South Africa should design economic policy based on strengths of regions: here's how
DATE: 22 February 2022
AUTHOR: The African Mirror
ECONOMISTS and policy-makers seem to have a blind spot when thinking about how the economy functions and what determines success. Analytical frameworks and government policies consistently neglect the role of space and geography in favour of national averages and sectoral plans. Yet growing evidence from around the world shows the importance of place and location for productivity, growth and development.
Intuitively, it is obvious that economic progress depends on the quality of local skills, capable public institutions, reliable infrastructure, and proximity to markets and suppliers. But just how important are these factors compared with the particular mix of local industries and macro-economic conditions?
In a recent paper we unpacked the economic performance of different provinces in South Africa to diagnose the significance of local factors and sectoral conditions. This is helpful in understanding why some provinces consistently outperform others. And what might be done to help lagging regions improve their competitiveness.
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