Date: 10/07/2006
Source: Department of Trade and Industry
Title: Mdladlana: Regional Industrial Development Strategy conference
Keynote address by Minister Mandisi Mpahlwa at the National Conference on the Regional Industrial Development Strategy, Johannesburg (Midrand)
Honourable MECs
Honourable Premiers
Provincial HODs
Honourable mayors
Foreign ambassadors
Government officials
Industry representatives
Ladies and gentlemen
12 years after South Africa’s democratic transformation it is apparent that, despite impressive growth and employment creation in the national economy, significant disparities persist at a regional level and may even have been enhanced in areas that are lagging. This is the result of the two-fold process of growth accelerating in the dominant economic cores, which are well connected to the global economy, while in areas marginalised both by apartheid and now by mainstream developments in the economy, the wealth and employment disparities have increased.
Our research shows the heavily biased distribution of economic activity in South Africa, with the majority of Gross Value Add clustered around three major metropoles, and the share of the three main metropolitan areas and functional hinterlands representing close to 65% of Gross Domestic Product (GDP).
Our studies also demonstrate the vastly different growth rates of districts between 1996 and 2004. It is clear from this analysis that there are a number of districts in economic decline. A worrying factor from our analysis is the fact that medium or high economic growth districts are only contributing more than 0.05% of the national Gross Value Added (GVA) while low-base districts contributed less than 0.02%.
In 1996, the medium and high base areas represented 93.93% of national GVA which increased slightly to 94.65% by 2004. Consequently, the share of the low base districts which represented 6.07% of national GVA in 1996 fell to 5.35% in 2004. Our analysis also indicate that the sectoral composition of the economies of our regions is skewed towards tertiary and secondary industries, dominating in the major metro-poles while primary industries play a much greater role in the economies of outlying districts.
These lagging regions, however, which include most of the former homelands, have few economic assets, are characterised by stressed natural environments, and often have very high population concentrations. In addition, they include areas which have experienced recent economic shock, e.g., as a result of the significant loss of mining or industrial activity, particularly where such activities were the leading sector and or where towns were established because of the presence or potential of such resources and activities.
The challenge for the democratic government is to ensure that all regions and their residents attain their full economic potential. In order to achieve this, blockages and barriers to the effective operation of the market need to be addressed. The dti is committed to the principles of the National Spatial Development Perspective (NSDP) and the attainment of a market-driven economy which places emphasis on knowledge-based development, innovation and competitiveness, and which provides opportunities for a range of enterprises linked to higher value-adding. This is in line with the Microeconomic Reform Strategy which seeks to address both overall industrial development and associated spatial imbalances.
The Regional Industrial Development Strategy (RIDS) has been framed in order to give effect to these goals and to help close the gap between regions which partially reflects the first-second economy division. Such a strategy focuses fundamentally on addressing the key obstacles to the functioning of the economy, primarily through infrastructural interventions which will enable all regions better to access markets and resources and to attain the full economic potential of which they are capable. The purpose is to provide a bottom-up rather than a top-down strategy, emphasising the importance of working with the local private sector and existing institutions, programmes and initiatives.
The strategic objectives are to attempt, as far as is possible to reduce economic disparities between regions, address the needs of both the first and the second economies, and narrow the gap between them. Whilst paying particular attention to the needs of those regions which are lagging behind the national norms, we will seek to enhance current regional strengths and lead sectors of the economy, and promote sustainable economic growth and employment in provinces and municipalities, as well as build regional competitive capabilities and firm-level support measures that enhances regional performance in attracting foreign direct investment.
We will achieve this through localised direct support to the small and medium enterprise (SME) sector using technical assistance funds to provide business advisory services, and upgrade overall productive capability, development and training, as well as providing comprehensive advisory services including the maintenance of a database on developments. RIDS will be embedded in a system where support is assured throughout the operating cycle in the regional economy. Key to this strategy will be creating a predictable regional investment and business climate to attract private sector investments that do not rely on public-sector guarantees and increasing production in, and improve competitiveness and diversification of, regional markets, especially in agro-industrial, manufacturing and services sectors with potential for export and employment.
