Analysing industrial growth in various cities in KwaZulu-Natal, South Africa

Abstract

This article investigates the industrial success of various cities in KwaZulu-Natal, South Africa. It assesses the hypothesis that knowledge spillovers are supportive of industrial growth at the city level. Theories of economic city growth suggest that cities are engines of knowledge spillovers, which are essential to generate growth. This study utilised data on the growth of industries in cities in KwaZulu-Natal between 1996 and 2015. The study initially found that industries develop better in environments characterised by less concentration and more city diversity, which gave evidence of Jacobs’ externalities. However, after controlling for industry-specific and city-specific characteristics, the results changed significantly. No evidence was found for concentration effects (Marshall/Arrow/Romer-externalities) and less diversity supports city-industry growth (evidence against Jacobs’ externalities).