Local economic responses to industrial migration in small towns.

ABSTRACT

BACKGROUND

It is the result of six years of work carried out in a number of small (both urban and rural) towns in KwaZulu-Natal. This was during the time when the African National Congress (ANC) was developing its economic political options for the post-apartheid democratic state and as a researcher as well as an activist; the author participated in a number of policy research processes as part of the ANC research team.

THE STUDY OBJECTIVE

Situated within the broad framework of economic geography, the thesis had to make use of the key postulates and propositions of location theory, as well as of globalization theory, in an attempt to describe economic decline in small towns, especially aspects such as center and periphery, agglomeration effects, localization and · the influence of urbanization on economic decision-making. What conventional theorists argued about the advantage of the center over the periphery is now greatly reduced and goods and services, information and decisions can be transported over longer and longer distances without loss of time, efficiency or cost-effectiveness.

THE RESEARCH FOCUS AND HYPOTHESIS

In the first case, it was assumed that the adverse international circumstances brought about by globalization created an environment of insufficient and uneven flow of resources and technology to the detriment of poor regions from around the world. In the last phase of the restructuring of the municipalities in 2002, there was a drastic reduction in the number of local authorities from 830 to 284.

THE RESEARCH QUESTIONS

Although the balance cannot be justified on a moral basis, it is a practical and necessary condition for investment and job creation, which ultimately benefits the poor in the longer term much more than administratively driven redistribution in the short term. The analysis of data indicates that a number of small towns have no local growth plans and have distorted economies, which are inextricably linked to and dependent on the local state for their functioning.

THE APPLICABILITY OF LOCAnON TIIEORRY IN THE STUDY OF ECONOMIC DECLINE

As a result, an entire chapter is devoted to such a diagnostic review of apartheid's industrial decentralization policies and how they affected the future of the small towns where they were implemented. As a result, the process of globalization has not benefited small towns because they are no longer the architects of their own destinies.

DEFINING LOCAL ECONOMIC DEVELOPMENT

In light of all of the above, this thesis argued that neither the post-apartheid economic history nor the actual practice of local government precludes the possibility of development-oriented local government being able to play a more dynamic role in promoting local economy. development. The case study methodology was also used to examine which local economic development strategies were used to attract foreign investment and business activity and how they marketed their distinctiveness and comparative advantages.

GLOOMY PERSPECTIVE

This thesis revokes the 'impact model' as a diagnostic tool, which meant to investigate the impact of 'time (globalization)' on 'space' (localities). In other words, he sought to investigate the impact of globalization on the economic base of small towns.

REFLECTIONS ON SOME KEY FINDINGS

After examining and describing a number of LED institutional arrangements, this thesis concluded with the validation of the study hypothesis that local government transformation in post-apartheid South Africa literally involved the redrawing of lines on maps to demarcate areas formerly 'white' defined and to include. 'black' under the Group Areas Act in some geographical and administrative entities. After a detailed analysis of that policy framework, this thesis was able to conclude that there remains a need for the restructuring of the apartheid state industrialization policy framework before any major policy on global economic integration can be initiated. Global economic integration has led to massive industrial integration. migration that had devastating effects on the economies of small towns.

INTRODUCTION

The work of these scholars has been reviewed and the relevance of their theoretical analysis tested in developing the argument for this study. A comparative analysis of the three researchers' key postulates is provided below with the aim of identifying similarities and differences in the assumptions about the causes of industrial migrations.

COMPARATIVE ANALYSIS OF CLASSICAL LOCATION THEORISTS Table 2.1: The Relevance of Classical Location Theory in the Analysis of Industrial Migration

Therefore this thesis found this approach less important in the analysis of the position of small towns. According to this theory, any form of government intervention can backfire in the long run by reducing the overall level of income in the local economy.

COMPARATIVE ANALYSIS OF THE MIGRATION mEORY

These were respectively based on 'sales maximization' and the location-related influence that industries exert on each other. Classical location theory generally assumes that a new factory must be located somewhere and that the decision will be based on certain factors.

INTRODUCTION

PROBLEM STATEMENT

Instead, in post-apartheid South Africa, owners of capital and capitalist management have increasingly become the sole decision-makers in choosing locations for their investments. Whereas previously closures were followed by the introduction of new technology and new innovative plans and new jobs, closures and job losses in the post-modern era are no longer offset by the opening of new factories and job creation.

