The Country of Good Hope; The government's policies are gaining traction. South African corporations are investing and many white South Africans are returning home.

Byline: Ruchir Sharma, Sharma is the co-head of global emerging markets at Morgan Stanley Investment Management.

Only the Cape of Good Hope lies south of Robben Island. Billed as a major tourist attraction now, the island offers a glimpse into "old" South Africa's troubling past. Robben Island is where the most prominent antiapartheid political prisoners, including Nelson Mandela, were held for years in pathetic conditions. For decades its squalid jail cells were the very symbol of apartheid-era oppression. Yet this week, as the nation celebrates 10 years of the "new," democratic South Africa, Robben Island stands as the very symbol of the stunning transformation. Not every released prisoner could go on to directly shape South Africa's future. Few prison guards had the means to move away. Left with wasted youth and few skills with which to earn a living, many of the island's former prisoners now serve as its tour guides. They live in peaceful coexistence with the retired jailers, who once oversaw their oppression. The remarkable harmony on Robben Island is symptomatic of the "forget the past and get on with the future" attitude of most South Africans that has enabled the nation to bounce back.

Before 1994--the year the new Constitution took effect and the African National Congress (ANC) came to power--the broad view was that South Africa faced a Hobson's choice between an apartheid government and a more democratic but apparently socialist-leaning government. After all, many ANC members underwent training in the Soviet Union. When the new government took over, the economy was a mess--completely out of touch with global reality due to sanctions, a lopsided business-ownership structure, a budget deficit of 9 percent of GDP and talk of a debt trap. Even as recently as 1999, investors worried about the ANC's economic instincts.

Yet the current government decided to adopt a market-friendly policy framework as the only way to achieve sustained economic development. Populism has been eschewed in favor of pragmatism. Tito Mboweni, once a Lenin-chanting student, is today a very orthodox central banker. Finance Minister Trevor Manuel is popular with the ANC rank and file as well as international investors. The change in sentiment toward the country is best captured by the tremendous response to the amnesty program announced last year, which allows South Africans to bring back money taken out of the country ...