Wednesday, 7 March 2012

IDZ, SEZ and the place of industrial policy

I am still working on that that long-promised, much-cited blog post about industrial policy in South Africa, but in the meantime things are cropping up that needs a mention. 

The DTI's proposed Special Economic Zones (SEZ) legislation is out for comment and The Engineering News Online posted an interesting article this morning. There are currently three operational Industrial Development Zones in South Africa at Coega, East London and Richardsbay. Since 2002/03 they have attraced investments worth R11.8 billion and created an estimated 33 236 jobs. That is approximately R355 000 per job. Over the past two financial years the DTI spent over R2 billion on the three IDZs. Other IDZs in the making were the OR Tambo IDZ next to the international airport in Kempton Park and the proposed Saldanha Bay IDZs, in the Western Cape. 

I will read up some more and report back, since the article does not explain how the SEZs will improve on the IDZ system. The DTI Director-General Lionel October did say that labour laws would not be relaxed in the SEZs.

There is an interesting link to a blog post by the Centre for Cities about the place for industrial policy in the UK. Joe Sarling reports on an the event "Developing an Industrial Strategy for the UK" hosted by the IPPR, the Resolution Foundation and New Economics Foundation. There they made the distinction between horizontal and vertical policies. The horizontal policies are not sector specific such as education, taxation and regulation. It was emphasised that there is a need to understand how these influence firms and how they can improve productivity. The vertical policies could be rewards for firms (not clear what) who are delivering on key long-term objectives such as research and development, employee training and up-skilling or long-term investment growth plans. The part that I liked best was:
A key rhetoric change to come from the event was the recognition that 21st century industrial policy needs to be more spatially aware if it is to be successful – there is no industrial policy without regional policy.
We definitely need more discussion on all of this in South Africa.

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