THE HYPOTHESIS

Due to labor market elasticity, there has been an increase in labor and skill migration from small towns to growth centers. The economic base of small towns is structurally flawed due to the lack of economic diversification in the local economy.

INTRODUCTION

The US President signed AGOA in 20007 and initially designated 35 sub-Saharan countries as beneficiaries. The proclamation modifies the U.S. Harmonized Tariff Schedule to reflect the trade preferences for apparel and textiles made available under section 112 of the Act.

APPAREL AND TEXTILE PREFERENCES

Countries like Lesotho and Malawi that had more advantageous access to the US market under AGOA. The act offered beneficiary sub-Saharan African countries duty-free and quota-free US market access for virtually all products through the asp program.

EXPANSION PROCESS FOR AGOA BENEFICIARIES

INTRODUCTION

SAMPLING TECHNIQUE - HOW THE CASE STUDIES WERE SELECTED

This may have resulted in a bias in the selection process in favor of those regions whose spatial characteristics were consistent with the researcher's values and beliefs. The researcher was able to enjoy respect as an agent of change when new interventions were discussed as part of the research output.

RESEARCH MEmODS

The second group consisted of respondents from the private sector, who mostly came from the chambers of commerce in each of the pilot areas. A questionnaire was designed and administered to more than 60% of the total number of companies available from a list obtained from the Durban Chamber of Commerce and Industry.

GENERIC PROBLEMS ENCOUNTERED

A semi-structured questionnaire was used to understand the perspectives of Finns and the location issues that affected them. The objective was to test some of the key underlying assumptions identified in locus theory, which formed the basis of the study's hypothesis.

RELIABILITY AND VALIDITY CONSIDERATIONS Smith (1975: 58) defines reliability by posing a question

The reliability of the research instrument used was not a concern for this thesis, as the combination of multiple instruments was the best way to avoid the impact of the researcher's bias within the studied areas. Two variables, which can affect the reliability and validity of the research, are the researcher effect and the orientation effect.

AVOIDING THE RESEARCHER EFFECT

We are excessively researched, due to the proliferation of ":level consultants", posing as messiahs and saviors of the poor. The status of the researcher was disclosed to all participants in the various local economic revitalization programs.

ORIENTATION EFFECT

His role, both as provincial coordinator of the now defunct KwaZulu-Natal Economic Council, and as a research student at the University of Natal, gave him a degree of credibility in the eyes of respondents. Finally, it became clear that one of the most durable and appropriate methodologies of the social sciences, which is still largely applicable and highly reliable in different contexts and social settings, is participant observation.

INTRODUCTION

The apartheid government's industrial decentralization strategy is examined to explain the historical impact of such a strategy on small towns, as well as the restructuring that will be required to implement new strategies in the context of post-apartheid development. This study argues that any restructuring of the apartheid state's 'decentralization strategy' should not be divorced from the government's transformation agenda. The implementation of such a strategy must be linked to the government's development strategy.

MANIFESTATION OF THE APARTHEID STRATEGY IN SMALL TOWNS TIlls study argues that the apartheid governinent's industrial strategy was developed as part of

This study outlines the link between apartheid's decentralization program and the policy of separate development that formed the core of apartheid policy. MANIFESTATION OF THE APARTheid STRATEGY IN SMALL TOWNS The study continues to argue that the apartheid government's industrial strategy was developed as part of this strategy.

LINK BETWEEN INDUSTRIAL DECENTRALISATION AND APARTHEID POLICIES

The financial package was not envisaged as the central financial pillar of the strategy. Two of the most famous 'intellectuals' and 'ethnocrats' who were assigned the task of creating a new plan were Professor Nic.

THE ECONOMIC AND POLITICAL AIMS OF THE INDUSTRIAL DECENTRALISATION STRATEGY

Inflow control was seen by all as a fundamental non-negotiable principle of the reform process. What was considered 'flexibility' in the strategy was unacceptable to the politicians of the time.

CONSTITUTIONAL BACK -UP TO INDUSTRIAL DEVELOPMENT STRATEGY

This research concluded that the state's decentralization strategy was designed to 'save ethnicity' as the fundamental organizing principle of South Africa's political economy. The political implications of the arithmetic of the numbers, as the government had hoped, were carefully worked out, ruling out the possibility of a strategy of co-option that could immeasurably threaten the white power base.

