Sub‐national growth rate differentials in South Africa: an econometric analysis*

Wim Naudé and Waldo Krugell

Papers in Regional Science, 2006, vol. 85, issue 3, 443-457

Abstract: Abstract. This research note examines the determinants of economic growth at the sub‐national level in South Africa, and investigates cross‐regional medium term (1998–2002) growth rate differentials between 354 magisterial districts. A dynamic panel data regression model is used that includes measures of geography (distance and natural resources) as well as recent estimates of physical and human capital. We find that the significant determinants of local economic growth are distance from internal markets, human capital, export propensity, and the capital stock. Distance from international harbours, as a measure of transport costs, and urban agglomeration (or density) affects growth indirectly through its significant effect on the ability of a region to export. Overall, these results indicate that geography is important, independent of its effects on institutions, for economic growth. Bearing in mind a medium‐term focus, no evidence of absolute convergence could be found over a five‐year period, but the evidence tentatively suggests beta convergence.

Date: 2006
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https://doi.org/10.1111/j.1435-5957.2006.00090.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:presci:v:85:y:2006:i:3:p:443-457

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