We will accelerate the dialogue between government and the private sector to develop a shared vision of regional economic development strategy and remove constraints to growth. Building an effective industrial, trade and productive capacity needed to ensure optimisation of production and product diversification will characterise this strategy.
RIDS accepts the principle of investment being driven by the private sector, but recognises, that in some situations and regions, the public sector could and should take the lead. RIDS proposes to work through Regional Growth Coalitions operating on the basis of strategic partnerships between the public and private sectors.
We believe that our regions need to improve their productive capacities to be competitive in a changing global environment. With the increasing impact of globalisation on regions, the scope for competition is no longer limited by national boundaries or by the definition of a particular industrial sector. This implies, among other things, that it has become imperative to develop and maintain regional competitive advantage, since assets that can lead to the development and successful industrialisation of our regions are now developed and managed by regional stakeholders.
Competitiveness at the level of the region or a spatial economic unit is of utmost importance. In the olden days, access to cheap raw materials, access to cheap unskilled labour, access to proprietary production technology and privileged access to markets were driving regional industrial competitiveness. New drivers are those related to the ability of our regions to produce goods and services that represent the good value (not necessarily the lowest price) in relation to comparable products of other regions around the world.
Our aim is to build regional economies that produces goods and services, of high value relative to price, support the export economy of the region, making it more competitive, as well as directly raising the quality of life and standard of living for people who are living in the region.
Our regions are becoming more exposed to global forces, as the nation state becomes more open to capital and trade flows. This represents both the threat in that market and investment conditions change rapidly subjecting our regions to potential negative impacts, and opportunity region, now that we have more scope to develop our own regional development strategies and access world market, labour, and capital. The greatest challenge that Southern African regions are facing is that they only control some of the factors, which determine their competitiveness.
National policy frameworks and socio-economic conditions are also very important e.g. national taxation, human resource development, tariff, microeconomic, industrial incentives, and policies. However, in many countries the national factors are becoming relatively less important of global forces, e.g. trade liberalisation that make trade tariffs less important, or because of internal changes, e.g. decentralisation which may result in the devolution of responsibility for critical competitiveness factors, e.g. education of technical personnel, to locals levels.
Our regions, through local governments, public-private partnerships, or the local private sector, typically have considerable influence over local infrastructure and amenity, industrial estate, office complex development, community networks/forums etc. In many regions, other important competitiveness functions, formerly under the purview of the national government such as technical education, management of airports, are coming under the control of stakeholders in the regions. The above dynamics mean that sub-national capability, both institutionally, and in terms of technical skills, to undertake industrial development and implement it is needed now more than ever.
Dynamic industrial development requires deliberate action by both government and private sectors in order to stimulate and support firms in their effort to create competitive advantages. In other words, it is the outcome not only of the invisible hand of the market but also of governance. Governance of industrial development today has to be based on a participative model in which social actors interact with the state in defining strategies and policies. This kind of model has emerged spontaneously in the industrialised countries as a reaction to increasing social complexity and the limited success of state interventionism. It is emerging, though hesitantly, in the developing world, especially in those countries where democratisation processes have opened some scope of action for civil society, and where the limited competence and inactivity of the state has created opportunities for nongovernmental organizations.
RIDS differs considerably to other regional development interventions of the past, in that we focus on building systemic competitiveness of our regions, by developing a comprehensive strategy that focuses on building both trade and industrial productive capabilities that enables our regions to respond to global opportunities. This long-term perspective implies the need to reduce ecological impacts and resource intensity to a level at least in line with the carrying capacity of the nation’s ecosystems.
