Industrial development policy in South Africa — the past, present and future

World Development, Vol. 17, No. Printed in Great Britain.

3, pp.

379-396,

1989.

0305--750X/89

$3.00

+ 0.00

0 1989 Pergamon Press plc

Industrial Development Policy in South Africa The Past, Present and Future HERMANUS

S. GEYER

University of Potchefstroom,

South Africa

Summary. -

The growth center concept has formed the cornerstone of industrial development policy in South Africa since apartheid was introduced as a constitutional model in 1948. This paper attempts to recapture the evolutionary development of industrial policy in South Africa and to underline prominent deficiencies in present industrial development policy. South African industrial policy continues the segregation practices of the past, despite the government’s repeated statements in recent years that it intends to move away from the concept of apartheid. Guidelines for a revision in industrial development thinking - based on sound economic principles rather than concealed political practices - are suggested for the country.

2. HISTORICAL PERSPECTIVES OF DEVELOPMENTTHINKING IN SOUTH AFRICA

1. INTRODUCTION Contrary to certain developed countries such as Great Britain where there is evidence that

agglomerating forces in urbanization are no longer dominant, where growth in major urban agglomerations has been largely superseded by counter-urbanization, and where there is an apparent shift in emphasis away from “developmentalism,“’ South Africa is still experiencing a continuing concentration of people and an increase in economic activity in its large metropolitan and megalopolitan areas. Although the government of South Africa has taken certain precautionary measures to counter this continuing influx of people to and excessive increase in economic activity in its major urban areas over the years, it has done so politically through internationally unacceptable measures and economically through development cente? policies. These policies were primarily designed to foster segregation practices in the past, and continue to do so now. Development center policies have proven to be ineffective as a means to improve the living conditions of many underdeveloped people living in peripheral areas. This is due, partially, to the political-ideological proclivities of these policies, but also to an overestimation of the development center’s ability to create economic spread effects in its hinterland. In order to demonstrate the changes that have taken place in South African development thinking over the past four decades, we review the post-war national industrial development policies of the South African government to date. 379

When the National Party came into power in South Africa in 1948, it gave new direction to development thinking, a direction based on the principles of racial segregation. This direction has been bitterly opposed by an overwhelming majority of people, both inside the country (except among the Afrikaner group of the European sector of the community) and outside. Initially, the government’s approach to industrial development was highly tentative and pragmatic, consisting of ad hoc policy decisions taken by the Natural Resources Development ‘Council (NRDC).3 No firm directive or long-term industrial development policy decisions were taken by the government at that stage, because the new political strategy had yet to be formulated. The first major attempt to determine guidelines for national physical development policy was made during the early 1950s when the Tomlinson Commission was appointed to report on proposals for the socioeconomic development of the “black reserves” (South Africa, Union of, 1954).’ One of the most important aspects dealt with by the commission was the question of industrial development strategy. During that time, the creation of employment opportunities through industrial development was regarded by the government as an important vehicle to ihncrease black prosperity, especially in the black reserves (South Africa, Union of, 1956a). It was argued that these opportunities would also

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reduce influx of blacks from the reserves to the major industrialized centers of the country. Three options were investigated by the commission. They were: - industrial development by whites alone or in partnership with blacks near the boundaries of black reserves, but within the “white area”; - industrial development by blacks alone or in partnership with whites near the boundaries of black reserves, but within the reserves; and - industrial development by blacks alone or in partnership with whites within the reserves, but further away from the boundaries. The commission recommended industrial development on a partnership basis between blacks and whites within reserves at locations some distance away from the boundaries (South Africa, Union of, 1954). This recommendation was founded on the following arguments: - any location near the boundaries would inevitably result in an increased locational advantage for the white entrepreneur, because such locations would be closer to established markets in the white area; - the black entrepreneur would not be able to initiate the amount of industrial development necessary for the economic advancement of communities in the reserves on his own, due to the developmental backlog of the black entrepreneur and the ceiling created by apartheid on the white side of the boundary; and - it can be expected that blacks would tend to migrate from their original places of residence within the reserves to the industrial centers at the boundaries once such centers were established. This recommendation was rejected by the government in favor of a politically biased minority report’ supporting the option of industrial development under white supremacy near the boundaries, but on the white side of them (South Africa, Union of, 1956a). It was argued that if industrial development on a blackwhite partnership basis were allowed within the reserves, there would be no grounds to prevent similar partnerships within the white areas (South Africa, Union of, 1956b); a policy, it was believed, that would be counterproductive to the concept of apartheid. Subsequently, favorable areas for industrialization near boundaries of the reserves were identified by the NRDC (South Africa, Union of, 1959) which in turn resulted in the Prime Minister’s blueprint on border area industrial development in South Africa (Verwoerd, 1960). So-called growth points - a concept based on Perroux’s popular (1955) growth pole concept -

