The Impact of Trade Openness and ICT on Technical Efficiency of Township Economies in South Africa
While the impact of trade openness on economic growth has been widely studied, its effect on township economies remains underexplored. In view of this empirical gap, this study examines the impact of trade openness proxied by export intensity on the technical efficiency of five major township econom...
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MDPI AG
2025-05-01
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| Online Access: | https://www.mdpi.com/2227-7099/13/5/125 |
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| author | Brian Tavonga Mazorodze |
| author_facet | Brian Tavonga Mazorodze |
| author_sort | Brian Tavonga Mazorodze |
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| description | While the impact of trade openness on economic growth has been widely studied, its effect on township economies remains underexplored. In view of this empirical gap, this study examines the impact of trade openness proxied by export intensity on the technical efficiency of five major township economies in South Africa—Soweto, Khayelitsha, Alexandra, Tembisa, and Soshanguve—while considering the moderating role of information and communication technology (ICT). This aim speaks to the ongoing quest to unravel factors limiting the transformation of South African townships since the advent of democracy in 1994. The analysis uses an instrumental variable stochastic frontier model and annual panel data covering the 1995–2023 period. On average, the five townships were found to have operated 19% below their full potential during the sampling period, with Soweto being the least efficient. Holding constant factors peculiar to township economies, such as crime rates and informality, the main results show that ICT plays a positive moderating role in reducing trade-related technical inefficiencies of these townships. This finding underscores the importance of targeted policy interventions, such as investments in digital infrastructure and digital literacy programs, to ensure that township economies benefit from global markets and achieve their full potential. |
| format | Article |
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| institution | Kabale University |
| issn | 2227-7099 |
| language | English |
| publishDate | 2025-05-01 |
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| series | Economies |
| spelling | doaj-art-7b2ca2fb03fb4754b7e6b3c1a9211dbd2025-08-20T03:47:49ZengMDPI AGEconomies2227-70992025-05-0113512510.3390/economies13050125The Impact of Trade Openness and ICT on Technical Efficiency of Township Economies in South AfricaBrian Tavonga Mazorodze0Department of Accounting and Economics, Faculty of Economic and Management Sciences, Sol Plaatje University, Kimberley 8301, South AfricaWhile the impact of trade openness on economic growth has been widely studied, its effect on township economies remains underexplored. In view of this empirical gap, this study examines the impact of trade openness proxied by export intensity on the technical efficiency of five major township economies in South Africa—Soweto, Khayelitsha, Alexandra, Tembisa, and Soshanguve—while considering the moderating role of information and communication technology (ICT). This aim speaks to the ongoing quest to unravel factors limiting the transformation of South African townships since the advent of democracy in 1994. The analysis uses an instrumental variable stochastic frontier model and annual panel data covering the 1995–2023 period. On average, the five townships were found to have operated 19% below their full potential during the sampling period, with Soweto being the least efficient. Holding constant factors peculiar to township economies, such as crime rates and informality, the main results show that ICT plays a positive moderating role in reducing trade-related technical inefficiencies of these townships. This finding underscores the importance of targeted policy interventions, such as investments in digital infrastructure and digital literacy programs, to ensure that township economies benefit from global markets and achieve their full potential.https://www.mdpi.com/2227-7099/13/5/125trade opennesstechnical efficiencytownships |
| spellingShingle | Brian Tavonga Mazorodze The Impact of Trade Openness and ICT on Technical Efficiency of Township Economies in South Africa Economies trade openness technical efficiency townships |
| title | The Impact of Trade Openness and ICT on Technical Efficiency of Township Economies in South Africa |
| title_full | The Impact of Trade Openness and ICT on Technical Efficiency of Township Economies in South Africa |
| title_fullStr | The Impact of Trade Openness and ICT on Technical Efficiency of Township Economies in South Africa |
| title_full_unstemmed | The Impact of Trade Openness and ICT on Technical Efficiency of Township Economies in South Africa |
| title_short | The Impact of Trade Openness and ICT on Technical Efficiency of Township Economies in South Africa |
| title_sort | impact of trade openness and ict on technical efficiency of township economies in south africa |
| topic | trade openness technical efficiency townships |
| url | https://www.mdpi.com/2227-7099/13/5/125 |
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