After the tumultuous years of 1960 and 1961 South Africa settled down to a political reality that was quite different from what had gone before. On the one hand South Africa was without firm allies in the world and isolation seemed set to grow; on the other hand the state’s ruthless repression of black protests and of black labour made it unlikely that there would soon be another challenge to the political order. The creating of black ‘homelands’ initially raised hopes that these could become growth points for black political participation.
During the 1950s the National Party government’s conservative macro-economic policy, along with suppression of black labour, laid the foundations for steady growth. Budget surpluses were used to retire debt. The NP dropped its earlier plans to nationalise the mines. Excessive wage demands from white workers were resisted. Investors nevertheless remained wary. The question was whether the state could handle a major black challenge.
By 1961 the doubts were removed: the government had ruthlessly crushed black resistance. The political turbulence in the first months of 1960 had caused a massive outflow of capital. The government had countered that by imposing strict controls on the repatriation of profits. This led to the accumulation of a large amount of private capital in the country. Foreign firms had little option but to reinvest in South Africa, and local companies followed suit. All this resulted in a sudden, major economic boom. Outside South Africa, however, it was not this new economic boom that attracted the attention of the international community. It was the policy and practice of apartheid.