As the complexity of our regions increases, the systemic nature of regional industrial development interventions becomes more important. We will build innovative industries by ensuring that suppliers of intermediary goods and machinery, demanding consumers, specialised business services and other factors that make up a supporting business environment is present.
We will ensure that some mature production processes locate to green-fields sites, which lack most elements of a modern supporting business environment, by providing resources necessary to realise social rate of return. Working with Department of Provincial and Local Government (DPLG) and district municipalities, we will ensure that a comprehensive plan consisting of access to international airports and ports, electricity and minimal education of the workforce are sufficient conditions to attract such industries are some of the key drivers of regional industrial development.
Our research has found that, even relatively complex state-of-the-art production processes and modern management methods have successfully located to green-fields sites in developing regions. Whilst these examples may refer to more mature industries which can be built up by transplanting knowledge embodied in blueprints, machines and operation manuals, we have found that blueprint industries do not conduct any substantial Research and Experimental Development (R&D) and will as a rule not even produces much incremental technological change, either.
In addition, despite the general trend toward tariff reduction, certain industries oriented toward the domestic markets of developing countries are not fully exposed to international competition. This is especially true for the low ends of product markets. Firms can therefore perform fairly well even if the supporting environment is weak. This is due to the fact that there are entry barriers to the domestic market, which trade liberalization, does not eliminate. Examples are:
* high transportation costs
* deficient communication systems
* a market size too small to be interesting for potential foreign investors
* underdeveloped marketing systems with large parts of demand being served by street vendors or on the basis of informal credit arrangements
* special local consumption patterns.
Critical to RIDS is the issue of targeted interventions. With the success of a number of generic interventions, RIDS will focus strongly on targeted interventions. There have been instances in the past where national governments have created industrial sectors from scratch. Doing that always had a spatial implication, as can be seen in places like Richards Bay. However, there have been no instances where local governments have created industrial sectors from scratch. Thus, RIDS is not proposing a “local industrial policy” that aims at creating a local aerospace, petrochemical or nanotechnology industry from scratch, as it is recognised that this would not be feasible.
However, local governments routinely come up with targeted interventions, for instance, to meet the specific needs of a region, or a local cluster, in terms of road infrastructure, water supply, electricity supply, training facilities and other factors. Local governments often do this in an ad hoc way. The key challenge is to approach these issues strategically, i.e., to understand the evolution of a strong local industrial base means for the local demand for services such as water in five or ten years’ time. The dti will assist local government in formulating their regional industrial roadmaps scan dynamisms in the local economy, and formulate regional industrial development plans that not only respond to the needs of emerging sectors but actually anticipate them, especially in terms infrastructure and knowledge development requirement.
Apart from targeted interventions that address tangible location factors, the dti is already working with the provincial and municipalities to look at such issues as business networking, cluster initiatives, regional value-chain initiatives or initiatives to strengthen regional innovation systems, and we have pulled in neutral facilitators and we have funded these activities for a certain period of time.
RIDS will be based on pre-selection of sectors through research and clearly defined criteria. However, often a more promising approach is to set the stage for “self-discovery”. A typical approach consists of the promotion of proactive contests, where the Department of Trade and Industry (the dti) offers targeted support and calls on local growth coalities to submit their industrial development plans for support.
Targeted interventions typically address two elements, namely, production factors (growth constraints) and market failure. In addressing growth constraints, the strategy would aim at building and upgrading advanced, specialised factors for a local sector or cluster. The main focus would be on knowledge, technology and innovation.
A guiding principle for targeted development interventions at a territorial level will be to address market failure which is typically due to coordination externalities, indivisibilities, information asymmetries, and similar problems. RIDS will address such market failure and aims at building functioning markets. Typical activities include networking initiatives, information sharing, strengthening of business development services, and government support in skills development, technology extension and metrology.
