1. Financing Cities in the Global Economy Module 1. Location and Geographical Economics (LGE) First presentation Simulation for LGE Group 3 Galina Kirillova Juan Granados Mitiku Beyene Vlastimil Huba May 4/2005

2. Content Geographical location (country of study) General diagnosis Main cities interconnected International trade flows Basic criteria to select the country

3. Geographical Location – South Africa Area: 1.2 million sq. km. Population:46.6 million (2004)

4. Geographical Location – South Africa 6 Border countries: Botswana Lesotho Mozambique Namibia Swaziland Zimbabwe Coastline: 2,798 km Administrative subdivisions: Nine provinces

5. General diagnosis ++ points Middle-income, emerging market with an abundant supply of natural resources Well-developed financial, legal, communications, energy, and transport sectors A stock exchange that ranks among the 20 largest in the world A modern infrastructure supporting an efficient distribution of goods to major urban centers throughout the region

6. General diagnosis - - points Growth has not been strong enough (volatility) High unemployment rate (27% in 2004) Daunting economic problems remain from the apartheid era, especially poverty and lack of economic empowerment among the disadvantaged groups Infant mortality, HIV and low life expectancy (50 years) South African economic policy is fiscally conservative, focusing on targeting inflation and liberalizing trade as means to increase job growth and household income.

7. GDP average: 3% GDP composition (2003): Agriculture and mining (primary sector)--11%; industry (secondary sector)--24%; services (tertiary sector)--65% South Africa's GDP is expected to increase gradually to 4.3%. GDP (2004): $213 billion. GDP per capita (2004): $3,480 General diagnosis

8. Main cities interconnected CITYPopulation 2001 % Contribution to SA GDP in 2000 Johannesburg Cape Town Durban Pretoria East Rand Port Elizabeth 2,962,759 2,858,743 2,981,237 1,454,290 2,054,133 1,015,334 14.98% 14.01% 7.77% 8.55% 7.78% 2.46% Total %13,326,49655.6% Six major cities contribute 55% of GDP Represent 31% of total population. Taken from Willem Naude and Waldo Krugell, (2002) `An Inquiry into Cities and Their Role in Subnational Economic Growth in South Africa’, Potchefstroom University (Source of data: STATSSA, 2001; PIMSS, 2001).

9. Main cities interconnected Six major cities contribute 55% of GDP Six secondary cities have population over 1 million East London Umtata Pietersburg Thohoyandou Middelburg Rustenburg. Taken from Willem Naude and Waldo Krugell, (2002) `An Inquiry into Cities and Their Role in Subnational Economic Growth in South Africa’, Potchefstroom University (Source of data: STATSSA, 2001; PIMSS, 2001).

10. Main cities interconnected South Africa's transportation infrastructure is well-developed supporting both domestic and regional needs 7 commercial ports and harbors: Cape Town, Durban, East London, Mossel Bay, Port Elizabeth, Richards Bay, Saldanha (115 million ton per annum) Johannesburg International Airport serves as a hub (10 airports over 3,047 m) 34,000 km Railways and 57,568 km highways paved The domestic telecommunications infrastructure provides modern and efficient service to urban areas,

11. International Trade - Flows Major destinations -U.K., U.S., Germany, Italy, Japan, East Asia, Sub-Saharan Africa. Major suppliers--Germany, U.S., Japan, U.K., Italy.

12. International Trade - Flows South Africa is the world's largest producer and exporter of gold and platinum and also exports a significant amount of coal. The value-added processing of minerals to produce ferroalloys, stainless steels, and similar products is a major industry and an important growth area. South Africa has made great progress in dismantling its old economic system: –Reduce the government's role in the economy and to promote private sector investment and competition –It has significantly reduced tariffs and export subsidies –Loosened exchange controls –Cut the secondary tax on corporate dividends, and improved enforcement of intellectual property laws

13. Basic criteria to select the country Developing country Modern infrastructure supporting an efficient distribution of goods to major urban centers throughout the region 12 cities over 1 million inhabitants The Government of South Africa has been applying policy to open markets, privatization, and a favourable investment climate with its release of the crucial Growth, Employment and Redistribution

14. Financing Cities in the Global Economy Module 1. Location and Geographical Economics (LGE) First presentation Simulation for LGE Thank you!