Testing Economic Growth Convergence and Its Policy Implications in the Gauteng City-Region

  • Koech CheruiyotEmail author
  • Darlington Mushongera
Part of the GeoJournal Library book series (GEJL)


Reducing income inequalities remains one of the key challenges facing South Africa twenty years after democracy. While these inequalities are very clear along racial lines, they are also very stark spatially. For example, research in 2000 showed that 82% of South Africa’s gross domestic product (GDP) was concentrated in 20% of the country’s major urban areas and 20% of urban areas had an average per capita income of R25,277, compared with an average per capita income of R5,452 for the poorest 20% of places. In Gauteng, over 80% of regional GDP is generated in the three metro areas of Johannesburg, Tshwane, and Ekurhuleni. However, neoclassical growth theory predicts that poor localities, or regions, will grow faster than rich ones, leading to economic convergence over time. Using ward-level median household income calculated from census data for 2001 and 2011, this chapter tests this assertion in the ten-year period between the censuses. The chapter employs spatial econometric techniques to generate exploratory spatial data analysis and measure unconditional (or beta) convergence parameters. While exploratory spatial analysis did not clearly indicate either unconditional convergence or divergence, spatial models suggested a divergence rate of 0.7% between the two censuses. The growth rate of divergence is significantly clustered, with the north-west and south-west of Gauteng having experienced clusters of higher growth rates of ward-level median household income. There are also pockets of high growth rates of median household income in central Tshwane, Midvaal, and Merafong City. Clusters of high growth rates are also visible in the suburbs around Sandton, Midrand, Bryanston, and Fourways. Pockets of low growth rates of median household income are visible in the areas around Ennerdale and Poortje in the south of Johannesburg. Implications for policy are suggested regarding spatial targeting efforts by government.


Inequality Economic convergence Spatial analyses Gauteng City-Region 



Christian Hamann is thanked for median household income calculations and preparation of the accompanying maps/figures. The useful comments of the two reviewers who read an earlier version of this chapter are acknowledged.


