Annual Forum Papers

The Concentration Tendencies of SADC's Manufacturing Industries with regard to South Africa: 1970

  • Year: 2005
  • Publication Author(s): Simon Hess
  • Countries and Regions: South Africa, Southern African Development Community (SADC)
Download:

The current implementation of a free trade area in SADC has given rise to concerns that the present location of industry in the region will be adversely affected. Specifically, many of the smaller and less-developed countries fear that this change will result in a loss of their industry towards the more developed members, and particularly towards South Africa. The paper conducts a review of the spatial distribution of industry within SADC from 1970 to 1999. This is achieved through the calculation and examination of industrial locational Gini coefficients, measuring the relative degree of concentration of 28 ISIC (rev 2) industries for the years 1970, 1980, 1985, 1990, 1995 and 1999. The analysis, however, is focused on the most recent two decades.

The average level of concentration within SADC is found to increase steadily from 1970 to 1990. Between 1990 and 1995, the level of concentration increases further, but at a lower rate, and, by 1999 industry begins to disperse. The Gini coefficient is a relative measure, and thus does not measure the absolute level of concentration. Thus, much of the increase in concentration seen is towards peripheral countries. To further interpret the Gini, the changes in concentration are compared to the absolute changes in manufacturing employment in South Africa. From this analysis there appears to be a distinct advantage for industry as a whole to locate in South Africa versus SADC as a whole. However, this is not the case for all industries as eight of the 28 industries analysed show particular tendencies to concentrate in the periphery (i.e. SADC excluding South Africa). Additionally, there are individual countries in addition to South Africa that appear to have a revealed comparative advantage in many of the other industries. Two main policy recommendations result from the paper. Firstly, individual countries in SADC need to promote those industries that show concentration tendencies in their country, and investigate further reasons as to why other industries tend to locate in South Africa. Secondly, further study should be undertaken on the effect of reducing transport costs on specific industries.