Measuring the export capability of South African regions

An earlier version of this article was presented at the Biennial Conference of the Economic Society of South Africa, 10–12 September 2007, Johannesburg.

Abstract

Recent research has identified what determines local exports and what policies might make them grow. Regions with higher Gross Domestic Product per capita, faster population growth, higher levels of skills, greater export diversification and shorter distances to ports have experienced faster export growth. However, the results of regression models apply to a theoretical representative region and do not allow one to establish where policy interventions will be most effective. This article constructs an index to identify the regions in South Africa that can export manufactured goods. It draws on the literature of the determinants of exports for indicators of the capability (or potential) to export across 354 magisterial districts in 1996 and 2001. The results show a positive relationship between export capability and export performance. The article identifies a number of front-runner magisterial districts along with those of high capability but low performance that stand to benefit most from industrial policy interventions.

Keywords:

• Export capability
• export performance
• subnational regions
• South Africa

The authors would like to thank two anonymous referees for comments that greatly improved the article. All errors and omissions remain their own.

Notes

An earlier version of this article was presented at the Biennial Conference of the Economic Society of South Africa, 10–12 September 2007, Johannesburg.

¹In-depth analysis of the compilation of subnational data falls outside the scope of the article. Source documentation for the REX database describes the compilation of the data in some detail. Suffice to say that the data related to the Census years are as reliable as one is likely to find. An earlier (draft) version of the paper also reported 2006 estimates of the export capability index, but an anonymous referee pointed out that one then becomes subject to the uncertainties of out-of-sample forecasts. Consequently the analysis was restricted to 1996 and 2001. The results for 2006 are available on request from the authors.