COMPARATIVE ADVANTAGE AND COMPETITIVENESS OF MAIN INDUSTRIES IN THE NORTH-EASTERN REGION OF SOUTH AFRICA: APPLICATION OF LOCATION QUOTIENT AND SHIFT-SHARE TECHNIQUES

It is important for policy makers to know where main industries are regionally concentrated. This allows investors to take carefully calculated risks on opportunities and for development policy makers to prudently provide the right economic development direction and properly implement strategies for the regional and/or national development. The primary objective of this paper is to provide an empirical investigation of the geographic concentration of the main industries in South Africa by means of comparing four selected provinces. This paper focuses on two economic base techniques, namely the location quotient and shift-share analysis that both seek to examine industrial advantages (disadvantages), structure and competitiveness. The key findings indicate that the comparative advantage declined in different industries. A worrying industry is mining in Mpumalanga and Limpopo provinces, where there is a remarkable decline in LQs and, thus, these industries need intensive care. In terms of shiftshare analysis, regional competitiveness factors were the largest positive contributor in two industries in KwaZulu Natal, three in Gauteng and Mpumalanga and four in Limpopo province. Considering the state of employment in the primary sector (agriculture and mining), the results suggest that policy makers should keep accelerating the construction of large and medium sized industrial enterprises, promoting and encouraging the development of secondary industry, and actively enhance the development of the tertiary industry in the north-eastern region of South Africa.

Keywords:

Competitiveness, Location Quotient, Comparative Advantage, Shift-shareAnalysis South Africa,

PDF

___

Barker, F. (2015). The South African Labour Market: Theory and Practice. 5th Revised Ed. Cape Town: Van Schaik Publishers.
Blair, J. P. & Carroll, M. C. (2009). Local Economic Development: Analysis, Practices, and Globalisation. 2nd Ed.. London: SAGE Publications.
Boasson, V., Boasson, E., Macpherson, A., & Shin, H. (2005). Firm value and geographic competitive advantage: Evidence from the U.S. pharmaceutical industry. Journal of Business, 78(6), 2465-2493.
Brakman, S., Garretsen, H., & Marrevijk, C. (2001). An introduction to geographical economics. Cambridge: Cambridge University Press.
Constantin, D. L., Bodea, C. N., C. B. Pauna, Goschin, C. B., Dragusin, Z. & Stancu, I. (2010). The question of clusters in less developed regions. Empirical evidence from Romania’s regions. Paper presented at the 50th Congress of European Regional Science Association, Jönköping, Sweden, August 19-23.
Department of Economic Development and Tourism (DEDT) (2017). Comparative advantage and regional competitiveness in Mpumalanga by means of economic base analysis. Mbombela, Department of Economic Development and Tourism.
Esteban-Marquillas, J. M. (1972). Shift Share Analysis Revisited. Regional and Urban Economics, 2(3), 249-261.
Ferreira, F. C. M., Goldszmidt, R. G. B. and Csillag, J. M. (2010). The Regional Concentration of Industries and the Performance of Firms: A Multilevel Approach. BAR, Curitiba, 7(4), art. 2, 345-361.
Froeschle, R. (2005). What to do with all this data? The role of economic base analysis in Regional Economic Development. http://www2.econ.iastate.edu/classes/crp274/swenson/URP290/readings/Updated%20Economic%20Base%20Analysis%202005_R_%20Froeschle.pdf. Accessed 2018/04/26.
Hoover, E. M. & Giarratani, F. (1984). An introduction to Regional Economics. 3rd Ed. New York: Alfred, A. Knopf.
Iordan, M. & Chilian, M. N. (2017). Competitiveness Dynamics in the Romanian Regions. Internal Auditing and Risk Management, Anul XII, 47(3), 71-82,Supplement Nr.1.
Jain, T. R. & Sandhu, A. S. (2016). Development Economics. New Delhi: VK Global Publications.
Leigh, N. G. & Blakely, E. J. (2017). Planning Local Economic Development: Theory and Practice. 6th Ed.. London: Sage Publications.
Martin, R. L. (2003). A study on the factors of regional competitiveness. A draft final report for the European Commission, Directorate General Regional Policy, Cambridge Econometrics, University of Cambridge.
Mori, T., Nikishimi, K., & Smith, T. E. (2005). A divergence statistic of industrial localization. The Review of Economics and Statistics, 87(4), 635-651.