expenditures account for nearly 40 per cent of Gross Domestic Product, with the military, police and related activities taking the largest share and the public sector employs about a third of the country's workforce. 31. Domestic savings are not only declining, but have not been translated into domestic fixed investment. On the contrary, since 1960, the share of domestic fixed investment in GDP growth has steadily declined. Despite low interest rates, gross domestic fixed investment fell steeply by 31 per cent (in real terms) between 1981 and 1987, reflecting loss of business confidence. This drop has been steepest in manufacturing where productive investment has even failed to keep up with depreciation. The result has been shrinking capacity, reduced production, loss in international competitivity, and a further loss of unemployment. In the 1980s, unemplojnment soared to its present level of 25 per cent to 30 per cent. In practical economic terms, then, disinvestment by domestic and foreign companies alike had begun long before the public campaign for sanctions and disinvestment had any impact. As long as South Africa had ready access to foreign capital, however, it could mask these distortions in its savings and investment structure by borrowing more heavily abroad. 32. The underlying defect in the South African economy lies in its export structure. South Africa is heavily dependent on foreign trade which accounts for 60 per cent of annual GDP. Export earnings are derived from primary and semi-processed products; minerals account for over 80 per cent, gold alone for over 40 per cent. Indeed, apart from foreign borrowings, boosts in gold prices have been the major factor in helping South Africa maintain equilibrium in its balance of payments. By contrast, manufacturing has failed to be competitive on the world market. Because of small domestic markets and scarcity of skilled labour, results of a system that keeps the masses of 
**Analysis**
The text discusses the economic structure and performance of South Africa, highlighting issues such as high expenditures, low domestic savings and investment, and a heavily dependent export structure. It also touches on the impact of these issues on employment and the economy as a whole.

**Category**
Economic development, International trade