The Business Cycle Resilience of the Western Cape Economy: A Regional Analysis of the 2009 Recession and Subsequent Recovery

Business cycle research received renewed attention in the run-up to, and in the aftermath of, the Great Recession. This paper focuses on the concept of regional economic resilience as an applied field of business cycle research. The resilience of the Western Cape regional economy is analysed by assessing the impact of the 2009 recession. Being one of the leading provincial economies of South Africa, the research considers the extent to which the 2009 recession impacted the Western Cape's long-term economic growth path. The latest research techniques in assessing economic resilience are applied, with a focus on quantifying the region's resistance to, and recoverability from, the 2009 recession. While the national and provincial contexts receive attention, the focus is on the district economies of the Western Cape. The drivers of economic resilience are decomposed into two key forces, namely industry mix and regional competitiveness, using a shift-share analysis. Longer term structural change is also considered. The paper finds that the Eden and Overberg district economies’ growth paths, and the way in which these regions absorbed the recession impact, may provide policymakers with pointers on how to revive the Western Cape's growth path, which took a knock with the 2009 recession.