  1. ANC (African National Congress). (1994). Reconstruction and development programme: A policy framework. Johannesburg: Umanyano.Google Scholar
  2. Anselin, L. (2005). Exploring spatial data with GeoDaTM: A workbook. Urbana: Center for Spatially Integrated Social Science.Google Scholar
  3. Anselin, L., Syabri, I., & Kho, Y. (2006). GeoDa: An introduction to spatial data analysis. Geographical Analysis, 38(1), 5–22.CrossRefGoogle Scholar
  4. Banerjee, A. V., & Iyer, L. (2005). History, institutions and economic performance: The legacy of colonial land tenure systems in India. American Economic Review, 95, 1190–1213.CrossRefGoogle Scholar
  5. Barro, R. (1991). Economic growth in a cross-section of countries. Quarterly Journal of Economics, 106, 407–443.CrossRefGoogle Scholar
  6. Barro, R. J., & Sala-i-Martin, X. (1992). Convergence. Journal of Political Economy, 100(2), 223–251.CrossRefGoogle Scholar
  7. Barro, R. J., & Sala-i-Martin, X. (1995). Economic growth. New York: McGraw-Hill.Google Scholar
  8. Barro, R. J., Sala-i-Martin, X., Blanchard, O. J., & Hall, R. E. (1991). Convergence across states and regions. Brooking Institution Papers on Economic Activity, 1, 107–182.CrossRefGoogle Scholar
  9. Bernat, G. A. (2001). Convergence in state per capita personal income, 1950–99. Survey of Current Business, 81(6), 36–48.Google Scholar
  10. Bernstein, A. (Ed.). (2010). Poverty and inequality: Facts, trends, and hard choices. Edited proceedings of Round Table No. 15. Johannesburg: Centre for Development and Enterprise (CDE).Google Scholar
  11. Bhorat, H., & Kanbur, R. (2006). Poverty and policy in post-apartheid South Africa. Pretoria: HSRC Press.Google Scholar
  12. Bhorat, H., & Van der Westhuizen, C. (2008). Economic growth, poverty and inequality in South Africa: The first decade of democracy. Paper commissioned by The Presidency for the 15 year review process. Cape Town: University of Cape Town (Development Policy Research Unit).Google Scholar
  13. Bosch, A., Rossouw, J., Claassens, T., & Du Plessis, B. (2010). A second look at measuring inequality in South Africa: A modified Gini coefficient. Working Paper No. 58. Durban: University of KwaZulu-Natal (School of Development Studies).Google Scholar
  14. Bourguignon, F. (2004). The poverty-growth-inequality triangle. Washington, D.C.: World Bank.Google Scholar
  15. Brand, D., & Heyns, C. (Eds.). (2005). Socio-economic rights in South Africa. Pretoria: University of Pretoria Law Press.Google Scholar
  16. Bruhn, M. (2008). Good, bad, and ugly colonial activities: Studying development across the Americas (Vol. 334). Washington, D.C.: World Bank.CrossRefGoogle Scholar
  17. Canaleta, C. G., Arzoz, P. P., & Garate, R. M. (2002). Structural change, infrastructure and convergence in the region of the European Union. European Urban and Regional Studies, 9(2), 115–135.CrossRefGoogle Scholar
  18. Deaton, A. (1997). The analysis of household surveys: A micro-econometric approach to development policy. Washington, D.C.: World Bank.CrossRefGoogle Scholar
  19. Durlauf, S., & Quah, D. T. (1999). The new empirics of economic growth. In J. Taylor & M. Woodford (Eds.), Handbook of macroeconomics (Part A) (pp. 235–308). North Holland: Elsevier.Google Scholar
  20. Everatt, D. (2003). The politics of poverty. Bangladesh e-Journal of Sociology, 2(1), 16–31.Google Scholar
  21. Gumede, V. (2011). Social and economic inclusion in post-apartheid South Africa. In J. Hofmeyr (Ed.), From inequality to inclusive growth: 2011 transformation audit (pp. 88–94). Cape Town: Institute for Justice and Reconciliation.Google Scholar
  22. Henderson, J. V. (2002). Urbanization in developing countries. World Bank Research Observer, 17(1), 89–112.CrossRefGoogle Scholar
  23. Jenkins, S. P., & Micklewright, J. (2007). New directions in the analysis of inequality and poverty. ISER Working Paper 2007–11. Colchester: University of Essex.Google Scholar
  24. Kanbur, R., & Venables, A. J. (2005). Spatial inequality and development. Oxford: Oxford University Press.CrossRefGoogle Scholar
  25. Kapur, S., & Kim, S. (2006). British colonial institutions and economic development in India. NBER Working Paper #12613. Cambridge, MA: National Bureau of Economic Research.Google Scholar
  26. Kim, S. (2007). Institutions and U.S. regional development: A study of Massachusetts and Virginia. NBER Working Paper #13431. Cambridge, MA: National Bureau of Economic Research.Google Scholar
