1. Financing Cities in the Global Economy Module 1. Location and Geographical Economics (LGE) Second presentation Simulation for LGE Group 3 Galina Kirillova Juan Granados Mitiku Beyene Vlastimil Huba May 16/2005

2. Content Geographical location of cities Simulation Results

3. Geographical location of cities Six major cities contribute 55% of GDP and represent 31% of total population Six secondary cities have population over 1 million 1.Cape Town 2.Durban 3.Johannesburg 4.Pretoria 5.Soweto 6.Port Elizabeth 7.Pietermaritzburg 8.Vereeniging 9.Bloemfontein 10.East London 11.Kimberley 12.Pietersburg

4. Simulation Parameters value for Simulation Fraction of income spend it in manufacture (Delta δ) 0.4 Elasticity of substitution (Epsilon ε) 5 External economies of scale (congestion parameter Tau) 0.1 Transport costs (T) 1.2

5. Simulation Parameters value for Simulation Distribution immobile activity Initial distribution mobile activity Function of population Distances (100 km)

6. Results Initial Simulation

7. Results Soweto Manufacturing work force decline in Soweto is 7%

8. Results Free trade zone

9. Results Low transport cost and no congestion

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