Determinants of provincial economic growth disparities in South Africa post-democracy

Abstract

South Africa continues to experience significant economic growth disparities across its nine provinces, which hinder equitable development and challenge national economic cohesion. This study examines the key factors that influence provincial economic growth in South Africa during the post-democracy period (1995–2023). Following a quantitative econometric approach, the study employs fixed effects, random effects, and dynamic panel data models (System GMM) to analyse provincial growth dynamics while addressing potential endogeneity and dynamic relationships. The findings reveal that fixed capital formation, income expenditure, and export growth rate significantly drive provincial economic growth. Conversely, in the dynamic model, employment share shows a negative association, pointing to labour market inefficiencies. Meanwhile, population size positively influences growth, reflecting its contribution to labour supply and market expansion. The results suggest the need for targeted investments in infrastructure, labour productivity, and export-oriented sectors to address provincial disparities and promote equitable development.