Where to do business in South Africa

Abstract

Doing business in South Africa is challenging in many ways and recently the deterioration of infrastructure and services provision at the local level have come to influence business location decisions. This paper sets out to build an index that describes the factors that determine the competitive advantages of local economies. This idea is inspired by UNCTAD’s Foreign Direct Investment (FDI) Potential Index for countries, but linked to the theories of Geographical Economics and applied at municipal level inSouth Africa. Principle Component Analysis is used to combine measures of the size and sophistication of the local economy, the local business and government institutions, and the broad macro forces that influence it all. We call the result the Where to do business (WTDB) index.