A comparison of poverty in South Africa's nine provinces

Poverty in South Africa varies greatly across the nine provinces. An accurate estimation of relative poverty shares is important because they serve as key indices for targeting social expenditure. In this article we test the robustness of provincial poverty rankings against changes in measurement methodology. In recent years, a large body of international literature has developed concerning the choice of an appropriate poverty line and the construction of more appropriate poverty measures. This article uses two of these recent developments ‐ the concept of a poverty critical range in place of a single poverty line and distribution‐sensitive decomposable poverty measures — to re‐examine provincial poverty. Results are checked across two recent national data sets.     

China's Spatial Disparity Within the Context of Industrial Production Efficiency: A Macro Study by the Data-Envelopment Analysis (DEA) System

Regional disparity and production efficiency are two important and closely related issues in contemporary China. These issues are closely related because the increased degree of disparity in development across the provinces in recent years can, to a large extent, be attributed to the disparity in production efficiency across the provinces. The objective of this study is to re-examine China's production efficiency at the macro level by using the data-envelopment analysis system (DEA). Findings of this study suggest that pure technical industrial production efficiency across the provinces had, on average, deteriorated in 1991 when compared to the beginning of the reform period.     

The changing dynamics of regionalism in South Korea's elections

One of the most persistent areas of discussion regarding South Korea's party and election systems is the continued elevation of regional personalities over political institutions. We seek to pour new wine into old bottles, however, by challenging a seldom‐considered assumption in Korean studies; that regionalism has exerted constant pressures across regime, province, and personality. There is a void in studying how transition to democracy has affected the dominance of personality‐based regionalism in Korean politics. We investigate democratization's impact on this phenomenon by examining the provincial distribution of legislative and presidential voting from 1971–2002. We employ a new indicator for personality‐based disproportionality, apply it to election outcomes at the provincial level, and find that the electoral impact of regionalism has changed over time across regimes, provinces, and political personalities. We find that regional voting disproportionality 1) increased immediately after transition; 2) has varied depending on personality and type of election; 3) is indeed low in provinces traditionally labeled as neutral; and 4) increased in the 2000 legislative election while declining in the 2002 presidential election.     

Inequity in inpatient healthcare utilisation 10 years after Apartheid

This paper provides evidence about socioeconomic inequity in inpatient healthcare utilisation in South Africa after 10 years of reform after Apartheid, and examines which are the contributing determinants. We use the South African sample of the World Health Survey from 2002–03 and estimate horizontal inequity in inpatient healthcare utilisation using the concentration index. We further decompose inequity in inpatient care to explore the contribution of the different determinants of use. We find that inpatient healthcare utilisation is found to be pro-rich distributed in South Africa. The rich are more likely to use inpatient healthcare than the poor, given the same level of need. In addition, race is found to be the most important contributor (42%) to socioeconomic inequity in inpatient healthcare utilisation in South Africa. Gender, education and the consumption level are also found to be important contributors, but to a lesser degree than race. Our findings provide evidence that socioeconomic inequity in inpatient healthcare utilisation still exists in post-Apartheid South Africa and that policies, regulations and research should contribute to a more equitable utilisation. The implementation of National Health Insurance could help to reduce the major problems and large (socioeconomic and racial) inequalities of the South African healthcare system.     

SOURCES OF INCOME DIFFERENCES ACROSS CHINESE PROVINCES DURING THE REFORM PERIOD: A DEVELOPMENT ACCOUNTING EXERCISE

The present paper performs a development accounting analysis to investigate the sources of China's interprovincial income inequality over the period 1982–2005. We estimate a Cobb–Douglas aggregate production function with various specifications. Using the estimated parameters, we conduct a development accounting analysis as well as a variance decomposition. Our results suggest that differences in physical capital intensity and in total factor productivity are both important sources of cross‐province income differences, each accounting for roughly half of the variation in income levels. Differences in human capital explain only a small amount of income differences across provinces. The results are robust to whether or not the assumption of constant returns to scale is imposed. The interaction between factor accumulation and total factor productivity is also discussed.     

