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Regional Business Confidence as Early Indicator of Regional Economic Growth

Ewert Kleynhans and Clive Coetzee
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Ewert Kleynhans: North-West University, South Africa
Clive Coetzee: North-West University, South Africa

Managing Global Transitions, 2021, vol. 19, issue 1 (Spring), 27-48

Abstract: Official sub-national GDP figures in South Africa are usually published with long delays or not at all, i.e. relevant, reliable, and real-time economic data on a provincial and local (municipal) level are often non-existent, causing a significant data asymmetry at the sub-national level. The search for an ‘optimal’ sub-national proxy for regional economic growth focuses on the possible use of regional business confidence. This article, therefore, investigates the use of regional business confidence indices (RBCI) as an early indicator or proxy of the regional economic growth rate (RGDP). To this end, the study employed panel cointegration methodology and techniques to interrogate the possible association between regional business confidence and regional economic growth, focusing on three specific regions of KwaZulu-Natal, South Africa. The results suggest that the utilisation of regional business confidence indicators indeed has merit. Constraints experienced in the study indicate the direction that further studies may follow, especially concerning the scope of the period and cross-sections. The research, therefore, addresses a fundamental gap in the data asymmetry in South Africa, while also setting a benchmark for other researchers to follow.

Keywords: business confidence; gross regional product; economic growth; panel data econometrics; fixed effects; random effects; GDP; BCI (search for similar items in EconPapers)
JEL-codes: C23 C53 E01 E17 O11 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.26493/1854-6935.19.27-48

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