Identifying industrial clusters for regional economic diversification: the case of South Africa's North West Province

Abstract

Dependency on commodity exports is seen as a structural weakness in resource dependent regions. Not surprisingly, such regions have made economic diversification a key priority. The economy of South Africas North West Province (NWP), a rich platinum and gold mining region, is highly specialised and dependent on a few sectors. This paper proposes industrial cluster formation as a means of diversifying the NWP economy and enhancing competitiveness in the province. The structural path analysis and Power-of-Pull methods were used to identify and rank order the industrial clusters that offer the greatest economy-wide benefits, while also creating opportunities for cross-sectoral collaboration.