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Regional Business Confidence as Early Indicator of Regional Economic Growth

Author

Listed:
  • Ewert Kleynhans

    (North-West University, South Africa)

  • Clive Coetzee

    (North-West University, South Africa)

Abstract

Official sub-national GDP figures in South Africa are usually published with long delays or not at all, i.e. relevant, reliable, and real-time economic data on a provincial and local (municipal) level are often non-existent, causing a significant data asymmetry at the sub-national level. The search for an ‘optimal’ sub-national proxy for regional economic growth focuses on the possible use of regional business confidence. This article, therefore, investigates the use of regional business confidence indices (RBCI) as an early indicator or proxy of the regional economic growth rate (RGDP). To this end, the study employed panel cointegration methodology and techniques to interrogate the possible association between regional business confidence and regional economic growth, focusing on three specific regions of KwaZulu-Natal, South Africa. The results suggest that the utilisation of regional business confidence indicators indeed has merit. Constraints experienced in the study indicate the direction that further studies may follow, especially concerning the scope of the period and cross-sections. The research, therefore, addresses a fundamental gap in the data asymmetry in South Africa, while also setting a benchmark for other researchers to follow.

Suggested Citation

  • Ewert Kleynhans & Clive Coetzee, 2021. "Regional Business Confidence as Early Indicator of Regional Economic Growth," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 19(1 (Spring), pages 27-48.
    • Handle: RePEc:mgt:youmgt:v:19:y:2021:i:1:p:27-48
    DOI: 10.26493/1854-6935.19.27-48
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    References listed on IDEAS

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    More about this item

    Keywords

    business confidence; gross regional product; economic growth; panel data econometrics; fixed effects; random effects; GDP; BCI;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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