As we prepare to submit RIDS to cabinet for approval, we have taken the view that it is important to take our stakeholders with us. RIDS will be implemented through regional growth coalitions. The development of partnerships and growth coalitions within regions are critical to the success of RIDS. Dynamic regional growth will only occur with the organisation, cooperation and drive of local stakeholders including the private sector, government institutions, departments and civil society. The private sector is recognised as the key driver of economic growth in the regions and will need to play a lead role in driving these partnerships.
Ladies and gentlemen: Under my leadership, the dti cannot afford paragons of laissez-fairism. We will build a highly capable regional competitive economy in which the states plays a leadership role to ensure high levels of accumulation of resources, technology absorption and penetration of foreign markets. Input sectors and logistics and infrastructure lie within the domain of government.
With ‘market failure’ so prominent and continues to pose a problem to our democracy, government intervention is inevitable. Since such ‘failures’ differ in intensity, scope and location, a selective set of interventions is required. We need to learn the significant lesson from the Asian Tigers on how they revived interest in some of the issues that were central to development such as human capital, infrastructure investment; and regulating market imperfections and failures, industrial policy, etc.
We will become active players in these growth coalitions. In regions with a well diversified private sector, our involvement may be limited to encouraging cooperation, assistance with additional support measures and ensuring an enabling environment is created and maintained in regions with a few dominant firms and/or strongly entrenched and outdated notions of cooperation and development.
In any event, it is critical that the basis for RIDS revolves around spurring the active participation and growth of the private sector. The role of government will be to create an enabling environment at each regional level to improve the systemic competitiveness of the region, the chances of success for the private sector, and thus socio-economic improvement for the region. I thank you
Enquiries:
Henriette van der Merwe
Tel: (012) 394 1640
Cell: 082 572 8184
Bongani Lukhele
Tel: (012) 394 1643
Cell: 083 291 8680
Bethuel Mnguni
Tel: (012) 394 1647
Cell: 083 624 8888
Donavan Jacobs
Tel: (012) 394 1641
Cell: 082 751 1078
Issued by: Department of Trade and Industry
10 July 2006
Source: Department of Trade and Industry
Title: Mdladlana: Regional Industrial Development Strategy conference
Keynote address by Minister Mandisi Mpahlwa at the National Conference on the Regional Industrial Development Strategy, Johannesburg (Midrand)
Honourable MECs
Honourable Premiers
Provincial HODs
Honourable mayors
Foreign ambassadors
Government officials
Industry representatives
Ladies and gentlemen
12 years after South Africa’s democratic transformation it is apparent that, despite impressive growth and employment creation in the national economy, significant disparities persist at a regional level and may even have been enhanced in areas that are lagging. This is the result of the two-fold process of growth accelerating in the dominant economic cores, which are well connected to the global economy, while in areas marginalised both by apartheid and now by mainstream developments in the economy, the wealth and employment disparities have increased.
Our research shows the heavily biased distribution of economic activity in South Africa, with the majority of Gross Value Add clustered around three major metropoles, and the share of the three main metropolitan areas and functional hinterlands representing close to 65% of Gross Domestic Product (GDP).
Our studies also demonstrate the vastly different growth rates of districts between 1996 and 2004. It is clear from this analysis that there are a number of districts in economic decline. A worrying factor from our analysis is the fact that medium or high economic growth districts are only contributing more than 0.05% of the national Gross Value Added (GVA) while low-base districts contributed less than 0.02%.
In 1996, the medium and high base areas represented 93.93% of national GVA which increased slightly to 94.65% by 2004. Consequently, the share of the low base districts which represented 6.07% of national GVA in 1996 fell to 5.35% in 2004. Our analysis also indicate that the sectoral composition of the economies of our regions is skewed towards tertiary and secondary industries, dominating in the major metro-poles while primary industries play a much greater role in the economies of outlying districts.
These lagging regions, however, which include most of the former homelands, have few economic assets, are characterised by stressed natural environments, and often have very high population concentrations. In addition, they include areas which have experienced recent economic shock, e.g., as a result of the significant loss of mining or industrial activity, particularly where such activities were the leading sector and or where towns were established because of the presence or potential of such resources and activities.
