Shift-share analysis of production in the manufacturing industry of South Africa's Southern District Municipality

28 April 2016

In this study, the development and structure of value-added production in the manufacturing industries of the Southern District Municipality (SDM) of South Africa are investigated. The field of study focuses on spatial economic development, with the aim of identifying industries that can offer future growth and job creation. The methodology of shift-share analysis, often applied to studies of Economic Geography, is used for the empirical analysis. The SDM district municipality includes the local municipalities of Klerksdorp, Potchefstroom, Ventersdorp, Merafong City and Wolmaransstad. The economy of these municipalities is mainly dependent on gold mining, which is declining as their gold reserves are becoming depleted which will lead to a large section of its population being unemployed in the near future. Shift-share analysis provides insight into the shifts of production between various sectors over time and is comprehensible to policymakers. It provides further insight into the national share effect on production of the sectors in the region, as well as the regional industrial mix and the competitive share effects. It was found that the sectors with the highest growth potential are Transport Equipment, Petroleum and Chemicals, Furniture, Metal Products, and Wood and Paper Products, and they merit attention in future development initiatives.