Economic specialisation and diversity in South African cities

Abstract

According to Naudé and Krugell (2003a) South Africa's cities are too small, dispersed, and over concentrated. In South Africa, households in the country's urban areas have average incomes almost thrice as high as the households in rural areas. More than 70% of South Africa's GDP is produced in only 19 urban areas (Naudé and Krugell 2003b). In Naudé and Krugell (2003a) it is stated that the rank-size rule shows that South Africa's urban agglomerations are too small and the cities mainly offer urbanization economies rather than localization economies. The main focus of this study will be looking at the specialization and diversity of South African cities. The aim is to determine whether certain cities should specialise in certain sectors, which they are currently involved in or should they add to their city and become more diverse and specialize in other sectors in order to promote economic growth. Many believe that a city which is more diverse would grow faster than a city specialising in a certain and thus be more beneficial to the economy than a specialized city would. This paper would like to address this phenomenon with regard to South African cities