  27. Kim, S. (2008). Spatial inequality and economic development: Theories, facts, and policies. Working Paper No. 16. Washington: Commission on Growth and Development.Google Scholar
  28. Krugell, W. F. (2005). The geographical economy of South Africa. Unpublished thesis, North West University, Potchefstroom.Google Scholar
  29. Krugell, W. F., Koekemoer, G., & Allison, J. (2005). Convergence or divergence of South African cities and towns? Evidence from kernel density estimates. Paper Presented at the Biennial Conference of the Economic Society of South Africa, Durban.Google Scholar
  30. Krugell, W., & Naudé, W. A. (2005). The geographical economy of South Africa. Journal of Development Perspectives, 1, 85–128.Google Scholar
  31. Lall, S., & Yilmaz, S. (2001). Regional economic convergence: Do policy instruments make a difference? The Annals of Regional Science, 35(1), 153–166.CrossRefGoogle Scholar
  32. Leibbrandt, M., Wegner, E., & Finn, A. (2011). The policies for reducing income inequality and poverty in South Africa. Southern Africa Labour and Development Research Unit Working Paper No. 64. Cape Town: University of Cape Town (SALDRU).Google Scholar
  33. Leibbrandt, M., Woolard, I., Finn, A., & Argent, J. (2010). Trends in African income distribution and poverty since the fall of apartheid. OECD Social, Employment and Migration Working Paper No, 101. Paris: OECD Publishing.Google Scholar
  34. Leibbrandt, M., Woolard, C., & Woolard, I. (2009). Poverty and inequality dynamics in South Africa: Post‐apartheid developments in the light of the long‐run legacy. In J. Aron, B. Kahn, & G. Kingdon (Eds.), South African economic policy under democracy, Chap. 10. Oxford: Oxford University Press.Google Scholar
  35. Lerman, R. I., & Yitzhaki, S. (1985). Income inequality effects by income source: A new approach and applications to USA. Review of Economics and Statistics, 67, 151–156.CrossRefGoogle Scholar
  36. Matthews, S. A. (2006). GeoDa and spatial regression modeling. Center for Spatially Integrated Social Science, Population Research Institute. University of California, Santa Barbara. Santa Barbara, California, USA. Accessed April 27, 2017.
  37. Møller, V. (2007). Quality of life in South Africa: The first ten years of democracy. Grahamstown: Institute of Social and Economic Research.Google Scholar
  38. Naudé, W. A., & Krugell, W. F. (2003). An enquiry into cities and their role in sub-national economic growth in South Africa. Journal of African Economies, 12(4), 476–499.CrossRefGoogle Scholar
  39. Naudé, W. A., & Krugell, W. F. (2004). An enquiry into cities and their role in sub-national economic growth in South Africa. WIDER Research Paper RP2004/08. Helsinki: UNU-WIDER.Google Scholar
  40. Nel, E., & Rogerson, C. M. (2009). Re-thinking spatial inequalities in South Africa: Lessons from international experience. Urban Forum, 20, 141–155.CrossRefGoogle Scholar
  41. Nel, E., & Rogerson, C. M. (2016). Re-engaging with spatial economic development: The recent experience of regional and local economic development in South Africa. Local Economy, 31(1–2), 3–8.CrossRefGoogle Scholar
  42. Niehues, J. (2011). Income inequality, inequality of opportunity and redistributive policies. Unpublished Ph.D. thesis, University of Cologne.Google Scholar
  43. NPC (National Planning Commission). (2011). National development plan: Vision for 2030. Pretoria: National Planning Commission.Google Scholar
  44. Puga, D., & Venables, A. J. (1999). Agglomeration and economic development: Import substitution vs. trade liberalisation. Economic Journal, 109, 292–311.CrossRefGoogle Scholar
  45. Ravallion, M. (2001). Growth, inequality and poverty: Looking beyond averages. World Development, 29(11), 1803–1815.CrossRefGoogle Scholar
  46. Republic of South Africa. (1996). The Constitution of the Republic of South Africa No. 108 of 1996.Google Scholar
  47. Republic of South Africa. (2003). Broad-based black economic empowerment (BBBEE). Pretoria: Department of Trade and Industry.Google Scholar
  48. Republic of South Africa. (2004). Expanded Public Works Programme (EPWP). Pretoria: Department of Public Works.Google Scholar
  49. Republic of South Africa. (2006). Accelerated and shared growth initiative for South Africa (AsgiSA). Pretoria: Presidency.Google Scholar