INTRODUCTION

CASE STUDY 1: KWADUKUZA/STANGER

SOCIO-ECONOMIC DEMOGRAPHY OF KWADUKUZA
LOCAL ECONOMIC DEVELOPMENT RESPONSES IN KW ADUKUZA: AN ANALYSIS
TECHNOLOGICAL CHANGES IN KWADUKUZA

Many high-tech companies have moved out of the area due to a lack of highly skilled labor. From this we can conclude that the operation of the local economic system made human development in this area impossible.

CASE STUDY 2: IXOPO REGION

INDUSTRIAL DEVELOPMENT CONTEXT IN IXOPO
LABOUR MARKET ELASTICITY
TECHNOLOGICAL CHANGE AND ITS IMPACT ON THE LOCAL ECONOMY

Ixopo experienced industrial decline in manufacturing, agriculture and forestry, sectors that formed the basis of the local economy. This resulted in a decline in the employment capacity of the agricultural sector, although according to the agricultural union, production remained the same or improved17.

CASE STUDY 3: DUNDEE AND THE COAL RIM REGION 18

INVESTMENT MARKETING AS A LOCAL RESPONSE TO ECONOMIC DECLINE
THE FORMATION OF CIDNESE INDUSTRIAL CLUSTERS

Hart (2002) provides a detailed account of the theoretical underpinnings of the Chinese presence in the region. Despite the existence of Chinese networks that controlled the clothing and textile supply chain, labor market conditions worsened and were the focus of much research21.

CASE STUDY 4: HOWICK AND THE NATAL MIDLANDS 26

SOCIO-ECONOMIC OUTLOOK OF THE AREA
LOCAL INDUSTRIAL DEVELOPMENT INTERVENTIONS
PROMOTION OF LEAD INDUSTRIES
PROMOTION OF EMPLOYMENT INTENSIVE INDUSTRIES
SMME DEVELOPMENT INTERVENTIONS IN HOWICK
TECHNOLOGICAL CHANGES AND THEIR IMPACT IN THE LOCAL ECONOMY

Howick is located on the Inland Development Corridor of the KwaZulu-Natal Provincial Spatial Development Framework. The area possessed regionally important recreational and environmental resources in the form of the Midmar Dam and the Umgeni River Complex.

CASE STUDY 5: PINETOWN AND THE INNER WEST OF DURBAN

THE NATURE OF INDUSTRIAL MOBILITY AND BUSINESS GROWTH PATTERNS
THE LOCAL REAL WAGE BILL
CHANGING PERCEPTIONS ON THE ROLE OF LABOUR

The majority of the companies that have taken up space in the area are capital and technology intensive. The first relates to the information itself and the second relates to the resulting change in the worker's consciousness.

INTRODUCTION

There is always a temptation to reduce spending on human development in order to reduce costs and become more competitive. Many of the small towns lack an ability to utilize human development as a means of solving local economic problems.

COMPETITIVENESS ANALYSIS

For the purposes of this thesis, a framework has been developed to compare the competitiveness of the case study areas and their ability to attract industries. The table below provides a broad analysis of the strategic competitiveness of the selected case study areas.

INTRODUCTION

TECHNOLOGICAL CHANGE AND INDUSTRIAL MIGRATION

One can conclude that the closure of a company has also threatened the jobs of the others employed in the related industries. Although the impact of the closure of this company may not have been felt throughout the region, the localities of Mooi River, Escourt and Howick felt the impact.

THE ROLE OF BUSINESS MERGERS IN INDUSTRIAL MIGRATION

The closure of Mooi River Textiles and the massive loss of jobs in the textile industry was accompanied by major changes in the location preference of this industry. This study also found that closures, such as those experienced in Mooi River, threatened not only the industry's position in the area, but also the prospect of new jobs.

MERGERS AND ACQUISITIONS IN KWAZULU-NATAL 30

In the manufacturing sector, merger activity took place mainly in the food and beverage subsector, followed by metal products and. Merger activity increased significantly in the financial services sector, followed by real estate and mining and construction.

CASES OVERVIEW

THE CASE OF BASFOUR 2488 (PTY) LTD AND KWAZULU TRANSPORT (pTY)LTD
TIlE CASE OF MONDI (LTD) AND KOIILER CORES & TUBES
THE CASE OF UNTI..EVER SOUTH AFRICA AND ROBERTSON'S FOODS The Commission recommended the conditional approval of the large merger between

After an investigation, the Commission recommended a ban on the merger because the transaction would create only one vertically integrated entity in the core and tube manufacturing industry. In addition, the Commission found that the merger would result in the exclusion of existing and potential paper and board suppliers.