were identified within these border areas. In Verwoerd’s blueprint, border industrial areas were defined as “. . . those localities at regions near the Bantu areas, in which industrial development takes place, through European initiative and control, but which are so situated that the Bantu workers can maintain their residences and family lives in the Bantu areas, and move readily to their places of employment” (Verwoerd, 1960, p. 6). This clearly paved the way for the implementation of the development center concept not primarily as a development instrument based on sound economic principles, but as an ideological instrument to achieve certain goals in terms of the government’s policy of apartheid. While Verwoerd emphasized the government’s economic objectives in the border area industrial development policy in order to conceal its political foundation, Lombard explicitly declared it “development with a political objective” (South Africa, 1967). During 1964, a Department of Planning was established to continue the work of the NRDC. In 1971, in an official declaration of industrial development policy - a policy declaration which could be regarded as a re-evaluation of Verwoerd’s blueprint of the 1960s - the concept of industrial development in border areas was reaffirmed (South Africa, 1971). It was still regarded by the government as the most effective instrument to stimulate development inside black reserves, but in addition it was now also seen as a means to counterbalance industrial development in the major industrial areas of the country. In order to continue coordination of industrial decentralization, the Permanent Committee for Industrial Establishment of the 1960s was restructured to form the Industrial Decentralization Board. During the same year, “capitals” of reserves were approved as growth points by the government, a step which in itself constituted a slight departure from previous development policy (South Africa, 1973).6 During the mid-1970s the first National Physical Development Plan (NPDP) was published (South Africa, 1975). Growth points identified by the Decentralization Board were included in this development strategy (Figure 1). A distinction was made in the NPDP between socalled growth poles and growth points (Figure 1). While the growth points were regarded by the government as a policy instrument to stimulate economic development in black reserves, socalled growth poles were regarded as intermediate size cities “. . . which will without much stimulus, command sufficient growth potential to develop and support a large population” (South Africa, 1975, p. 18). Ironically, development

DEVELOPMENT

POLICY

IN SOUTH

AFRICA

381

NationcC physical development plan

I

Namtbu

metropdis

n
e

Ki lometre

. 2/r.

0 0 l

Main town Uomirq region Bbck reserve

Growth pole Growth pomt

Figure 1.

indicators such as population distribution, labor requirements, market characteristics, and economic potential in the black reserves were totally disregarded by the compilers of the plan, which to a great extent ridiculed the inclusion of the growth points. Development at the growth points was stimulated by several incentive measures,’ supplemented by the Physical Planning Act (No. 88 of 1967).’ This legislation was an additional instrument in the hands of the government through which the number of black, laborintensive industries in metropolitan areas could be controlled to reduce job opportunities for blacks in these urban areas. According to Wellings and Black (1986). however, the legislation was widely boycotted by industrialists, who closed down in some instances rather than move their industries to less advantageous locations.