Major International Information Flows Across the Safex Wheat Market

We study information flows across four wheat futures markets on four continents: Zhengzhou Commodity Exchange (ZCE), South African Futures Exchange (SAFEX), Euronext/Liffe and Kansas City Board of Trade (KCBT). Three approaches for studying information flows among non‐synchronous markets are applied: cointegration techniques, vector autoregressive analysis and multiple regression proposed. Although comparable underlying assets are traded in the four markets, our results indicate that no long‐run links exist among them. ZCE is by far the most endogenous market, and Euronext/Liffe is the most exogenous one. Finally, the model points to KCBT as the most influential and sensitive wheat market. Our findings indicate that the relative openness of the SAFEX wheat market supports information flows and linkages from KCBT and Euronext/Liffe. Therefore, our results suggest that more supportive policies to incentivise higher wheat production in South Africa are required to mitigate the impact of price shocks emanating from the global wheat markets.     

Industrial Diversification and Its Impact on Productivity Growth in Taiwan's Electronics Industry*

The present study attempts to link plant‐level production diversification to productivity growth in Taiwan's electronics industry. An account of the role of the Taiwanese government over the last 2 decades leading to the take‐off of its electronics industry is briefly discussed. We reviewed production activities of more than 20 000 Taiwanese electronics plants during the period 1992–1999. In an inter‐industry comparison, we find that at the four‐digit and seven‐digit industry levels, Taiwanese electronics production plants exhibit a significantly higher degree of product diversification than plants in the manufacturing sector as a whole. Econometric results positively identify diversification as a source of significant productivity growth across all electronics plants classified in the related industry groups.     

The development status of women in South Africa: Patterns and progress in the provinces

The development status of women in South Africa declined between 1996 and 2001. This study examined whether the decline was pervasive throughout the nine provinces, and whether any development patterns were apparent among the provinces. The findings revealed that women had lost ground across the board, both in absolute terms and relative to men. They also showed that certain ranking patterns prevailed among the nine provinces and, notably, that women in provinces with pre-existing poor development statuses may also be predisposed to a poor development status relative to men. This double burden may translate into a perpetuation of poverty for women who find themselves in these provinces.     

Production efficiency and its spatial disparity across China’s TVEs: A stochastic production frontier approach

The development of China’s township and village enterprises (TVEs) in recent years is beyond doubt encouraging. However, it is uncertain whether or not this rapid development is exacerbating China’s spatial disparity by encouraging inequality of production efficiency across these enterprises. By using the stochastic production frontier model with a simple exponential specification of time-varying firm effects, which incorporates panel data, this paper aims to answer this question by examining the changes in production efficiency of the TVEs located in different provinces between 1988 and 1993, with particular reference to the spatial disparities of these changes. The findings of this paper indicate that the production efficiencies of the TVEs, on average, improved between 1988 and 1993. Furthermore, the results also show that regional inequality, in terms of production efficiency across the TVEs located in different provinces, had narrowed in the six years under study. JEL classification: C33; D24; 011; 047     

DETERMINANTS OF SOUTH AFRICA‐US INTRA‐INDUSTRY TRADE IN SERVICES: A WILD BOOTSTRAP DYNAMIC PANEL DATA ANALYSIS1

The study attempts to empirically identify factors that determine South Africa–US intra‐industry trade (IIT) in selected services during the period 1994‐2002. The study utilises Liu‐Davidson‐Flachaire wild bootstrap, which is robust to heteroscedasticity and provides estimates of the degree of parameter bias. The empirical results, in principle, show that South Africa–US IIT in the selected services is determined by factors similar to goods‐based “North‐South” IIT studies. Specifically, differences in per capita income and differences in market size negatively affect IIT. The study also indicates that US foreign direct investment in South Africa positively contributes to the unaffiliated IIT in services.     

