OECD Territorial Reviews: Cape Town, South Africa 2008

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The Cape Town city-region, which is the second-largest area in South Africa (4 million inhabitants), reflects the national challenge of creating new economic opportunities while correcting past inequities. Since the end of the apartheid system, Cape Town has benefited from macroeconomic stabilisation and has outpaced the national average growth rate. It has both modernised its traditional strengths in port logistics and developed innovative sectors in tourism, agro-food processing, viticulture, financial and business services. However, 22% of the population is unemployed and 38% of residents live below the poverty line. This report identifies the key missing collective goods that could both create externalities for firms and foster a more equitable distribution. It provides a platform for the development of a forward-looking, cross-cutting regional development strategy and proposes new "second generation" governance reforms to consolidate previous achievements and respond to emerging obstacles.


Towards a Competitive and Inclusive City-region

After having achieved relative macroeconomic stability, South Africa’s government is now spearheading efforts to drive economic growth and reduce poverty. Prudent fiscal, trade and monetary policy stabilisation programmes, such as the Growth, Employment and Redistribution (GEAR) strategy, have normalised the economic and investment environment. As a result, the national economy is doing well: the national budget is relatively healthy, and inflation rates and interest rates have been relatively low since 2000. After a decade of sluggish performance, growth has followed a more stable path, above the average OECD rate. However, despite democratisation and improved economic performance, South Africa faces significant unemployment, poverty and inequality. To reverse this situation, the central government launched the Accelerated and Shared Growth Initiative for South Africa (AsgiSA) in 2006. AsgiSA was a result of the recognition that despite substantial economic achievements since the end of apartheid, the fruits of those successes were not widely shared. It focuses on unlocking binding constraints to higher economic growth and ensuring a wider distribution of growth yields, particularly with respect to increased job creation.


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