Apart from the political injustice of the policy, it has distinct socioeconomic disadvantages (Geyer, 1980).9 First, it disregards industrial development potential and population distribution patterns within the reserves. Furthermore, the settlement of large numbers of blacks at the growth points on the white side of the boundary is prohibited through a variety of control measures.” Thus, the availability of job opportunities at these growth points would inevitably lead to the disruption of existing communities within the reserves and to the establishment of large numbers of these uprooted blacks in dormitory towns” on the black side of the boundary, right next to the white growth points. Second, the competitive disadvantage of these black communities would make it extremely difficult, if not impossible, for black potential entrepreneurs to start their own undertakings in these dormitory

382

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towns. Even if they did succeed, this would lead to an unnecessary duplication of urban areas; two urban centers juxtaposed, one on either side of the .boundary serving an area which otherwise could have been served by one center only.” The most important disadvantage of South African development center policy as it stands,13 however, is the fact that it is ideologically founded and not based on sound economic principles which are necessary for success. Most of the centers - i.e., the so-called growth points which are now called industrial development points - are geographically isolated, relatively far away from strong and established markets, located in peripheral areas with relatively few significant natural endowments and other viable factors of production compared to the core areas. Due to educational disadvantages, the’ black labor force in these rural areas does not suit the labor requirements of technically advanced industry (which is often associated with the development center concept). Neither does there seem to be hope for a radical improvement in the educational level of the black population in South Africa in the short term. This educational backlog (Table 1 and Figure 2) seems to be too great at this stage to expect it to advance to levels ideally suiting the labor requirements of technically advanced industries in the immediate future. Since 1977, in a desperate attempt to soothe increasing black discontent with the apartheid system and consequential rioting and unrest, and to avoid further ostracism by the international community, the Nationalist government started paying lip service to constitutional changes with a view to eliminate racial discrimination (South Africa, 1977 and 1979). This apparent movement away from the traditional concept of apartheid eventually resulted in an open declaration by the State President that South Africa had “. . . outgrown the old outdated colonial system of paternalism as well as the outdated concept of apartheid” (South Africa, 1986d). A “new political dispensation” for the future was announced. Although apartheid was publicly renounced, the 1982 constitution reinforced institutionalized apartheid by excluding blacks from the decision making process on the first level of the three-tier government system. The Immorality Act (No. 23 of 1957) and the Mixed Marriages Act (No. 21 of 1968)14 were abolished, but the Group Areas Act (No. 36 of 1966) and the Black Communities Act (No. 4 of 1984). which separate most land and residential areas on racial grounds remained. Influx control from black reserves to white areas was terminated, but was replaced by a policy of “orderly urbanization” which has the same effect

on blacks.ls Although these constitutional changes have not as yet included any significant changes regarding the constitutional rights of the black majority, l6 they were accompanied by new initiatives in development planning. First, a study group, the Kleu Committee, was appointed in 1977 “to formulate afresh the industrial development strategy of South Africa and to propose adjustments in order to overcome problems” (South Africa, 1984b). Seven years would elapse, however, before the findings of this study group would be made known. Second, draft development strategies” for the Pretoria-Witwatersrand-Vaal Triangle (PWV), Durban-Pinetown-Pietermaritzburg (DPP), and Cape Town-Bellville (CTB) metropolitan areas’* were published, but were never officially approved by Parliament. Instead, the so-called Good Hope Plan (Figure 3) was published, which contained a number of proposed industrial development guidelines for the country as a whole (South Africa, 1981a). Despite the rather moderate industrial development results which were achieved in these border area growth points (Anon., 1973; South Africa, 1981a) and despite indications of certain theoretical misconceptions regarding the potential of these points to bring about development within the black reserves (see note 12), the number of growth points (which are now called industrial development points) was increased from 16 in the NPDP (South Africa, 1975) to 48 in the Good Hope Plan (South Africa, 1981).‘9 Comparing the Good Hope Plan with the NPDP of 1975, the inevitable development of the growth points into twin cities, one on each side of the reserve boundaries becomes apparent, as was predicted earlier. These industrial development points were now defined as “points where alternative agglomeration advantages could be created to counterbalance the existing metropoles and thus create employment opportunities in the regions concerned” (South Africa, 1982, p. 2). The position of these industrial development points in border areas makes it clear, however, that the views of the government on the dual function of the industrial development points - i.e., to counterbalance overconcentration in metropolitan areas and to create employment and industrial development opportunities in the reserves - with their apparent ideological undertones, remained unchanged. The minor changes in the South African approach to the development center concept introduced during the early 1980s brought about a minor shift in emphasis from the white to the nonwhite entrepreneur, and from large to

Source:

South

Pupils/teacher

Africa

(1986).