Provincial Output Spillovers in China： Global Vector Autoregressive Approach

The paper uses a global vector autoregressive model to examine provincial output spillover effects in China. We find that there are effective output spillovers from Guangdong, Liaoning and Zhejiang to other provinces in China, but trivial effects from Shanghai, Shandong, Sichuan and Xinjiang, and negative effects from Beijing. Foreign direct investment (FDI) in Guangdong and Liaoning is the main channel for creating provincial output spillovers, compared with domestic investment and exports. However, FDI spillovers tend to decrease, with spillovers from exports and domestic investment rising over time, so that the spillover effects in Guangdong and Liaoning are non‐persistent and highly volatile. Other channels of output spillover, such as domestic investment, should be enhanced. Impacts of shock from government expenditure on GDP vary significantly across time and provinces; inland and western provinces are most negatively affected. The heterogeneous spillover structure shows that regional policies might achieve better results than nationwide policies in reducing regional disparity.     

FISCAL ILLUSION AT THE LOCAL SPHERE: AN EMPIRICAL TEST OF THE FLYPAPER EFFECT USING SOUTH AFRICAN MUNICIPAL DATA1

While South Africa operates a relatively decentralised governance and administrative structure, an important feature of the country's intergovernmental fiscal relations system is the gap that exists between the expenditure responsibilities of sub‐national authorities and their assigned revenue bases. The resulting vertical fiscal imbalance is mainly addressed via significant intergovernmental transfers to provinces and local governments. This factor presents strong a priori grounds for assuming that in the South African context, the heavy dependence of many local governments on intergovernmental transfers may generate fiscal illusion. Despite this, there have not been many empirical studies of fiscal illusion in South Africa's intergovernmental transfer system. This paper extends existing literature on fiscal illusion by using the fiscal year 2005/06 financial and expenditure data from 237 local government authorities in South Africa to evaluate the flypaper variant of the fiscal illusion hypothesis. Empirical results indicate that the marginal effects of municipal own‐source revenues on local expenditure exceed those of intergovernmental transfers. No statistical evidence in support of the flypaper hypothesis within the context of municipal expenditures in South Africa is found.     

Thinking regionally: Aviation and development implications in the Karoo region,South Africa

This study focuses on regional economic development in South Africa, across provincial political jurisdictions. The article argues that remote hinterlands can be more usefully understood as forming an integrated whole, rather than functioning as the poor rural cousins of their provincial metropoles. This article considers three propositions: that key transport projects (such as airports) may unlock regional development; that this may stimulate regional spatial integration; and that this may spur the South African government to address its weak regional planning system. All three propositions are speculative, drawn from the international literature, but they contribute to an argument for greater spatial coherence in South African planning in rural regions. The argument is illustrated with reference to the Karoo region of South Africa, and the potential of a new airport to impact on regional economic dynamics. Furthermore, the article argues that such impacts will require new regional planning systems, which are currently absent from the South African political system.     

THE ECONOMICS OF SUICIDE IN SOUTH AFRICA

This study investigates the economics of suicide in South Africa using the Mortality and Causes of Death data from death notification as well as regional economic data for the 2006‐2008 period. Using an inflation rate that varies by month and across province of residence as a proxy for economic performance, the results indicate a negative relationship between inflation and suicide, suggesting that suicides are countercyclical. When controlling for month and province fixed effects, however, the inflation coefficient, albeit remaining negative, is no longer significant, except in the female sample. Suicide is more prevalent among younger individuals, while the greatest proportion of suicide is seen among men. Suicides also exhibit a strong seasonal variation, with peaks in spring and summer, with December having the highest suicide prevalence. The overall results indicate a negative but insignificant relationship between economic performance and suicide in South Africa, with socio‐economic differences and individual characteristics accounting for most of the variation in suicide.     

Protectionism and Industry Location in Chinese Provinces

This paper investigates the determinants of activities’ location in Chinese provinces based on a unique panel data set, paying particular attention to the role of local protectionism. We estimate a model of production location across Chinese provinces that combines factor endowments and geographical consideration. Results emphasize that the dynamics of comparative advantages and the forces of the new geographic economy are at work in Chinese provinces. Estimations, however, lend strong support to the role of local protectionism. The location of economic activities in Chinese provinces does thus not exclusively follow the logic of the market.     