INTRODUCTION

The purpose of this chapter is to analyze local development initiatives in the study areas, focusing particularly on employment generation strategies. Fourth, the impact of local economic initiatives in the study areas will be critically examined.

THEORETICAL FRAMEWORK FOR LED ANALYSIS

The Economic Base Theory (Demand Side Approach)

Many of small towns' economic development efforts are focused on attracting manufacturing facilities. Through the analysis of the economic base of the selected small towns, the driving forces behind the growth of the local economy were identified.

LED IN THE CONTEXT OF GLOBALIZATION

An example of an authority initiative can be seen in the study areas of KwaDukuza and Dundee. The table below shows the impact of typical LED activities witnessed in the study areas.

INTRODUCTION

SMALL AND MEDIUM ENTERPRISE (SME) DEVELOPMENT AS AN LED STRATEGY

Of particular importance was the finding of the important role of the political, legal and regulatory environment. He emphasizes company size as one of the most important variables affecting economic development and its impact on the local economy.

SMALL BUSINESS DEVELOPMENT AS AN LED STRATEGY: THE BROAD PERSPECTIVE

Comparing the two strategic imperatives of entrepreneurship, Suarez-Villa (1988) concludes that strategic planning is the most important activity. Strategic planning is assumed to be more concerned with the internal operations of the firm and their relationship to demand influences and strategies.

THE EFFECTIVENESS OF SMME'S IN JOB CREATION: FINDINGS

This study found that strategic planning is still lacking, especially from the point of view of micro-industries. At the same time, capitalizing on increasing demand and expanded market niches required strategic planning to guide SMME's expansion of their marketing efforts.

INTRODUCTION

In contrast, a 'locally driven' approach involves local stakeholders in the process, even to the extent of using local volunteers to conduct confidential surveys. Years of international experience in addressing BRE in this way has been documented by Business Retention and Expansion International35 (BREI), a non-profit professional association that offers BRE training and accreditation.

BRE AS A STRATEGIC APPROACH TO LOCAL ECONOMIC DEVELOPMENT

Programs to mitigate the effects of major closures or cuts, such as the Social Plan Fund, have done relatively little to prevent them in the first place or to build on the potential of existing businesses of all sizes to create new jobs. In contrast, the value of BRE programs has long been recognized in the United States and, over the past decade or so, has become a valuable component of local economic development strategies in Canada, Australia, and New Zealand, and on a smaller scale in Norway, Poland, Romania and Morocco.

THE SIGNIFICANCE OF BUSINESS RETENTION AND EXPANSION IN SMALL TOWNS

Marketing and expansion incentives can indeed be part of a BRE program, but the cost per job created is typically much lower. However, BRE has the potential to save existing jobs and create new jobs that might otherwise not be created at all.

THE MODUS OPERANDI OF BRE

Because the locally led BRE approach centers management and implementation in the community in which it takes place, such an approach is problematic in divided communities. In cases such as these, the results are analyzed in detail by the economic development agency, the BRE consultant or, especially in the case of Howick, by an academic institution (University of Natal, Pietermaritzburg).

COMPARISON OF THE TWO BRE APPROACHES

Can be driven by agency priorities and existing solutions. Risk of ready-made solutions. No local buy-in. Operated by part-timers, which limits the capacity to trade. Access to resources and opportunities more difficult. Requires follow-up support. Very limited influence on.

THE IMPACT LOCALITIES

Although an important technological support for local business, none of the studied BRE interventions created local websites. An easily accessible database of the wide range of public and private sector resources available to assist business was an essential part of the BRE program in Pinetown and was continuously updated.

CRITICAL SUCCESS FACTORS FOR BRE

RESOURCES AND SUPPORT MEASURES
DISCOVERING BUSINESS NEEDS AND CONCERNS
DATA ANALYSIS AND ACTION PLANS
LINKING RESOURCES TO PLANS
FOLLOW UPS
DEVELOPMENT OF POLICY AND SUPPORT MEASURES

It is therefore not sufficient for the provincial clearinghouse to simply act as a referral agency with little interest in the outcome. The results of the BRE surveys, discussed in the next chapter, the local action plans and the clearinghouse all provide valuable information about the needs and concerns of KZN business.

