Improving the business and investment climate in the Western Cape: The role of a Provincial Competitiveness Index

Why a provincial competitiveness index?

Provide information to enhance decision-making:1. For business to determine and validate investment plans 

and to assess locations for new operations2. For communities to hold government accountable3. For government to benchmark policies and programmes4. For analysts to evaluate how regions and enterprises 

compete on domestic and world markets5. For transition managers to improve the performance of 

the economic delivery system

Definition of regional competitiveness

“The  ability  to  attract,  retain  and  develop  firms, other  entities  and  entrepreneurs,  with  a  stable  or rising market share, while linking leading and lagging areas  and  increasing  the  rate  of  economic participation and the quality of life of residents, now and in the future”

Model of regional economic competitiveness

 

Technology & innovation

Business ownership & management

Skills & capacity

Connectivity

Business & investment

climate

Education, training &

research base

Land supply and physicalinfrastructure

Quality of life & amenities

Governance & institutions

ProductivityUse of resources (labour & land)

Competitive performanceFeedback effects

Industrial structure

Key drivers

Trade

Source: Turok, 2006 adapted from Cambridge econometrics

Competitiveness factors

Connecting long-term to short-term indices

Red Tape Reduction Unit (ease of doing business)

Provincial Competitiveness Index (better business and investment climate and enhancing the factors of competitiveness)

“Blombos Cave Index” (monitoring the long-term transition towards an inclusive, resilient and competitive regional economy)

Source: WCG Red Tape Reduction Unit

Source: WCG Red Tape Reduction Unit

Source: WCG Red Tape Reduction Unit

From Red Tape to Green Carpet10 measures to improve EIA planning and decision-making

Directorate Development Facilitation, Department of Environmental Affairs and Development Planning, WCG 

Provincial Competitiveness Index1. Regulatory environment

Low barriers to entry for new businesses

Transparent legal and business information

Enforceable contracts

Burden of complying with bureaucratic 

procedures

Ease of trading across national 

borders

Provincial Competitiveness Index2. Role of government

Proactive and creative 

leadership

Consistent and predictable policies

Business incentives

Generating future skills

Crime and violence

Provincial Competitiveness Index3. Resources and infrastructure

Infrastructure Municipal services

Labour: availability of 

skills

Labour: dispute 

resolution

Access to credit

Provincial Competitiveness Index4. Sustainability

Business support and professional 

services

Employment creation Cost of living

Quality of life Environmental regulation

Multiple dimensions of business and investment climate success

Scale specific• Success is determined by processes that are international, national and sub-national

Sector specific• For example, export businesses will have different needs to SMEs in services sector

Business type specific• Needs of large corporations, SMEs, entrepreneurs and informal sector differ

More than regulation and legal frameworks• Connectivity, quality of life, cost, human capital, markets, environment 

More than FDI attraction• Establishment, growth and retention of existing businesses as important

Roundtable Discussion 2Business and Investment Climate Index

1. Informal businesses2. Small, medium and micro 3. Corporates and multinationals4. Municipalities 5. Investment strategies