The challenge for the democratic government is to ensure that all regions and their residents attain their full economic potential. In order to achieve this, blockages and barriers to the effective operation of the market need to be addressed. The dti is committed to the principles of the National Spatial Development Perspective (NSDP) and the attainment of a market-driven economy which places emphasis on knowledge-based development, innovation and competitiveness, and which provides opportunities for a range of enterprises linked to higher value-adding. This is in line with the Microeconomic Reform Strategy which seeks to address both overall industrial development and associated spatial imbalances.
The Regional Industrial Development Strategy (RIDS) has been framed in order to give effect to these goals and to help close the gap between regions which partially reflects the first-second economy division. Such a strategy focuses fundamentally on addressing the key obstacles to the functioning of the economy, primarily through infrastructural interventions which will enable all regions better to access markets and resources and to attain the full economic potential of which they are capable. The purpose is to provide a bottom-up rather than a top-down strategy, emphasising the importance of working with the local private sector and existing institutions, programmes and initiatives.
The strategic objectives are to attempt, as far as is possible to reduce economic disparities between regions, address the needs of both the first and the second economies, and narrow the gap between them. Whilst paying particular attention to the needs of those regions which are lagging behind the national norms, we will seek to enhance current regional strengths and lead sectors of the economy, and promote sustainable economic growth and employment in provinces and municipalities, as well as build regional competitive capabilities and firm-level support measures that enhances regional performance in attracting foreign direct investment.
We will achieve this through localised direct support to the small and medium enterprise (SME) sector using technical assistance funds to provide business advisory services, and upgrade overall productive capability, development and training, as well as providing comprehensive advisory services including the maintenance of a database on developments. RIDS will be embedded in a system where support is assured throughout the operating cycle in the regional economy. Key to this strategy will be creating a predictable regional investment and business climate to attract private sector investments that do not rely on public-sector guarantees and increasing production in, and improve competitiveness and diversification of, regional markets, especially in agro-industrial, manufacturing and services sectors with potential for export and employment.
We will accelerate the dialogue between government and the private sector to develop a shared vision of regional economic development strategy and remove constraints to growth. Building an effective industrial, trade and productive capacity needed to ensure optimisation of production and product diversification will characterise this strategy.
RIDS accepts the principle of investment being driven by the private sector, but recognises, that in some situations and regions, the public sector could and should take the lead. RIDS proposes to work through Regional Growth Coalitions operating on the basis of strategic partnerships between the public and private sectors.
We believe that our regions need to improve their productive capacities to be competitive in a changing global environment. With the increasing impact of globalisation on regions, the scope for competition is no longer limited by national boundaries or by the definition of a particular industrial sector. This implies, among other things, that it has become imperative to develop and maintain regional competitive advantage, since assets that can lead to the development and successful industrialisation of our regions are now developed and managed by regional stakeholders.
Competitiveness at the level of the region or a spatial economic unit is of utmost importance. In the olden days, access to cheap raw materials, access to cheap unskilled labour, access to proprietary production technology and privileged access to markets were driving regional industrial competitiveness. New drivers are those related to the ability of our regions to produce goods and services that represent the good value (not necessarily the lowest price) in relation to comparable products of other regions around the world.
Our aim is to build regional economies that produces goods and services, of high value relative to price, support the export economy of the region, making it more competitive, as well as directly raising the quality of life and standard of living for people who are living in the region.
Our regions are becoming more exposed to global forces, as the nation state becomes more open to capital and trade flows. This represents both the threat in that market and investment conditions change rapidly subjecting our regions to potential negative impacts, and opportunity region, now that we have more scope to develop our own regional development strategies and access world market, labour, and capital. The greatest challenge that Southern African regions are facing is that they only control some of the factors, which determine their competitiveness.
