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Abstract
Scholarship on the developmental state has largely focused on the attempts by Third World nation-states to channel investments towards economic development during the 1950s and early 1960s. This scholarship has paid significant attention to how nationally based companies and their states shaped the process of late development. This dissertation examines the post-apartheid state's efforts to channel investment to steer the process of late industrialization in the context of higher rates of internationalization of investment through transnational companies.
In this dissertation, the post-apartheid government's automotive industry policy is used as a case study to examine why the attempts by the post-apartheid state to channel private investment along the lines of developmental states under conditions of globalization have been not successful. I argue that the post-apartheid state has indeed increased the rate of investment in the automotive industry through high subsidization of transnational companies, but without imposing discipline. This has enabled these companies to earn higher profit margins without the state being able to enforce its stated policy goals, such as increasing employment and export rates.
The failure of the post-apartheid state to channel investment in line with the developmental state has partly to do with the state elites' investment policy strategy, which has been based on luring business through neoliberalism. However, more crucially, it is due to the transnational companies' strategy to use South Africa as both a domestic market and an export base. Furthermore, when the post-apartheid state elite ascended to government in 1994, these companies had already built and located their international market networks and huge technological capabilities outside of South Africa. Consequently, these companies had no interest in the construction of a developmental state. Such a state might have provided a subsidy, but the companies would have had to concede to state discipline. On the contrary, transnational companies used the threat of disinvestment from the South African economy to cajole the state into providing greater subsidies. Instead of building a developmental state, the post-apartheid state elite has built a nanny-state, which simply provides handouts to transnational companies.
