Economic Growth and Development: Industrial development policies
Industrial development
SA is a developing country
Two features of developing countries are deficient infrastructure and dependence on
primary sector
To encourage development SA must promote development of its industrial base
Best practices can also be applied ( set of guiltiness that represent most effective
course)
Each country can develop its own set of recommended practices
They generally include: tax concessions for companies investing in poor areas ; public
investment in infrastructure which has a crowding-in affect
Manufacturing sector
Industrial development and manufacturing sector
Industrial development is the basis of economic growth and is essential for
development of living standards
It means creating businesses that produce output in all branches of the economy
i.e. primary , secondary and tertiary sectors
Industry has come to mean the manufacturing industry Industry is the production of g/s
Manufacturing is a major employer and provides training within an economy
Manufacturing stimulates production of raw materials
Manufacturing provides the basis for a large marketing Manufacturing
sector is making goods
on a large scale using
Requirements for a successful manufacturing sector machinery in factories
Capital and Skills
Countries with available finances and a skilled work force become highly
industrialized
It results in huge growth in GDP, the per capita income and standard of
living
Industrialized countries are classified as developed high-income countries
Countries that lack skills and sources of investment are left behind in
industrialization
They are classified as developing medium-income and low income
countries
Infrastructure
Manufacturing industries require efficient and reliable power, water,
transport and communication services.
They also need services for their employees from housing to banks and
hospitals
Therefor industrial development = rise to cities
Industrial Policies
Manufacturing industry is so important for development of economy that
its future can’t be left to chance
Governments develop policies to guide industrial growth
These polices are part of the monetary and fiscal policy of the state
The basis of a successful industrial policy
For an industrial policy to be successful , three main sets of policies must be
implemented along with the main industrial policy:
Skills & Education for industrialization: This must ensure that there’s an
adequate number of people with the correct qualifications to supply needs of the
industry
Improvements in the infrastructure: Supplies of transport , power and water must
be available as well as modern form of communication
, Innovation and technology: Modern technology is essential. Technology can be
imported or developed locally.
Regional industrial development in South Africa
SA is a country with some well-developed regions with many industries and other
regions have no industries
A problem of a concentration of industries is that it continues to create a divide
between developed and under-developed areas
Developed areas attract more industry because they have needed infrastructure
Under-developed areas remain the way they are and the gap widens
Regional industrial development policy
This policy was created in 1995
The main aims are to create right conditions for investment in areas characterized by
poverty; and to increase employment in these areas.
The policy has two main aspects i.e. spatial development initiatives and special
economic zones formally known as industrial development zones
Spatial Development Initiatives (SDIs)
An SDI is an area with high levels of unemployment and poverty that the government
believes has economic potential
Areas chosen as SDIs must be underdeveloped and have potential for sustainable
industrial growth
SDIs help spread economic activity equally in a country
All investment is based on public-private partnerships
Special Economic Zones (SEZs)
An SEZ is an enclosed industrial area near an international port or airport where normal
custom rules don’t apply
IDZs since 2012 were changed to SEZs
Conditions for SEZs are the same as those for IDZs but more incentives have been
added to encourage development
SEZs will expand on the work of IDZs:
SEZ policy is designed to increase economic growth , boost exports and create
jobs
Investment is based on public-private partnership
Incentives are offered to firms so that they can have a competitive advantage
Growth in an SEZ is based on export-orientated manufacturing
SEZs attract business investment where exports will increase and South African
products will be more competitive.
Features of SEZs that attract investors
Tax incentives
Raw materials can be imported free of import duties
Goods purchased are VAT free
Streamlined administration
Less regulations apply
Less bureaucracy
Efficient customs
Assistance given in exporting and importing
World-class infrastructure
High quality transport
Industrial development
SA is a developing country
Two features of developing countries are deficient infrastructure and dependence on
primary sector
To encourage development SA must promote development of its industrial base
Best practices can also be applied ( set of guiltiness that represent most effective
course)
Each country can develop its own set of recommended practices
They generally include: tax concessions for companies investing in poor areas ; public
investment in infrastructure which has a crowding-in affect
Manufacturing sector
Industrial development and manufacturing sector
Industrial development is the basis of economic growth and is essential for
development of living standards
It means creating businesses that produce output in all branches of the economy
i.e. primary , secondary and tertiary sectors
Industry has come to mean the manufacturing industry Industry is the production of g/s
Manufacturing is a major employer and provides training within an economy
Manufacturing stimulates production of raw materials
Manufacturing provides the basis for a large marketing Manufacturing
sector is making goods
on a large scale using
Requirements for a successful manufacturing sector machinery in factories
Capital and Skills
Countries with available finances and a skilled work force become highly
industrialized
It results in huge growth in GDP, the per capita income and standard of
living
Industrialized countries are classified as developed high-income countries
Countries that lack skills and sources of investment are left behind in
industrialization
They are classified as developing medium-income and low income
countries
Infrastructure
Manufacturing industries require efficient and reliable power, water,
transport and communication services.
They also need services for their employees from housing to banks and
hospitals
Therefor industrial development = rise to cities
Industrial Policies
Manufacturing industry is so important for development of economy that
its future can’t be left to chance
Governments develop policies to guide industrial growth
These polices are part of the monetary and fiscal policy of the state
The basis of a successful industrial policy
For an industrial policy to be successful , three main sets of policies must be
implemented along with the main industrial policy:
Skills & Education for industrialization: This must ensure that there’s an
adequate number of people with the correct qualifications to supply needs of the
industry
Improvements in the infrastructure: Supplies of transport , power and water must
be available as well as modern form of communication
, Innovation and technology: Modern technology is essential. Technology can be
imported or developed locally.
Regional industrial development in South Africa
SA is a country with some well-developed regions with many industries and other
regions have no industries
A problem of a concentration of industries is that it continues to create a divide
between developed and under-developed areas
Developed areas attract more industry because they have needed infrastructure
Under-developed areas remain the way they are and the gap widens
Regional industrial development policy
This policy was created in 1995
The main aims are to create right conditions for investment in areas characterized by
poverty; and to increase employment in these areas.
The policy has two main aspects i.e. spatial development initiatives and special
economic zones formally known as industrial development zones
Spatial Development Initiatives (SDIs)
An SDI is an area with high levels of unemployment and poverty that the government
believes has economic potential
Areas chosen as SDIs must be underdeveloped and have potential for sustainable
industrial growth
SDIs help spread economic activity equally in a country
All investment is based on public-private partnerships
Special Economic Zones (SEZs)
An SEZ is an enclosed industrial area near an international port or airport where normal
custom rules don’t apply
IDZs since 2012 were changed to SEZs
Conditions for SEZs are the same as those for IDZs but more incentives have been
added to encourage development
SEZs will expand on the work of IDZs:
SEZ policy is designed to increase economic growth , boost exports and create
jobs
Investment is based on public-private partnership
Incentives are offered to firms so that they can have a competitive advantage
Growth in an SEZ is based on export-orientated manufacturing
SEZs attract business investment where exports will increase and South African
products will be more competitive.
Features of SEZs that attract investors
Tax incentives
Raw materials can be imported free of import duties
Goods purchased are VAT free
Streamlined administration
Less regulations apply
Less bureaucracy
Efficient customs
Assistance given in exporting and importing
World-class infrastructure
High quality transport
