The impact of arms production on the South African manufacturing industry

The 1977 UN arms embargo was one of the main factors which led South Africa to establish a largely self sufficient import-substituting arms industry c apable of meeting the apartheid state's demand for sophisticated weaponry. While macroeconomic studies suggest that high military spending had a damag ing effect on economic growth, no studies have investigated the disaggregat ed impact of military expenditure on industrial development. This paper app lies panel data methods to the Industrial Development Corporation's Sectora l Database in order to analyse the level effects of military spending.