To achieve economic growth, South Africa aims at a more outward-oriented economic framework. However, as is discussed in this study, such a transition is made difficult by the constraints created by past industrial policies.Protectionism, the apartheid system, and other regulations have contributed to a generally noncompetitive manufacturing sector, a weak macroeconomic position, and distorted factor markets. Social unrest compounds the problem, as does lack of skill and capital. The role of state interventionism in the new South Africa is also considered.