An analysis of sub-national economic databases in South Africa

Abstract

South Africa faces significant challenges such as a low economic growth rate, high unemployment rate, high poverty rate and substantial inequality. These problems and their possible solutions have a spatial dimension that is often neglected. To support local economic development the public and private sectors require access to reliable sub–national data. Statistics South Africa collects and disseminates socio–economic data, but information about local economies is limited to two private sector databases. This dissertation sets out to analyse the validity and reliability of the economic data available at municipal level in South Africa. A comparison of the sub–national data from these two databases reveals differences in the estimates as a result of the different methodologies applied. Each database seems to be internally consistent. Over the period some places grew faster or slower than the national average in terms of population and value added but there is persistence in relative positions and ranking. This is the outcome that one would expect if local economies conform to the theories of geographical economies: growth occurs in agglomerations, but the process is cumulative and path dependent. The analysis found no evidence of “exploding standard errors”. Though the comparison of the two databases shows that they are internally consistent, it also shows that rankings between the two differ substantially. Different variables from the two databases should not be used together in analysis. The key caveat of this study is that the analysis does not extend to the construction of a sub–national database, but it provides the background for such an effort.