National policy frameworks and socio-economic conditions are also very important e.g. national taxation, human resource development, tariff, microeconomic, industrial incentives, and policies. However, in many countries the national factors are becoming relatively less important of global forces, e.g. trade liberalisation that make trade tariffs less important, or because of internal changes, e.g. decentralisation which may result in the devolution of responsibility for critical competitiveness factors, e.g. education of technical personnel, to locals levels.
Our regions, through local governments, public-private partnerships, or the local private sector, typically have considerable influence over local infrastructure and amenity, industrial estate, office complex development, community networks/forums etc. In many regions, other important competitiveness functions, formerly under the purview of the national government such as technical education, management of airports, are coming under the control of stakeholders in the regions. The above dynamics mean that sub-national capability, both institutionally, and in terms of technical skills, to undertake industrial development and implement it is needed now more than ever.
Dynamic industrial development requires deliberate action by both government and private sectors in order to stimulate and support firms in their effort to create competitive advantages. In other words, it is the outcome not only of the invisible hand of the market but also of governance. Governance of industrial development today has to be based on a participative model in which social actors interact with the state in defining strategies and policies. This kind of model has emerged spontaneously in the industrialised countries as a reaction to increasing social complexity and the limited success of state interventionism. It is emerging, though hesitantly, in the developing world, especially in those countries where democratisation processes have opened some scope of action for civil society, and where the limited competence and inactivity of the state has created opportunities for nongovernmental organizations.
RIDS differs considerably to other regional development interventions of the past, in that we focus on building systemic competitiveness of our regions, by developing a comprehensive strategy that focuses on building both trade and industrial productive capabilities that enables our regions to respond to global opportunities. This long-term perspective implies the need to reduce ecological impacts and resource intensity to a level at least in line with the carrying capacity of the nation’s ecosystems.
As the complexity of our regions increases, the systemic nature of regional industrial development interventions becomes more important. We will build innovative industries by ensuring that suppliers of intermediary goods and machinery, demanding consumers, specialised business services and other factors that make up a supporting business environment is present.
We will ensure that some mature production processes locate to green-fields sites, which lack most elements of a modern supporting business environment, by providing resources necessary to realise social rate of return. Working with Department of Provincial and Local Government (DPLG) and district municipalities, we will ensure that a comprehensive plan consisting of access to international airports and ports, electricity and minimal education of the workforce are sufficient conditions to attract such industries are some of the key drivers of regional industrial development.
Our research has found that, even relatively complex state-of-the-art production processes and modern management methods have successfully located to green-fields sites in developing regions. Whilst these examples may refer to more mature industries which can be built up by transplanting knowledge embodied in blueprints, machines and operation manuals, we have found that blueprint industries do not conduct any substantial Research and Experimental Development (R&D) and will as a rule not even produces much incremental technological change, either.
In addition, despite the general trend toward tariff reduction, certain industries oriented toward the domestic markets of developing countries are not fully exposed to international competition. This is especially true for the low ends of product markets. Firms can therefore perform fairly well even if the supporting environment is weak. This is due to the fact that there are entry barriers to the domestic market, which trade liberalization, does not eliminate. Examples are:
* high transportation costs
* deficient communication systems
* a market size too small to be interesting for potential foreign investors
* underdeveloped marketing systems with large parts of demand being served by street vendors or on the basis of informal credit arrangements
* special local consumption patterns.
Critical to RIDS is the issue of targeted interventions. With the success of a number of generic interventions, RIDS will focus strongly on targeted interventions. There have been instances in the past where national governments have created industrial sectors from scratch. Doing that always had a spatial implication, as can be seen in places like Richards Bay. However, there have been no instances where local governments have created industrial sectors from scratch. Thus, RIDS is not proposing a “local industrial policy” that aims at creating a local aerospace, petrochemical or nanotechnology industry from scratch, as it is recognised that this would not be feasible.
