Bibliotecas para desarrollar aplicaciones de Realidad Aumentada

The objective of this minor dissertation was to examine if income convergence, measured by GDP per capita, exists across South African provinces since 1994 to 2013. Panel data techniques with fixed effects were used to analyse data pooled across provinces over a period of 18 years.

Some of the important highlights of the results in this minor dissertation are as follows:

− There is evidence in support of both unconditional and conditional beta convergence across South African provinces since 1994. Sigma convergence results also show a declining dispersion in GDP per capita over time across provinces.

− The speed of convergence was found to be 5 per cent per annum for unconditional convergence and 7 per cent per annum for conditional beta convergence.

− Half-lives for unconditional and conditional convergence were estimated to be 12 years and 8 years respectively. This suggest that it will take between 8 and 12 years to address 50 per cent of the gap between the initial GDP per capita level and the steady state GDP per capita level.

− However, further analysis revealed that convergence was rapid amongst rich provinces and very slow to non-existent among poor provinces.

− The size of the manufacturing sector was critical for the convergence process in South Africa. Thus, provinces with relatively larger manufacturing bases realised faster convergence speeds than provinces with relatively smaller manufacturing bases.

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− Higher population growth and provincial government expenditure were found to work against GDP per capita growth. Both were found to have a negative effect on GDP per capita growth, and thus convergence.

In light of the results presented above, this minor dissertation makes four important contributions to the South African literature on regional economics, namely:

1. The minor dissertation provided an empirical test of convergence, its speed and factors affecting convergence across South African provinces. This was achieved using panel data estimations.

2. The study has added to the current debate on the role industrialisation in economic growth and thus GDP per capita convergence. The study showed that industrialisation, measured by manufacturing value added, is critical for enhancing provincial growth and GDP per capita convergence.

3. The study has added to the current policy debate, by providing an analytical tool through which government can assess the successes or failures of development plans and policies that were implemented towards addressing provincial disparities. In a medium to long term, this analytical tool can be used to analyse the impact of the recently approved NDP.

4. The study has used a unique data set that combines provincial data from various sources to form a panel, from which the analysis was conducted. The data set spans 18 years and is comparable.

Based on the findings highlighted above, this minor dissertation makes the following policy proposals, namely:

− Instead of developing new policies, government should rather improve and domesticate many of the current development policies so that they leverage on each province’s comparative advantages.

− To stimulate provincial growth, there is a need for economic structure reforms towards industrialisation and diversification, particularly in rural

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and poor provinces. This will stimulate economic growth and, as a consequence, improve average incomes per person.

− For the above policy options to be successfully implemented, government should improve efficiency in public spending. The results in this study found that there are inefficiencies in provincial expenditures and that has served to slow down the convergence process.

While the findings of this minor dissertation shed light on the extent of convergence or the lack of it, across South African provinces, it is not prescriptive in nature. Instead the study recognises that, in addition to the contribution made by this minor dissertation, further research may uncover certain dynamics of income convergence in South Africa that may not have been addressed by this study. Areas that may be considered for further research include, but are not limited to the following:

− Subject to data availability, convergence across South African provinces could be tested using individual and/or personal income data instead of GDP per capita, which was used in this minor dissertation.

Although GDP per capita has been used in many empirical studies similar to this one, its limitation as a measure of income has been widely acknowledged.

− Since literature show that convergence in GDP per capita can be influenced by many factors, the inclusion of additional factors can shed light on the determinants of convergence in addition to those currently considered in this minor dissertation; in particular, factors such as, inter alia, physical capital, exports, research and development and savings.

These indicators could not be included in this minor dissertation due to lack of data at province level.

− Literature show that disparities in natural resource can explain disparities across regions. Since natural disparities are prevalent in South Africa, more research is needed to understand its impact on the

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convergence process. Moreover, indicators for natural resources should be explored as part of future research work.

− The education variable, which is used as a proxy for human capital, came with a negative coefficient which is contrary to expectations. As part of further research work, there is a need to explore other education indicators as proxies for human capital.

− Further research should also focus on exploring other indicators for distinguishing provinces into poor and rich. Currently, in this minor dirssertation, one indicator is used.

In conclusion, the minor dissertation found evidence in support of convergence in GDP per capita across South African provinces from 1994 to 2013, which gives hope for a more equal society in the long term.

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