Abstract
M.Com. (Development Economics)
This study addresses the impact of a policy change in the form of the introduction of IDZs in the Eastern Cape Province and its impact on poverty. In the Eastern Cape, East London and Port Elizabeth have the two oldest IDZs in South Africa. Currently, there are 10 new proposed IDZs. Using the experience in the Eastern Cape (EC) as a baseline, this study is aimed at understanding if this policy decision for national expansion is in the best interests of alleviating poverty. This study used the difference-in-difference (DiD) and the Foster-Greer-Thorbecke (FGT) approaches, using the Income and Expenditure Survey (IES) data for 2005 and 2010. The two approaches are complementary in nature. The FGT indices provide an analytical value for trending all changes in the poverty profile in the Eastern Cape and Limpopo. The DiD approach is applied to the Eastern Cape as the treatment group and Limpopo is utilised as the control group. This study used the upper bound poverty lines of R413 and R594 for 2005 and 2010, respectively, for the FGT indices calculations. The FGT results applied weights for the correction of sampling errors provided by Stats-SA. The outcomes are represented in tables in accordance with race, settlement type and the gender of the household.
The DiD approach found a negative, but significant relationship in the Eastern Cape with a 4.8% poverty reduction between 2005 and 2010, which was casually caused by the introduction of the two IDZs. The welfare approach, using the FGT indices, found an overall 6% reduction in headline poverty in South Africa between 2005 and 2010, and a 0% change in both Limpopo and the Eastern Cape. According to settlement types, moderate reduction in headline poverty in urban formal sector of between 1% and 3% was recorded. An increase in male poverty was evidenced, with a 3 - 5% decrease in female headed households‟ poverty, with female-run households still holding the burden of poverty. Africans are, by far, carrying the burden of poverty in both provinces, at average of 60% with a 1% - 4% reduction in headline poverty recorded. What is of the greatest concern is that in both provinces the state of the poor has worsened, with increases recorded in poverty gap and square poverty gap indices. This alludes to South Africa having income-based poverty reduction, but not a substantive reduction on poverty...