DRAFT REGIONAL INDUSTRIAL DEVELOPMENT STRATEGY

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• DRAFT REGIONAL INDUSTRIAL DEVELOPMENT STRATEGY
• PRESENTATION TO TRADE AND INDUSTRY
• PORTFOLIO COMMITTEE
• 2 AUGUST 2006
• CAPE TOWN

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STRUCTURE OF PRESENTATION

• PROBLEM STATEMENT
• Spatial distribution of Gross Value Added
• Growth disparities
• Unemployment trends
• WHY THE REGIONAL INDUSTRIAL DEVELOPMENT STRATEGY
• Composition and growth of economic activity
• Growth in Gross Geographic Value Added
• RATIONALE FOR RIDS
• STRATEGIC INTENT
• PRINCIPLES FOR RIDS
• BROAD APPROACHES TO REGIONAL DEVELOPMENT
• GENERIC VS TARGETED INTERVENTIONS
• Targetered interventions our approach
• BUILDING SYSTEMIC COMPETITIVENESS
• RIDS SUPPORT MEASURES

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PROBLEM STATEMENT

• Sharpest regional disparities at present are
  between the three main metropolitan complexes and
  the rest of the country
• Three broad categories of regions are considered,
  these will be applied in determining potential
  impact scenarios for the RIDS
• the three metros
• middle-order regions combinations of
  magisterial districts selected because they
  contain main service hubs of a wider functional
  region or macro-region
• main production complexes of a cluster or
  corridor of inter-related industries

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PROBLEM STATEMENT (cont.)

• RIDS recognises the inequalities still present
  within the countrys most successful economic
  regions, and thus seeks to promote the
  consolidation and improvement of the economic
  potential of these regions
• Creation of what were often unsustainable
  industrial development points, will require
  concerted efforts to redress economic and
  perceptual imbalances and pursue more balanced
  development

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SPATIAL DISTRIBUTION OF GVAper 50km
MesozoneThe map below shows the heavily biased
distribution of economic activity in South Africa
with the majority of Gross Value Added (GVA)
clustered around three major metropoles
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• GROWTH DISPARITIES(GDP)

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• UNEMPLOYMENT TRENDS

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WHY THE REGIONAL INDUSTRIAL DEVELOPMENT STRATEGY
(RIDS)

• Inequalities within the space economy
• Restructuring the apartheid regional industrial
  policy
• Overhaul of top-down regional development
  planning-that exclusively focused on
  manufacturing
• Space or regions increasingly becoming a factor
  of production
• Growth in industrial poles not trickling down
• Create partnerships to promote regionally-based
  economic
• development strategies in the systematic and
  formalised manner
• Create convergence in investment programming and
  development planning between different local
  actors

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RATIONALE FOR RIDS Vision to ensure all regions
attain their full economic potential, by
addressing blockages and barriers to the
effective operation of the market

• The RIDS is intended to 
•        
• achieve the national industrial development
  objectives (taking into account National Spatial
  Development Perspective (NSDP)
• further the goals of the Accelerated and Shared
  Growth Initiative for South Africa (ASGISA),
  through accelerating growth development in
  regions
• enhance and build capacities and potentials as
  identified in the NSDP
• address spatial economic growth constraints and
  deal with market failure related to industrial
  development in municipalities,
• close the gap in the contemporary policy
  framework
• build regional competitive productive
  capabilities, that enhance regional economic
  performance

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STRATEGIC INTENT

• Localised direct support to the SME sector using
  technical assistance funds
• Creating a predictable regional investment and
  business climate to attract private sector
  investments
• To increase production in, and improve
  competitiveness and diversification of,regional
  markets with potential for export and employment
  creation
• Strengthen appropriate infrastructure support to
  regions
• Build effective industrial, trade and productive
  capacity
• Encourage all regions to attain their full
  economic and development potential
• Encourage the enhanced growth and development of
  already succesful regions

