawal of the state as argued by Fedderke et al.