However, local governments routinely come up with targeted interventions, for instance, to meet the specific needs of a region, or a local cluster, in terms of road infrastructure, water supply, electricity supply, training facilities and other factors. Local governments often do this in an ad hoc way. The key challenge is to approach these issues strategically, i.e., to understand the evolution of a strong local industrial base means for the local demand for services such as water in five or ten years’ time. The dti will assist local government in formulating their regional industrial roadmaps scan dynamisms in the local economy, and formulate regional industrial development plans that not only respond to the needs of emerging sectors but actually anticipate them, especially in terms infrastructure and knowledge development requirement.
Apart from targeted interventions that address tangible location factors, the dti is already working with the provincial and municipalities to look at such issues as business networking, cluster initiatives, regional value-chain initiatives or initiatives to strengthen regional innovation systems, and we have pulled in neutral facilitators and we have funded these activities for a certain period of time.
RIDS will be based on pre-selection of sectors through research and clearly defined criteria. However, often a more promising approach is to set the stage for “self-discovery”. A typical approach consists of the promotion of proactive contests, where the Department of Trade and Industry (the dti) offers targeted support and calls on local growth coalities to submit their industrial development plans for support.
Targeted interventions typically address two elements, namely, production factors (growth constraints) and market failure. In addressing growth constraints, the strategy would aim at building and upgrading advanced, specialised factors for a local sector or cluster. The main focus would be on knowledge, technology and innovation.
A guiding principle for targeted development interventions at a territorial level will be to address market failure which is typically due to coordination externalities, indivisibilities, information asymmetries, and similar problems. RIDS will address such market failure and aims at building functioning markets. Typical activities include networking initiatives, information sharing, strengthening of business development services, and government support in skills development, technology extension and metrology.
As we prepare to submit RIDS to cabinet for approval, we have taken the view that it is important to take our stakeholders with us. RIDS will be implemented through regional growth coalitions. The development of partnerships and growth coalitions within regions are critical to the success of RIDS. Dynamic regional growth will only occur with the organisation, cooperation and drive of local stakeholders including the private sector, government institutions, departments and civil society. The private sector is recognised as the key driver of economic growth in the regions and will need to play a lead role in driving these partnerships.
Ladies and gentlemen: Under my leadership, the dti cannot afford paragons of laissez-fairism. We will build a highly capable regional competitive economy in which the states plays a leadership role to ensure high levels of accumulation of resources, technology absorption and penetration of foreign markets. Input sectors and logistics and infrastructure lie within the domain of government.
With ‘market failure’ so prominent and continues to pose a problem to our democracy, government intervention is inevitable. Since such ‘failures’ differ in intensity, scope and location, a selective set of interventions is required. We need to learn the significant lesson from the Asian Tigers on how they revived interest in some of the issues that were central to development such as human capital, infrastructure investment; and regulating market imperfections and failures, industrial policy, etc.
We will become active players in these growth coalitions. In regions with a well diversified private sector, our involvement may be limited to encouraging cooperation, assistance with additional support measures and ensuring an enabling environment is created and maintained in regions with a few dominant firms and/or strongly entrenched and outdated notions of cooperation and development.
In any event, it is critical that the basis for RIDS revolves around spurring the active participation and growth of the private sector. The role of government will be to create an enabling environment at each regional level to improve the systemic competitiveness of the region, the chances of success for the private sector, and thus socio-economic improvement for the region. I thank you
Enquiries:
Henriette van der Merwe
Tel: (012) 394 1640
Cell: 082 572 8184
Bongani Lukhele
Tel: (012) 394 1643
Cell: 083 291 8680
Bethuel Mnguni
Tel: (012) 394 1647
Cell: 083 624 8888
Donavan Jacobs
Tel: (012) 394 1641
Cell: 082 751 1078
Issued by: Department of Trade and Industry
10 July 2006
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