(82.84) (67.15) (29.47) -

(72.36) (35.97)

13,687 4,708

Educational college St 10 (technical)

128,467 124,407 57,492 17.62

(39.59)

28,464

University college Technical School teachers

(16.71) (68.90)

1,012,918 27,314

St 10 (standard)

Pupils (school)exemption) St 10 (univ.

European

(11.33) (13.50)

737 5,138

g (16:bl) -

(13.51)

9,717

12.936 I 1,025 31,221 25.52

(13.14) (5.80)

2,298 796,773

(%) of total

Coloured

of students and pupils in di/ferent

Category

1. Number

(%) of total

Table

(3.91)

I;.;:,’ (4:43)

I;:;;

(%) of total

categories

Asian

231,947 3,823 5,719 245 1,686 6,067

educational

(66.32) (15.66) (38.95) (12.54) (46.10) (4.91) (18.84) (49.16) -

(%) of total

LWtCic

to race group,

4,020,484 6,207 28,006 816 17,544 7,600 34,YOI 95,893 41.93

according

Totd

(100) (100) (loo) (100)

6:506 38,055 155,07Y 185,261 195,065 31.08

(W -

I::;

(100)

%

;;J&

6,062,122

1984

WORLD DEVELOPMENT

384

“Irdependent’bladc reserves exctuded + 94.0 = 1970, (85.6) = 1960 + Gr. I St 5 (primary schod 1, St. 6 St.10 (secondary sctmc) Source: S&h

Africa (19660)

Figure 2. smaller-scale industry. In essence, this meant a shift in emphasis in development thinking away from the extreme practices of white paternalism of the past. The paternalistic basic needs approach of the 1960s and 1970s’” made way for a new and more flexible “differentiated approach.“” Greater flexibility in incentive measures and development policy on a regional level due to possible differences in development circumstances regionally were announced (South Africa, 1985e). In addition to previously existing

organizations such as the Development Corporations, which are involved in the establishment of commerce and industry in the various black reserves, the Development Bank of Southern Africa, the Small Business Development Corpand the Urban Foundation are oration, prominent new institutions, directly and indirectly initiated by government, whose function is to support the basic needs development approach of the authorities. Emphasis is now placed on the mutual interdependency of the different geographical entities or development regions in South Africa (South Africa, 1982a; Geyer ef al., 1988). Incentive measures were improved. Although the focus has shifted slightly away from the conventional development center concept, the establishment of industrial complex-oriented enterprise” at the industrial development points remains important. Special mention is made in the White Paper on industrial development, for example, of the need to determine the feasibility of expanding electronic industry in South Africa a technologically advanced industry with typical industrial complex qualities (South Africa, 1985c). Labor-intensive industries remain a priority, however. In addition to the industrial development points, a new development instrument was introduced in the Good Hope Plan. Eleven socalled deconcentration points” - some of them formerly growth points were announced. Similar to the function of “overspill towns” in England (Glasson, 1983), the deconcentration points are meant to accommodate population overflow from metropolitan areas. They are defined as “points adjacent or close to the metropolitan areas toward which industrial growth could be deconcentrated to lessen the pressure of overconcentration in the metropolitan areas” (South Africa, 1981a). All of these deconcentration points are located within border areas, as are an overwhelming majority of the industrial development points; many of them twin cities on opposite sides of reserve boundaries. Apart from their impractical locations from a politico-economic point of view, too many of these points have been identified. A total of 48 industrial development points, 11 deconcentration points and the possible qualifying of even more towns for industrial aid does not seem to be a target within the reasonable means of South Africa’s present financial, entrepreneurial, and market capabilities. The new “integrated” approach to industrial development was reaffirmed in the final report of the Kleu Committee, mentioned earlier (South Africa, 1984b). and in a subsequent White Paper

DEVELOPMENT

POLICY

IN SOUTH

AFRICA

385

,L+@babwe

Industrlol

rce : South Africa

development pky’ 1966

(1985e)

*as contained in the Good Hope Ftm, ard periodically revised by the central authority. o

Q

Mtropcl IS

.