Water management options for food security in South Africa: scenarios,simulations and policy implications

Recent research activities of the International Water Management Institute on water and food security have led to the development of a user‐friendly simulation model, Podium, to test national policy options on water allocation to different uses. This article presents an application of the model to South Africa, where water resources development and management constitute a high national priority. Data on demography, nutritional requirements, food imports and exports, climate and hydrology are used to create scenarios about meeting future water requirements for food production while simultaneously satisfying the water requirements of other sectors. The simulation results highlight the need to improve productivity in irrigation and also intensify rainfed agriculture to avoid future food insecurity, especially under high population projections. Merely expanding irrigated areas will not make significant impacts on national‐level food security. There also appears to be scope for increasing domestic per capita water consumption without altering current diversions for agriculture and other requirements.     

THE SOUTH AFRICAN PHILLIPS CURVE: HOW APPLICABLE IS THE GORDON MODEL?

Is there a Phillips curve relationship present in South Africa and if so, what form does it take? Traditionally the method to establish whether or not there is a relationship between the output gap and the change in inflation is merely to regress the latter on the former. This yields the well‐known augmented Phillips curve. However, Gordon has argued that this specification of the Phillips curve produces biased results. Instead, he puts forward and estimates successfully for several industrialised countries his so‐called triangular model that tests for hysteresis and inertia in the behaviour of inflation, as well as the impact on inflation of changes in the output level. This paper considers whether or not Gordon's triangle model is applicable to South Africa, i.e. are hysteresis and inertia present in South Africa? In addition, in an attempt to find a better estimation of the output gap, the paper also experiments with alternative ways to estimate the long‐run output level, including the standard HP‐filter, as well as a production function approach.     

An economic analysis of factors influencing rural‐urban migration in southern Africa

Rural‐urban migration is a serious problem being encountered by developing countries, including South Africa. A single‐equation model is formulated to test hypotheses concerning the determinants, namely personal and household characteristics, of the decision by household heads in Ciskei to migrate. The migration model was expressed as a dichotomous ordered‐response model using logistic regression. The results suggest that the personal characteristics of the household heads had a bearing on the probability of migration. The coefficients of the household characteristics, with the exception of the number of adults in the household, were found to have a statistically weak association with the decision to migrate.     

Grazing into the future: Policy making for South African communal rangelands

This article reports on a symposium held at Fort Hare University in July 1998. Its objective was to assess the current state of knowledge on communal rangelands and identify issues important for policy making. This was done in the light of concerns about recent policy reform. Uncontrolled access to resources and the lack of services were identified as the main constraints on socio‐economic development in the communal rangelands, and inadequate forage during the dry season was recognised as a general constraint on livestock production, irrespective of mean annual rainfall. Government policies must recognise these issues and the social and ecological heterogeneity of communal rangelands in South Africa. The conclusion with the most far‐reaching implications, however, was that degradation has occurred in some, but not all, communal rangelands and is most likely to occur in arid areas. This finding is in direct contrast to the current base for agricultural policies in South Africa, which assumes that livestock have little impact on rangelands.     

Policing the provinces: A budgetary analysis

This article examines the impact of the Financial and Fiscal Commission's (FFC) new provincial financing dispensation on the allocation of police resources and on the deliv ery of police services at provincial level. Trends in the police budget since the late 1989s are examined, and the existing provincial allocation of police resources is analysed, as well as the relationship between crime rates, socio‐economic variables and the provincial allocation of police resources. A new framework for the provincial allocation of police resources is subsequently proposed. This framework is based on the FFC's proposed provincial grants formula and the establishment of a Crime Equalisation Fund (CEF) which allocates additional police resources based on each province's per capita crime rates and specific priority crimes. The article argues that the phased reallocation of po lice resources to provinces via this new framework will contribute to a more equitable and effective utilisation of existing police resources, which in turn should have a positive impact on the delivery of police services and the levels of crime. It also suggests that the further devolution of the police budget to provinces is likely to be inhibited by the ANC's commitment to retaining a national, centralised police service. Thus, any further devolu tion of budgetary powers with respect to policing will be determined by the outcome of centre‐province political dynamics rather than by the need to combat crime more effec tively at provincial levels.