Place Matters
National prosperity depends on every region performing better
In this discussion piece, the authors Visagie and Turok raise how economists and policy-makers seem to have a blind spot when thinking about how the economy functions and what determines success. Analytical frameworks and government policies consistently neglect the role of space and geography in favour of national averages and sectoral plans. Yet growing evidence from around the world shows the importance of place and location for productivity, growth, and development.
Intuitively, it is obvious that economic progress depends on the quality of local skills, capable public institutions, reliable infrastructure, and proximity to markets and suppliers. But just how important are these factors compared with the particular mix of local industries and macro-economic conditions?
In a paper published in the SA Journal of Economics entitled Firing on all cylinders: Decomposing regional growth dynamics in South Africa, the authors unpack the economic performance of different provinces to diagnose the significance of local factors and sectoral conditions. This is helpful in understanding why some provinces consistently outperform others, and what might be done to help lagging regions improve their competitiveness.
Abstract based on original source.
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