Deconcentrotitm point 1981 and 1985

.

Industrial development point 1981 and 1995

0

Industrial dw&mmt 1985

fi

Irdustrlal I981

development pant

Ftommg reqlon @4ack resewe

V?.

Functumol region

point

Figure 3.

on future industrial development options for the country (South Africa, 198%). According to the White Paper: - industrial development alone will not be sufficient for the attainment of South Africa’s regional development policy. Government believes that an integrated development program which includes agriculture, commerce, and services in addition to industrial development should now be implemented - i.e., the so-called comprehensive development approach; - greater emphasis should be placed on the informal sector and on a basic needs ap-

proach u for the economic advancement of the underdeveloped black community of the country; and - industrial development policy should take regional differences into account. Voices are now being heard outside government circles about the urgency of a revised dual approach to economic development in South Africa. On the one hand, a basic needs approach inspired from below is propagated to increase the basic living standards of the underdeveloped component of the South African community (Coetzee, 1986). On the other hand, a change is necessary in the development center ap-

386

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preach to make it appropriate to the prevailing economic circumstances in South Africa (Geyer, 1987). Instead of applying the development center concept as an “induced” development instrument24 in peripheral areas, it is suggested that emphasis be shifted toward the intermediate size cities as natural or spontaneous development centers of the country (see Tables 2 and 3). The development center approach should, however, be adapted to the Third World circumstances of South Africa and should not merely transplant the Western concept of growth poles, as in the past. The strong, dualistic nature of South

African society necessitates a combination of basic needs and growth center approaches in a manner that benefits the underdeveloped sector of the South African community most (Geyer, 1988). Fundamental constitutional changes are imperative, however, in order to make the involvement of the underdeveloped community

in planning and decision making more meaningful. Simultaneously, a growth center approach is needed to increase economic growth in order to finance the provision and/or improvement of certain cost-intensive services, such as education and medical facilities within underdeveloped areas.

Table 2. Population increase of urban centers in South Africa,

1970-80

Urban population Category Metropolis* Intermediate city? Small urban areat Total

1970

%

1980

%

growth per year

6,371,989 1,082,049 2.670.154 10.124.192

62.94 10.69 26.37 100.00

8.365.701 1.086668 3.474.165 12.926.534

64.71 8.41 26.88 100.00

2.76 0.04 2.67 2.47

Sources: South Africa, 1976 and 1985b. *Pretoria-Witwatersrand-Vaal triangle area (PWV area), Durban-PinetownPietermaritzburg area (DPP area), Cape Town area, and Port ElizabethUitenhage area. tBloemfontein, East London, Kimberley, Welkom-Virginia area, Pietersburg, Klerksdorp, Potchefstroom, Newcastle, Witbank, Rustenburg. and George. All “A’‘-category centers according to a central place study of the Department of Constitutional Development and Planning (South Africa, 1984a). $545 other small towns in southern Africa.

Table 3. Contribution of urban centers in South Africa to the gross geographical product,

1970430

Contribution Category Metropolis* Intermediate city+ Small urban area$ Total

1968 5900,526 995,666 2,464,218 9,360,410

to GGP (excluding agriculture) growth % 1978 % per year

63.03 10.64 26.33 100.00

21,971,633 4,306,979 6.063.433 32.342.045

67.93 13.32 18.75 100.00

14.05 15.77 9.42 13.20

*Pretoria-Witwatersrand-Vaal triangle area (PWV area), Durban-PinetownPietermaritzburg area (DPP area), Cape Town area, and Port ElizabethUitenhage area. tBloemfontein, East London, Kimberley, Welkom-Virginia area, Pietersburg, Klerksdorp, Potchefstroom, Newcastle, Witbank, Rustenbure. and George. All “A”-category centers according to a central place study of {he Departmknt of Constitutional Development and Planning (South Africa, 1984a). $545 other small towns in southern Africa. Sources: South Africa, 1974 and 1985a.

