Is the Multilateral Financial Embargo of 1986-1991 on South Africa Effective?

Abstract

This paper presents a simple open economy version of Ramsey's model within a political context, taking into consideration the main elements of the apartheid system that was in effect in South Africa for a long time. This is in response to the question of the extent of the effectiveness of the international financial embargo in achieving its desired goal, which was the lifting of the apartheid system. The paper concludes that there was an inverse relationship between the degrees of the response of the financial embargo as an international reaction to the human rights violations of the apartheid system on the one hand, and on the interest rate on the other. This provides a new interpretation for the outflow of capital from South Africa during the economic blockades. In line with the assumptions of the model, whites - the group with the capital - were the most affected by the blockade, with their income being directly affected by the imposition of the financial embargo. This indicates that the financial embargo was effective in achieving its desired goal, namely the exertion of pressure on the economic sector to lift the apartheid system. In addition, this research presents a simplified empirical study that concludes by reiterating the results of the theoretical study: that the financial embargo that was imposed on South Africa between 1986 and 1991 was effective in achieving its desired goal.

Keywords: South Africa, Financial Embargo, Political Economics, Economic Growth