Long-run spatial inequality in South Africa: early settlement patterns and separate development

Stellenbosch Working Paper Series No. WP16/2018
 
Publication date: September 2018
 
Author(s):
[protected email address] (Department of Economics, Stellenbosch University)
 
Abstract:

New economic geography theories predict that historically densely settled areas also become more industrialised. Industrial agglomeration has therefore cultivated spatial inequalities in all parts of the world. South Africa presents an interesting case study, where institutional failures interrupted the ‘usual’ agglomeration process. On the one hand, current day metropolitan regions are located in historically densely populated areas. On the other hand, apartheid-era homelands also had highly concentrated populations, but did not industrialise to the same extent as other parts of South Africa. Much earlier in history, following the mfecane, these locations attracted migrants in search of favourable agricultural conditions and physical security in the face of conflict (they were high rainfall, rugged areas). The benefit of settling in these areas, however, only remained prior to imposed restrictions on land ownership (1913 Land Act) and movement of people (during apartheid). This paper decomposes modern spatial inequality, and establishes that agglomerations and historical institutional failures explain large proportions of spatial inequality. Furthermore, the homelands wage penalty reverses once these controls are introduced into various models: had agglomeration taken its course without institutional constraints, the homelands would likely have developed into high paying local economies. While new economic geography theories hold in the urban core, the densely populated former homelands did not follow this trajectory. Spatial inequality is therefore more severe than it would have been had institutional failures not prevented the former homelands from industrialising at the same pace as other historically densely populated areas.

 
JEL Classification:

N97, R11, D31

Keywords:

Spatial inequality, economic geography, apartheid homelands, African economic history

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BER Weekly

9 December 2019
The woes at state owned enterprises continued to dominate domestic news headlines last week. Not only was SAA put in business rescue, but Eskom load shedding returned late in the week, highlighting the operational difficulties that the power utility continues to face. The mood was not lifted by the latest GDP data, which revealed that the economy contracted...

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