Reflecting on South Africa’s post- apartheid experience with spatially informed economic development programmes Glen Robbins School of Development Studies University of KwaZulu-Natal TIPS Conference October 2008

Starting with the conclusion South Africa’s industrial policy frameworks, in order to translate into more effective action, must be:  informed by substantially deeper forms of localised intelligence and therefore serve the purpose of enabling as opposed to disabling differentiation;  conceived with, and implemented through, localised networks, or at least partnerships with local networks, to make them real and accessible to firms; and  focused on complex urban centres, with substantial layers of nationally significant economic activity, and not only on geographically isolated and economically marginalised districts.

How did I get to this conclusion? 1. By considering South Africa’s experience with industrial policy post 1994; 2. By examining emerging patterns of economic activity, in many other contexts, as well as foundations of new forms of industrial policy that have been tried and tested in these contexts in the past two decades; and 3. By proposing that the gap between the findings in 1. and the trends in 2. provide an important reference point for future South African industrial policy orientation.

South African industrial policy post 1994 South Africa has, post 1994, had a rather patchy experience with industrial policy, moving from one partially implemented framework to another A variety of “reworkings” have taken place culminating in the most recent offerings (NIPF and IPAP) seeking to identify:  a renewed purpose for industrial policy in a context where global orthodoxies have left the approved toolkits devoid of much content; and  possible roles for the institutionally fragile DTI, and its partner entities, that can translate into meaningful implementable action.

Taking note of global trends For more than a decade, studies have been demonstrating that:  National economic activity is increasingly being concentrated in urban nodes;  The smoothing of considerable degrees of national policy uneveness has elevated the relevance of localised dimensions of competitiveness for firms in their interaction with global economic processes;  Effective forms of local organisation – often aligned with geographically concentrated clusters - can support critical local capabilities that translate into effective action for local firms.

What some of the researchers say Traditional nation states have become ‘unnatural’ units in a global economy – economically functional boundaries of regions are more significant (Ohmae, 1995) Regional communities and firms are the building blocks of resurgent regional economies that are driving globalisation processes (eg Silicon Valley) (Storper, 1997) Processes of knowledge sharing and networking, core to new economic processes, are connected to dynamics arising from proximity (more than just simple agglomeration effects) (Maskell et al, 1998) “… the only justifiable form of industrial (trade) policy is in fact regional industrial development policy” (Helmsing, 2001)

How does SA industrial policy match up? Industrial policy conceived of and implemented through “national interest” framework Institutional systems largely centralised Programmes designed to respond to generic challenges Prior to 2004 frameworks were devoid of meaningful geographic differentiation Post 2004 emerging interest in areas of economic marginalisation Emphasis on alignment with national frameworks in interaction with sub-national plans (eg provinces)

But there are exceptions – sort of … SDIs  Had an explicit geographic focus recognising the importance of local infrastructure and institutions  But identified and driven from a national level with a focus on securing “national scale” impact projects, “Don’t bring your parochial concerns into these strategic processes!” DTI clusters  Recognise specific regional concentrations of sectors  But attempted organisation at national level with little attention to local factors – tend to focus on conglomerates and not SMEs LED and RIDS  Post 2004 a growing interest in supporting local economic development and supporting development in marginalised areas  But little or no focus on major centres of economic activity

Where does this leave us? Provinces and cities  Fragmented and uneven capacity with little in the way of policy consistency DTI  Ambivalent in interactions with sub-national processes, with weak knowledge base and low effectiveness in terms of programme impact These problems will persist without a commitment to turn both the policy frameworks and the institutional structures on their head.

Thank you