Estimating trade flows between regions of KwaZulu-Natal, South Africa

Abstract

Background: The enhancement of trade creates employment and wealth and should be promoted. During planning and economic development of a region knowledge regarding the effect of initial actions on the final economic indicators such as total demand, purchases, sales, imports, exports, value addition and employment is indispensable. The specific value of trade flows and the multiplier effects involved, indicating the magnitude of linkages on a local and global level is essential. Aim: The final and intermediate trade flows between regions of KwaZulu-Natal, South Africa, are investigated in this article. Setting: The five major regions of KwaZulu-Natal Province. Methods: To investigate these spatial linkages, a modified multiregional input-output model was constructed. A survey approach was used to construct the model and involved primary data collected through a specially designed survey. Results: The results show that Richards Bay and Durban had the highest output multipliers, leading to the largest effect on output and trade flows. It was found that the values of intra-trade of these regions are much higher than the trade between the various urban regions. Durban has a fairly open economy, trading significantly with the other four regions, followed by Pietermaritzburg and Richards Bay. Port Shepstone and Newcastle are relatively closed economies, trading predominantly internally. Conclusion: The results suggest that there is indeed some flows of goods and services between the five regions, both intermediate and final. However, the estimated inter-regional spillovers, as well as feedback effects, seem to be rather limited.