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PRINCIPLES FOR RIDS

• The RIDS is informed by the following
• Principle of an activist state
• Principle of a developmental state promoting
  developmental industrialization
• Principle of reciprocity support of sectors
  that will help achieve governments developmental
  agenda

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BROAD APPROACHES TO REGIONAL DEVELOPMENT
CRITERION TRADITIONAL APPROACH Contemporary Approach
CONCEPTUAL BASIS Key factors Regional attributes i.e. production costs availability of workers Regional capabilities i.e. innovative milieu, clusters industrial networks
POLICY CHARACTERISTICS Aims Objectives Equity or efficiency Employment creation increased investment Geo-spatial equity, efficiency and capabilities Increased Competitiveness employment creation
KEY INSTRUMENTS Incentive schemes, business aid hard infrastructure Local growth coalitions, regional road maps, business environment soft infrastructure
POLICY STRUCTURE Spatial focus Analytical Base Problem areas Designation indicators Regional exporting All regions Regional SWOT analysis
EVALUATION Outcomes Measurable Very difficult to measure
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GENERIC VERSUS TARGETED INTERVENTIONS

• An important issue in RIDS relates to whether
  government should target either
• Generic Approach i.e. trying to improve the
  overall investment conditions for private
  companies. They include geographic location,
  availability, quality and cost of factors of
  production, taxes and incentives or,
• Targeted Approach, i.e. addressing limited number
  of industries

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TARGETED INTERVENTIONS OUR APPROACH

• Generic interventions are generally covered in
  the existing macro and micro-economic strategies
• With the success of a number of generic
  interventions, the RIDS will focus strongly on
  targeted interventions
• Targeted interventions typically address two
  elements, namely, production factors and market
  failures
• A targeted intervention under the RIDS umbrella
  would aim to
• Build and upgrade advanced and specialized
  factors for a local sector or cluster focusing on
  skills development, technology extension and
  metrology

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Building Systemic Competitiveness
Meta level
Developmental
ability to formulate
orientation of society
strategies and
competitive pattern of
policies
economic organization
Macro level
collective
learning- and
memory
change-friendly
Stable macroeconomic, political
value attitudes
social
and juridical framework
cohesion
budgetary policy
competition policy
Meso level
monetary policy
fiscal policy
Targeted policies to strengthen
currency policy
trade policy
the competitiveness of certain
sectors
industrial structure
environmental
Micro level
import / export
technology
regional
education
Technological
infrastructure
Organizational
Inno-
labor
vations
Social
Simultaneous engineering
Collective efficiency and
Efficient firms
innovation networks
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RIDS SUPPORT MEASURES
Funding (Rm)
Iinterventions
Outcomes
Themes

• Regional Growth Coalitions
• Regional Industrial Road Maps
• Regional Indicative Business Plans

• Regional Growth Protocols
• Investment Packages
• Regional Development Plans

• Business Retention and Expansion Strategy
• Local beneficiation strategies
• Local Government Industrial Analysis Capacity
  Building
• ISRDP and URP project support facility
• Rural Contact Centres

• Early warning systems
• BRE Capacity Building Facility
• URP ISRD Project Diagnostic tool
• Training programme for municipalities
• Capacity building programmes for municipalities

subject to authentication and confirmation by
the feasibility report Source Team analysis
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RIDS SUPPORT MEASURES
Funding (Rm)
Outcomes
Interventions
Themes

• Regional Industrial Infrastructure Backlogs
  (Research)
• Industrial Clustering Strategy
• Special Economic Zones
• Industrial Development Zones
• Industrial Parks
• Logistics / Supplier Parks
• Industrial Estates
• Innovation Hubs
• Spatial Development Initiatives (SDIs)
• Primary and Secondary Corridors
• Industrial Complexes
• Industrial Clusters

• Regional Development Fund
• Industrial Clustering Capacity Building Fund
• Dedicated Incentives
• Legislation
• Institutional Framework

subject to authentication and confirmation by
the feasibility report Source Team analysis