Industrial development as an effective local economicdevelopment strategy:The Port Elizabeth metropole as a case study
(Work In Progress)
In light of the performance of the Italian districts, and as if to compensate for decades of neglect, the local area is making a comeback as a new paradigm of industrial development (Ganne, in Scott and Storper, 1992:216).
Tamzyn PakesInstitute for Development Planning and ResearchUniversity of Port ElizabethSeptember 1998
2
TABLE OF CONTENTS
1 INTRODUCTION 32 PORT ELIZABETH AS A CASE STUDY 42.1H
ISTORICAL PATTERN OF DEVELOPMENT
42.2O
VERALL ECONOMIC TRENDS
72.3T
HE NATURE OF INDUSTRIAL DEVELOPMENT
82.4O
PPORTUNITIES FOR INDUSTRIAL DEVELOPMENT
102.5L
OCAL ECONOMIC DEVELOPMENT STRATEGIES
143 INDUSTRIAL DEVELOPMENT STRATEGY AT A LOCAL LEVEL 153.1T
HE SIGNIFICANCE OF INDUSTRIAL DEVELOPMENT IN THE ECONOMY
153.2T
HE OBJECTIVE OF INDUSTRIAL DEVELOPMENT STRATEGY
153.3I
NDUSTRIAL DEVELOPMENT AT A LOCAL LEVEL
163.4S
TATE POLICY AND LOCAL INDUSTRIAL DEVELOPMENT STRATEGY
243.5A
LTERNATIVE LOCAL ECONOMIC DEVELOPMENT STRATEGIES
284 TOWARDS A LOCAL INDUSTRIAL DEVELOPMENT STRATEGY FOR PORTELIZABETH 295 CONCLUSION 32REFERENCES 33
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1 INTRODUCTION
This paper addresses the concept of a relatively new approach to economic development inSouth African cities and towns. In particular, the focus is on local economic development andits association with industrial strategy. The case study of the Port Elizabeth metropole
1
isused to illustrate the question of industrial development as an effective local economicdevelopment strategy.Since the early 1980s, there have been changes in the local economic development (LED)literature. The traditional neoclassical approach to LED appears to have given way to a newconcept of economic development in which "economic values and motivations are only partof the story". The traditional "development from above" paradigm has been shelved in favourof "development from below" and a new emphasis on the role of institutions, evolutionarydynamics, and territorial specificity in the approach to both industrialisation and regionaldevelopment. The responsibility for economic development has shifted to the local or citylevel in response to the inability of regions to respond to the global crisis prompted by globalrestructuring. Although the international trend has been towards a reduced industrial sectorand a growth in services, it appears that "manufacturing still matters" in terms of the healthand wealth of a country's economy.A number of LED models have emerged which provide guidance to cities that are interestedin taking the initiative in responding to the rise of the new flexible production order. Inresponding to the objectives set in a localised industrial development strategy, it is useful toconsider three main options:- the attraction of new industries into the area, the strengtheningof the existing industrial base, and the promotion of new small business and/or theagglomeration of interlinked small firms that serve specialised markets and react flexibly toemerging market niches.The main argument in this paper is that an
effective
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local industrial development strategythat complements other economic activity in other sectors - and that is not solely based onlarge-scale industry - needs to be designed for the Port Elizabeth metropole, and that thenew theories of LED provide some useful guidelines.
Section 2
presents a case study of the city of Port Elizabeth. The history of the economy andmanufacturing sector are described, and the opportunities for development are considered. In
Section 3
the role of the manufacturing sector in the economy and the objectives of industrialstrategy are discussed, followed by a review of the role of industrial development at a locallevel. The new developments in the LED literature are presented, and existing industrial andLED policy and its relation to the local level in South Africa is determined.
Section 4
thenoffers some suggestions as to how an effective local industrial strategy could be designed forthe city of Port Elizabeth. In the concluding part of this paper,
Section 5
, some importantquestions are posed with regard to what needs to be further investigated.
1
Important
: The Port Elizabeth metropole includes the town of Uitenhage, which is located some fortykilometres away.
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Meaning that it meets the objectives of both local economic development and industrial developmentstrategy.
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