Overcoming Underdevelopment in South Africa’s Second Economy

This paper is a synthesis of the July 2005 Development Report published by the Development Bank of Southern Africa, Human Sciences Research Council and United Nations Development Programme (DBSA, HSRC and UNDP). The Report asks why, if the origins of economic dualism are rooted in the cheap, forced, migrant labour introduced by the mining industry and reinforced during apartheid, does dualism persist under democracy when all the relevant laws and many of the practices of the past have been abolished? The breakdown of apartheid did not immediately translate into improved material conditions for the majority of South Africans: 300 years of colonialism and 50 of internal colonialism had hard-wired a duality into the system. Two worlds, which may be conceptualised as the first and second economies, coexisted: a globally integrated world of production, exchange and consumption, and a constrained world of informality, poverty and marginalisation. This synthesis sheds light on the origin and nature of the 'second economy' metaphor, and suggests solutions.