  50. Republic of South Africa. (2010). The new growth path: The framework. Pretoria: Economic Development Department.Google Scholar
  51. Rey, S. J., & Montouri, B. D. (1999). U.S. regional income convergence: A spatial econometric approach. Regional Studies, 33(2), 143–156.CrossRefGoogle Scholar
  52. Rogerson, C. M., & Nel, E. (2016). Redressing inequality in South Africa: The spatial targeting of distressed areas. Local Economy, 31(1–2), 28–41.CrossRefGoogle Scholar
  53. Romer, D. (1996). Advanced macroeconomics. New York: McGraw-Hill.Google Scholar
  54. Sala-i-Martin, X. (1996). Regional cohesion: Evidence and theories of regional growth and convergence. European Economic Review, 40, 1325–1352.CrossRefGoogle Scholar
  55. Salardi, P. (2005). How much of Brazilian inequality can we explain? An attempt of income differentials decomposition using the PNAD 2002. Accessed February 10, 2017.
  56. Seekings, J. (2007). Poverty and inequality after apartheid. Paper prepared for the Second ‘After Apartheid Conference’, Yale University, 27–28 April.Google Scholar
  57. Solow, R. M. (1956). A contribution to the theory of economic growth. The Quarterly Journal of Economics, 70(1), 65–94.CrossRefGoogle Scholar
  58. StatsSA (Statistics South Africa). (2001). Census. Pretoria: Statistics South Africa.Google Scholar
  59. StatsSA (Statistics South Africa). (2011). Census. Pretoria: Statistics South Africa.Google Scholar
  60. StatsSA (Statistics South Africa). (2015). Census 2011: Income dynamics and poverty status of households in South Africa. Pretoria: Statistics South Africa.Google Scholar
  61. Temple, J. (1999). The new growth evidence. Journal of Economic Literature, 37, 112–156.CrossRefGoogle Scholar
  62. Tregenna, F. (2011). Halving poverty in South Africa: Growth and distribution aspects. Distribution implications of halving poverty in South Africa. Working Paper No 2011/60. Helsinki: UNU-WIDER.Google Scholar
  63. Tregenna, F., & Tsela, M. (2012). Inequality in South Africa: The distribution of income, expenditure and earnings. Development Southern Africa, 29(1), 35–61.CrossRefGoogle Scholar
  64. UNDP (United Nations Development Programme). (2015). The millennium development goals report 2015. New York: United Nations Publications.Google Scholar
  65. Van der Berg, S. (2010). The demographic and spatial distribution of inequality. In Poverty and Inequality: Facts, Trends and Hard Choices. Centre for Development and Enterprise Round Table Paper, (15). Johannesburg: Centre for Development and Enterprise.Google Scholar
  66. Van der Berg, S., & Louw, M. (2004). Changing patterns of South African income distribution: Towards time series estimates of distribution and poverty. South African Journal of Economics, 72(3), 546–572.CrossRefGoogle Scholar
  67. Woolard, I. (2002). An overview of poverty and inequality in South Africa. Working paper prepared for Department for International Development (DFID) (SA), July. Pretoria: DFID.Google Scholar
  68. Woolard, I., Leibbrandt, M., & McEwen, H. (2009). The persistence of high income inequality in South Africa: Some recent evidence. In J. Hofmeyr (Ed.), Recession and recovery. Cape Town: Institute for Justice and Reconciliation.Google Scholar
  69. World Bank. (2009). World development report 2009: Reshaping economic geography. Washington, D.C.: World Bank.Google Scholar
  70. SALDRU (Southern Africa Labour and Development Research Unit). (Various dates). National income dynamics study. Cape Town & Pretoria: Department of Planning Monitoring and Evaluation.Google Scholar
  71. Young, A. T., Higgins, M. J., & Levy, D. (2008). Sigma convergence versus beta convergence: Evidence from U.S. county-level data. Journal of Money, Credit and Banking, 40(5), 1083–1093.CrossRefGoogle Scholar
  72. Yusuf, F., Martins, J. M., & Swanson, D. A. (2014). Methods of demographic analysis. New York: Springer.CrossRefGoogle Scholar

Copyright information

© Springer International Publishing AG 2018

Authors and Affiliations

  1. 1.University of the Witwatersrand, Gauteng City-Region Observatory (GCRO), a partnership between the University of Johannesburg, the University of the Witwatersrand, Johannesburg, the Gauteng Provincial Government and organized local governmentJohannesburgSouth Africa

Personalised recommendations