If I asked you to name the second-highest selling album in the world in 2025, you might guess Taylor Swift, Bad Bunny or Justin Bieber. In fact, it was Stray Kids, a South Korean boy band most readers of this newspaper have almost certainly never heard of.
I certainly hadn’t until a podcast on The Economist app this weekend pointed out that its music has racked up 10.5-billion YouTube views, 2-billion TikTok likes and roughly 21-million hours of listening on Spotify for a single track called God’s Menu.
The statistic says something about the extraordinary global reach of South Korean culture. It also arrives at an intriguing moment. In 2026 the world marks the 250th anniversary of The Wealth of Nations, published on March 9 1776 by Scottish moral philosopher Adam Smith.
Two and a half centuries after Smith tried to explain why some nations grow rich while others remain poor, South Korea has become one of the most compelling real-world demonstrations of his central insight that prosperity emerges not from central direction but from the energy unleashed when individuals are free to compete, innovate and trade.
In 1960 South Africa was roughly four times richer than South Korea in terms of income per person. South Korea was still rebuilding after the devastation of the Korean War. Its economy depended heavily on foreign aid and subsistence agriculture.
South Africa, by contrast, possessed one of the most advanced economies in the developing world. It had deep capital markets, a sophisticated banking system, globally competitive mining houses and a rapidly industrialising manufacturing sector.
None of that is to romanticise the period. The apartheid system was morally indefensible and economically inefficient, excluding the majority of South Africans from full participation in the economy. The long-term costs of that exclusion were enormous.
But it is also historically accurate to acknowledge that by the late apartheid era South Africa had built substantial economic institutions and infrastructure, world-class mining technology, strong financial markets and an industrial base capable of supporting modern growth.
By the early 1990s something remarkable had happened. South Africa and South Korea were roughly neck-and-neck in terms of income levels. At that moment the economic futures of the two countries were not obviously predetermined. Both were emerging from deeply authoritarian political systems. Both were integrating more fully into the global economy. Both possessed strong industrial capabilities.
Yet three decades later the divergence is painfully apparent for all to see. South Korea is now among the world’s advanced economies, with income levels above $30,000 per person and globally dominant firms such as Samsung, Hyundai Motor and LG. South Africa’s per capita income, by contrast, has stagnated around $6,000.
The explanation lies not in geography or culture or natural resources. South Africa remains vastly richer in minerals and agricultural land than South Korea ever was. The difference lies overwhelmingly in policy choices.
Smith’s argument in The Wealth of Nations was deceptively simple. Nations become prosperous when people are free to specialise, trade and innovate within systems that reward effort and investment. “It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner,” he famously wrote, “but from their regard to their own interest”.
The explanation lies not in geography or culture or natural resources. South Africa remains vastly richer in minerals and agricultural land than South Korea ever was. The difference lies overwhelmingly in policy choices.
Self-interest, properly channelled through markets, becomes a force for collective prosperity. South Africa’s challenge today is that too many of its institutions do the opposite. The result has been as predictable as it is infuriating to witness, as economic growth has stalled, world-leading joblessness has entrenched itself as a feature of the economy, all while the tax base erodes. And as Smith warned more than two centuries ago, “no society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable”.
South Africa’s government of national unity now faces a choice that goes to the heart of the country’s economic future. It can continue to tinker with redistribution in an economy that is barely growing. Or it can confront the deeper structural challenge of restoring the conditions that allow markets to generate sustained prosperity. That means embracing pro-growth policies with the same seriousness that South Korea did half a century ago.
South Korea’s transformation was not the result of ideological purity. The state played an active role in shaping industrial policy and supporting key sectors. But it also maintained an unwavering focus on export competitiveness, productivity and global integration. Firms were expected to compete internationally. Failure carried consequences.
By contrast, South Africa has too often protected inefficiency while deterring investment. Consider steel. The government imposed tariffs to shield ArcelorMittal South Africa from foreign competition, with the intention of preserving domestic industrial capacity. Yet the broader operating environment steadily deteriorated.
Electricity prices rose sharply under Eskom while unreliable supply disrupted production. Logistics failures at Transnet drove up freight costs and constrained exports. The result was perverse. Downstream manufacturers paid higher input prices while the protected steel producer itself remained under pressure.
This pattern has been repeated across much of the economy. The irony is that the country possesses many of the ingredients Smith would have recognised as foundations of prosperity, such as a sophisticated financial system, deep capital markets, abundant natural resources and entrepreneurial talent in every community. What it lacks is policy coherence around growth. Growth has slowed accordingly.
According to PSG Financial Services chief economist Johann Els, South Africa’s economy is likely to expand only 0.3% quarter on quarter in the final quarter of 2025, bringing full-year growth to roughly 1.4%. That is an improvement on the 0.5% growth recorded in 2024, but it remains far too anaemic.
State’s stranglehold
Even the consensus forecast for 2026 — growth edging towards 1.9% — might be optimistic given that the rand price of Brent crude oil has surged more than 70% this month amid escalating tensions in the Middle East. Petrol prices could rise by as much as R4/l in April. Inflation may move temporarily towards 4%, potentially delaying interest rate cuts. For an economy already growing slowly, such shocks can quickly erode fragile momentum.
About 250 years ago Smith offered what may still be the most concise growth strategy ever written: “Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism,” he wrote, “but peace, easy taxes and a tolerable administration of justice.”
That’s it. No master plans. No endless state intervention. Those 250 years after The Wealth of Nations, the only invisible hand in South Africa is attached to the arm of a state and is still battling to release its asphyxiating grip on the economy.
• Avery, a financial journalist and broadcaster, produces BDTV’s ‘Business Watch’. Contact him at michael@fmr.co.za.
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