History and GIS

This week I am at an ERSA organised workshop on the use of geographical information systems (GIS) in the analysis of economic history. For the occasion Johan Fourie brought out Alex Moradi of Sussex University and after the first afternoon there are already some interesting points to write about.

Alex explained that historical GIS is about structuring, mapping and analysing geographies of the past. It is a way of interrelating information from different sources - some of it spatial. GIS software can be used as a database management tool (layers are key), for analysing data (clustering, spatial autocorrelation) and visualising finished products (make your own maps). We will be learning more about that tomorrow.

For someone who is interested in geographical economics I found Alex's borders example interesting. Geography, like altitude or latitude variables are not really used as an explanatory variables, but rather as a way to help identify differences or discontinuities. I look forward to his inputs on our research ideas.

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On subnational data - pick your black box

South Africa faces significant challenges such as a low economic growth rate, high unemployment rate, high poverty rate and substantial inequality.  I often argue that these problems and their possible solutions have a spatial dimension that is neglected.  But, to support local economic development the public and private sectors require access to reliable sub-national data.  Statistics South Africa collects and disseminates socio-economic data, but information about local economies is limited to two private sector databases: Global Insight's REX and Quantec's Regional indicators.Recently, one of my Master's students set out to compare the two databases and we found some interesting differences.

The first thing to note is that in both cases the data are derived or imputed. This in itself is not a problem - it is also the case with for example the EU's NUTS-3 data - but the questions are about the amount of source data that do exist and the assumptions made to generate economic data at municipal level. It has been said that sub-national economic data in South Africa are not suitable for dynamic analysis because it is generated from aggregate GDP figures on the basis of a static algorithm. Our look at the data did not find simple disaggregation of official national or provincial total to the municipal level based on some or other fixed proportion, or fixed growth rates over time. We did find some interesting differences in, for example, population numbers.

There is hardly any way of knowing which is more correct, so for the economic data we argued as follows. If you subscribe to the idea that agglomerations of economic activity are characterised by cumulative causation and path dependency you would expect that over the short period for which there is data available, some places would grow faster and others slower than the national average but there would be persistence in relative positions and ranking. This is typically what the databases show. There is a lot more in the dissertation about the growth rates of GVA and different places' share of GVA, but the table below gives a brief summary of a test of rankings.

Each database shows internal consistency, but there are large (and significant) differences in rankings of places' share of GVA between the two databases.

Our conclusion: There is no evidence that the private sector databases are a simple breakdown of national or provincial numbers. There are no exploding standard errors. But the databases are black boxes and they differ substantively. They should not be used together. It is a question of picking your black box. 

What we need is an academic, open source dataset - a resource that can be vetted, applied and improved by all users.

The #CityTalk discussion on Twitter last night

SONA and the WHERE of growth and jobs

Yesterday evening President Zuma delivered the State of the Nation Address. When one considers the state of a nation you need to mention a number of things. He started with the familiar challenges of unemployment, poverty and inequality. He mentioned that unemployment is structural and made the case that government have been taking steps and will be taking steps to meet the challenge. These steps include increased spending on social security, infrastructure development to stimulate the economy and the establishment of the National Planning Commission. President Zuma also reviewed some of the progress on the undertakings made in last year’s SONA – it is easy to forget about the Jobs Fund, incentives for new industrial projects, local content procurement regulations and the R10 billion that the IDC set aside for job creation. The president’s overview shows that these things take time to get going, never mind produce any results and I think that this is a key point to keep in mind about this year’s promises.

The address identified a number of key issues for 2012. These are being discussed everywhere (see Carien du Plessis’ list) and I do not want to get into all the details again. The list includes:

• An infrastructure development drive

This is driven and overseen by the Presidential Infrastructure Coordinating Commission. It includes five geographically focused programmes and social infrastructure programmes. The argument is “The massive investment in infrastructure must leave more than just power stations, rail-lines, dams and roads. It must industrialise the country, generate skills and boost much needed job creation”.

• The extension of basic services, including housing, housing, electricity costs and water supply.

• Education – where the President argued that the focus on education is paying off and 300 million rand is being allocated for the preparatory work towards building new universities in Mpumalanga and Northern Cape.

There was also mention of:

• Health

• Land reform

• BBBEE

• Crime and corruption

With something as broad as the state of a nation there are many things to mention and commentators found their hobbyhorses in the stable: failures in education and healthcare were glossed over, crime and corruption were mentioned in passing, there was hardly a mention of SMMEs, women or the environment.

My concern is with where economic activity occurs and there are quite a few aspects that have clear spatial implications. Something like the Gauteng-Durban logistics corridor makes sense as it is already a main freight corridor, but there are serious questions about the manganese export channel through the Port of Ngqura. It is also not clear that there are sufficient agglomeration forces at work to establish a successful South-Eastern node to improve the industrial and agricultural development and export capacity of the Eastern Cape region. Government may revitalize Mthatha and add some infrastructure, but what about the pooled labour market and supplier of intermediates that an agglomeration requires? I have similar questions about the “enormous potential along the West coast. Related to the spatial story is the question of provincial and local capacity to deliver. The major infrastructure projects may be driven by PICC, but a large share of everything that the government sets out to do have be delivered at Provincial and local government level and in many aspects they are failing.

I realise that the questions cannot be answered be answered in a state of the nation address, but I do think they should be kept in mind for the Budget Speech on the 22^nd of February and for the Department of Trade and Industry’s budget vote.

My ERSA presentation

Geograph econ lecture

View more presentations from School of Economics, North-West University.

Megapolitan regions

This week has seen some interesting news coverage of a new book Megapolitan America by Arthur Nelson and Robert Lang. The Atlantic Cities showed a map of large regions of interconnected metropolitan areas.

These megapolitan regions are expected to house two thirds of the U.S population by 2040 and are seen as the interface with the global economy. Such agglomerations drive growth through the external economies that they generate. Economic geographers argue that concentration of economic activity cumulatively causes a thick labour market, specialised suppliers of intermediate inputs and knowledge spillovers 'that are in the air'. The end result is lower costs and faster growth.

The coverage by The Atlantic Cities focussed on the role that infrastructure can play in supporting such agglomerations. The Dallas/Fort Worth International Airport is presented as a success in coordination of infrastructure investment between metro regions.

In South Africa drawing a map like this of economic activity (local GDP) is complicated and the topic of a lot of my data work planned for this year. It is slightly easier to track down exporters through SARS data and work by two of my colleagues (Wim Naudé and Marianne Matthee) show interesting agglomerations.

Exporters typically require the thick labour markets, suppliers of intermediates, knowledge spillovers and infrastructure characteristic of agglomerations. In South Africa the port cities of Cape Town, Port Elizabeth and Durban are key agglomerations but the landlocked Gauteng economy is the powerhouse.

Hopefully I will be taking a closer look at South Africa agglomerations in the year to come. Stay tuned...