An Assessment of the Investment Climate in South Africa
World Bank Publications, May 10, 2007 - Business & Economics - 154 pages
Most aspects of South Africa's investment climate—the location-specific factors that shape opportunities and incentives for firms to invest productively, create jobs, and grow—are favorable. The majority of large, registered firms believe that the legal system is able to protect their property rights. Infrastructure is reliable. Tax rates are relatively low. The burden of regulation is comparable to other middle-income countrries. Few firms pay bribes. And most firms have adequate access to credit. In many dimensions, South Africa has a good investment climate. Consistent with this, large South African firms are very productive. Labor productivity is far higher than in the most productive low-income countries in Sub-Saharan Africa and compares favorably with other middle-income countries such as Brazil, Lithuania, Malaysia, and Poland. And although labor productivity in South Africa is slightly lower than in the most productive cities in China, it is over three times higher than in China as a whole. So, why hasn't South Africa been growing faster? As this title explores, while the investment climate is generally favorable, some problems remain. Firms appear to be particularly concerned about four areas: difficulty hiring skilled and educated workers, rigid labor regulations, exchange rate instability, and crime. Using rigorous statistical information on these and related topics, the book aims to assist policy makers and private sector stakeholders in developing reforms that will improve firm performance and growth.
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An Analysis of Firm Performance
Characteristics of the Labor Market
Access to and Cost of Finance
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14 percent 40 percent access to finance Asian-owned firms Black Economic Empowerment Brazil capital intensive China coefficient comparator countries constraints corporate-owned firms cost of financing Cross-Country Comparison differences dummy Eastern Cape Economic employees employment growth estimates exchange rate factors Fedderke Figure firm performance firm-level firms in South firms rated firms reported Hangzhou impact increase industry Investment Climate Surveys Kenya KwaZulu-Natal labor costs labor market labor productivity labor regulations large firms less levels Lithuania loan lower macroeconomic instability major Malaysia manufacturing sector median firm middle-income countries nonexporters OECD operations and growth percent of firms percent of sales Poland problem profitability rand rated access relatively Retail/wholesale SACU sample Senegal serious obstacle skilled workers Source South Africa South African firms statistically Statistics South Africa suggests total factor productivity trade U.S. dollar union unskilled workers value added variables Western Cape white-owned firms World Bank