In the nineteenth century, when the discovery of gold took place in certain areas, workers from all over the west rushed towards those areas. This era was known as gold-rush. It took place in many countries like Australia, Brazil, Canada, New Zealand, South Africa and the United states.
In the nineteenth century, the second great divide of the South African history was the discovery of gold. The South African economy started to experience structural changes, typical of modern economic growth. Raise in real income per capita accompanied transfer of resources from primary production to manufacturing. The output share of the services sector enhanced and exports increased. These trends characterize a developing economy. But, this trend in South Africa proved a limited exception to typical structural changes, mainly because of the continued significance of gold mining.
Before the discovery of gold, economic development remained limited largely to the Cape Colony. It took place within an institutional structure of government-maintained order and low taxes. There was economic development, based on wool exports and marble production for the limited market at the Cape.
Gold mining is vital to the delicate economies of many poor countries, which account for roughly two-thirds of global gold production. In addition to generating export revenue in these countries, gold production provides royalty and tax income to their governments, worker training, technology transfer and the creation of a skilled workforce. Gold mining brought significant improvements in physical, social, legal and financial infrastructure of South Africa.
Gold mining is a foundation industry in South Africa that frequently provides the critical mass for the development of electricity, road, water and rail transport in a region, that are the crucial foundations of an economy.
The discovery of gold in 1886 transfigured the South African economy. European investment poured in; by the end of the nineteenth century, it was equal to all European investment in the rest of Africa. International banks and increased cash and credit were available to local miners, farmers, and prospectors; they, in turn, placed growing demands for land and labor on the local African populations.
During the post-war years, the British fully focused on rebuilding the country, especially the mining industry. By 1907, the mines of the Witwatersrand produced approximately one-third of the annual gold production of the world. South Africa was recognized as treasure trove throughout the world.
South Africa stepped into the international economy through its exports, primarily gold bars and diamond. The cycle of economic growth was stimulated by the continual growth of the mining industry. One of the biggest employers of South Africa was mining industry with around 460000 employees and another 400,000 engaged by the suppliers of goods and services to the industry.
The gold industry of South Africa is continually expanding and adapting to changing local and international world conditions. It is making a significant contribution to economic activity, job creation, foreign exchange earnings and GDP.
Gold has been a leading way of storing wealth, and has always been the backbone of recession and slump in stocks etc. Now, we can conclude with the fact that gold has played an influential role in the development of South Africa.