Geography Reference
In-Depth Information
South Africa opened up its economy to the global market in 1994. Trade
liberalization had a very significant impact, with exports plus imports
rising from 47 per cent in 1996 to approximately 60 per cent of GDP in
2004. In terms of inward investment, South Africa in 2005 accounted
for 21 per cent of all FDI inflows into the African continent. In 2005 the
country actually witnessed a fall in FDI inflows due to the sale of a foreign
equity stake in a domestic gold-mining firm to a domestic firm, although
South Africa remains Africa's major location for inward FDI, and the
continent's major source of outward FDI (UNCTAD 2007). As well as the
traditional investors from the UK and USA, there is now also increasing
interest in foreign investment in South Africa on the part of investors from
Asia, a trend which reflects the overall increasing interest of Asian MNEs
in Africa in general (UNCTAD 2007).
As South Africa's trade, and in particular its manufacturing exports,
have increased dramatically over the last two decades, the relationship
between trade and economic geography has become much sharper. The
dominant commercial centre Johannesburg is currently just outside the top
50 financial centres in the world (COL 2009; Long Finance 2011), and is
the only city in the whole of Africa within the world's top 75 global finan-
cial centres (COL 2009; Long Finance 2011). More generally, however,
in terms of the internal economic geography, economic growth in South
Africa is being increasingly dominated by the urban centres, and particu-
larly those with major transportation infrastructures (Naude and Krugell
2003). In 2000, some 84 per cent of South Africa's manufacturing exports
were accounted for by only 6 per cent of the magisterial districts (Naude
and Krugell 2003). As already noted in the case of the other BRIICS
economies, considering agglomeration effects enforces constraints in the
typical policy instruments for regional development (Nel and Rogerson
2009). For example, increasing productivity by attracting FDI in high
value added and technology intensive manufacturing activities will tend to
benefit those South African urban centres where such activities are already
strongly agglomerated (Flaherty 1995). In agriculture, successful export
crops are also disproportionately cultivated in the richer regions (Flaherty
1995). Moreover, the trade-off between growth and equity is particularly
difficult to tackle in the case of South Africa, as interregional disparities
are also strongly correlated with interclass and interracial differences
(Flaherty 1995). However, empirical studies have pointed out that the
reduction of such inequalities may indeed depend on the economic growth
of South Africa's largest cities, and on the way that their further spatial
agglomeration processes interact with smaller cities and the wider urban
hierarchy (Naude and Krugell 2003).
