Enterprise richness as an important characteristic of South African towns

Abstract

Towards the end of the 20th century there were almost 500 small towns of fewer than 50 000 persons in South Africa, accommodating about one tenth of the country's population. Little was known or said in national debates about the future of these places. A decade later this situation had changed and many studies have been or are being undertaken on small towns. For instance, the South African Government recognised that to stem the continued migration from rural to urban areas, a different approach was needed to economic development in rural municipalities and a 'Small Towns Regeneration Project' was initiated. Concerns about a perceived decline of rural towns also stimulated a quest to develop or find methods and/or measures to monitor the well-being of towns. Elsewhere in the world, small and medium enterprise 'observatories' were established to study and report on all aspects of small and medium enterprises, an approach recently followed in South Africa. New ways are needed to improve our understanding of the enterprise dynamics of South African towns. In this contribution, we examine the potential utility of the enterprise richness (i.e. the number of enterprise types) of South African towns and show that enterprise richness has a strong and fully quantifiable relationship with the total number of enterprises in the towns. This contribution adds a new dimension to the capability to make predictions about the enterprise structures of South African towns. This lack of understanding is also broadly true for the coexistence of enterprises in towns. There are basically three reasons for natural ecologists' interest in ecological diversity and its measurement: (1) it is a central theme in ecology, (2) measures of diversity are often used as indicators of the well-being of ecological systems and (3) considerable debate surrounds the measurement of diversity. 12 Magurran 12 stated that biological diversity is like an optical illusion: the more it is looked at, the less clearly defined it appears to be.

Power laws, demography and entrepreneurship in selected South African regions

“…Given the statistically significant relationships between population sizes and enterprise numbers frequently recorded for South African towns, [7][8][9][10][11][12][13][14][15][16][17][18][19] it is clear that town size (measured by the population number), the creation of jobs, and thus enterprise numbers and entrepreneurial decisions, have similar variance patterns. It is, therefore, also necessary to examine if the enterprise numbers of regions have Pareto rank-size distributions.…”

“…This result is not unexpected given the often-observed linear relationship between population sizes and enterprise numbers of South African towns. [7][8][9][10][11][12][13][14][15][16][17][18][19] If the rank-size population distribution of towns in a region is described by a power law, the enterprise number rank-size distribution of the region should exhibit the same pattern. The ratios observed for the enterprise distribution of the three regions indicate that lower-ranked towns in the three regions have from 50% to over 60% of the enterprises of the towns ranked just above them (Table 5).…”

“…[7][8][9][10][11][12][13][14][15][16][17][18][19] Previously, linear relationships between population and enterprise numbers and enduring power law relationships between total enterprise numbers and the enterprise richness (total number of enterprise types) of South African towns 15,19 were recorded. This study recorded log-log agglomeration patterns for the population and enterprise numbers of regional towns.…”

“…Considering the above warning 4 and the implications reported for municipalities 5 , it is necessary to investigate the possible presence of Pareto (Zipf-like) population and/or enterprise distributions in the towns of South African regions. The presence of linear regularities (proportionalities) in the form of statistically significant correlations between the demographic and entrepreneurial characteristics of South African towns [7][8][9][10][11][12][13][14][15][16][17][18][19] could signal the possible presence of Pareto rank-size distributions in regions.…”

The enduring and spatial nature of the enterprise richness of South African towns

“…These questions led to a study of a group of 134 South African towns. 4 It was found that the abundance of enterprise types is a function of the total enterprise numbers of the towns and follows a power law with an exponent of 0.7164. (Ball 5 remarked that there is no hidden Hobbesian significance in the word 'power' -it is just a mathematical term.…”