LESSONS FROM THE CASE STUDIES

PRE-PACKAGED RESOURCES

INTRODUCTION AND BACKGROUND

EW systems therefore strengthen a local government's planning by opening another line of communication with local industry and creating another route for solving pressing needs that develop.

THE ROLE OF LABOUR IN THE DEVELOPMENT OF EARLY WARNING SYSTEMS

By leading this work, trade unions can demonstrate their commitment and ability to act in the interest of the whole of society, not just for the benefit of their members. This creates a practical opportunity for labor and community-based organizations to move beyond a sole focus on wealth redistribution and take responsibility for protecting and building the nation's productive capacity and leading the way in wealth creation.

KEY FINDINGS FROM PINETOWN

DISCOVERING BUSINESS CONCERNS ABOUT THE AREA
BUSINESS STATUS OF FIRMS LOCATED IN THE AREA
PINETOWN AS A HUB FOR EXPORT RELATED BUSINESSES
PRODUCTMTY AND COMPETITIVENESS OF LOCAL FIRMS
AVAILABILITY OF RAW MATERIAL
NATURE OF ASSISTANCE REQUESTED FROM LOCAL GOVERNMENT

One positive outcome of the study was the realization that the area is becoming an increasingly popular destination for corporate 'head offices'. Analysis of the survey responses shows that the majority of businesses in Pinetown planned to expand their operations in the near future.

INTRODUCTION

CHAPTER FOURTEEN: PLACING MARKETING AND INVESTMENT PROMOTION AN ANSWER TO THE PROBLEM OF INDUSTRIAL MIGRATION IN THE CONTENT OF SMALL TOWNS. The thesis attempts to find a common denominator and looks at the different practices of LEDIs in the field of marketing.

ORGANISATIONAL STRUCTURES OF LEDI'S

Place marketing is a relatively new concept that grew rapidly in the 1980s and 1990s in connection with the opening of the world economy and the tremendous growth of industrial marketing worldwide. Identify most localities, such as Dundee and KwaDukuza, place marketing is considered a must and is therefore part of the government's strategy.

SUB-NATIONAL AND OVERSEAS OFFICES AND THEIR CORE FUNCTIONS

TECHNIQUES AND TOOLS USED IN PLACE MARKETING

INVESTOR TARGETING BY REGION AND INDUSTRY
INVESTOR TARGETING BY TYPE OF INVESTMENT
SERVICES PROVIDED TO INVESTORS
PROMOTIONAL TOOLS

The focus of the LEDIs in KwaZulu-Natal~or the importance of the region as a source of inward investment. Although less common than the above methods, a number of non-personal promotional techniques are prominent in KwaZulu-Natal.

THE EFFECTIVENESS OF LED ORIENTED INVESTMENT PROMOTION INSTITUTIONS: LESSONS FROM THE CASE

All the above tools for place marketing are widely known for their effectiveness and are currently adopted by institutions such as Kwazulu-Natal Marketing Initiative (KMI), Kwazulu-Natal Tourism Authority (KZNTA), Trade and Investment Kwazulu-Natal (TIK), Spatial Development Initiatives (SDI), the Durban Investment Promotion Agency (DIPA) and other local authorities in their promotional efforts. In the next chapter, the specific institutional vehicles that were formed to drive the implementation of the priority projects will be analyzed.

INTRODUCTION

The interview with officials from the Department of Economic Development in KZN, also repeated by the management of the Midlands Investment Initiative, suggests that the Midlands Cluster Forum is another example of a program-based formation, although the agenda is a program of projects of regional importance. These have a limited lifespan and may end after the completion of the project.

BUILDING BLOCKS FOR A SUCCESSFUL LED INSTITUTION

For Ian Outrarn, the chairman of the MII, the cluster has several working groups, each with its own agenda and strategic focus and with specific mandates. To achieve this successfully, and maintain legitimacy and credibility in the eyes of the stakeholders, the institution must be inclusive and have a mandate.

STAKEHOLDER PARTICIPATION FRAMEWORK AND THE ROLE OF LOCAL GOVERNMENT

Such department may report directly to the Office of the City Manager and the Economic Development Committee. The first view suggests that such a unit should be located at the 'center' of municipal government, that is, within the office of the municipal manager.