DEVELOPMENT

POLICY IN SOUTH AFRICA

3. AN APPROPRIATE DEVELOPMENT CENTER APPROACH FOR SOUTH AFRICA The concentration and dispersion of economic development in geographic space, and the economic forces which bring them about, are matters which have received wides read attention over the past two decades. B Optimism about the potential of the development center as an instrument to initiate economic development, especially in developing countries with marked core-peripheral differences, has given way to pessimism and even a total rejection of the concept.26 Due to threshold limitations, industrial development associated with the development center concept does not lend itself to a great deal of diffusion of innovation and economic benefits to peripherai communities. The production process of the industrial complex - the key industry and its associated satellite industries - which serves as the origin and source of energy of the development center is often of a technically advanced nature. This allows very little scope for job opportunities to a large section of the relatively poorly educated labor force normally associated with such peripheral areas. Consequently, the development center, which may be located in a peripheral area, may not have.a significant short-term effect on the improvement of living standards in such peripheral areas. It also seldom seems to contribute directly to a diffusion of economic development or to a creation of a significant amount of development opportunities in its hinterland over the short term. The increasing discontent of peripheral communities with the immediate results of the development center in rural areas - as the main thrust behind the trickling down of development multiplier effects from such centers to the peripheral communities in general - has elicited a variety of reactions. They vary from an outright rejection of the concept in some instances (Conroy, 1973), to more balanced judgments by others of the moderate potential of the development center concept as the generator of development and development opportunities under peripheral conditions. Richardson (1978) ascribes the disappointment of development scholars with the development center concept to the careless transplanting of this western concept to developing countries and to piecemeal identification of locations for planned (or induced) centers in areas with little potential viability. This has been the case in South Africa. J

387

An example of the reasoning behind such an unrealistic development center approach is the supposition - fallaciously drawn from Weberian (1969) concepts - that the provision of transport infrastructure between an existing core and a peripheral area with marginal development potential, supplemented by socioeconomic incentive measures, would necessarily trigger the development process in the peripheral area (or designated center). Similar conclusions were drawn by Hansen (1966) and Taaffe and Gautier (1973) in their assessment of the disappointing results achieved in the development of Appalachia and SBo Paulo, Brazil respectively. As a result of the disillusionment of development scholars working in a core-periphery framework, a major shift in emphasis took place during the 1970s from development center or so-called center-down policy to the basic needs approach. It was argued that the latter would increase the living standards of the poor in less developed countries (LDCs) and would automatically create a more equitable distribution of wealth. Given the worldwide focus on programs intended to satisfy basic needs and the persistent relative decline in nutritional levels of Third World countries, some doubts are being expressed about the real potential of the basic needs approach as an economic growth mechanism (Dell, 1979). It can be argued that an application of a grassroots, basic needs, bottomup approach in LDCs alone would seldom be practical. The view is often expressed that rapid economic growth is a prerequisite for the successful implementation of a basic needs program (ILO, 1976; Dell, 1979). Little redistribution of wealth is possible - whatever such a program entails - without sufficient funds in the state coffers. Government income, again, is to a large degree dependent on the performance of the highly productive economic sectors, which in turn largely determine the economic growth rate of the country as a whole. The shift in emphasis in South Africa to the basic needs approach, of course, holds a number of important consequences. As a policy that stresses social welfare rather than a rapid increase in the GDP growth rate, too much emphasis on the basic needs approach alone could hamper the improvement of living standards of the less developed component of the population in the long run. It can be accepted that a basic needs approach would improve the living standards of the peripheral communities, and would also stimulate the informal sector in the short term. It might, however, also slow down production and income generation in the formal secondary sector, which needs urgent

388

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attention in terms of better utilization of capital resources, productivity of labor, and research on the improvement in the levels of technology (South Africa, 1984b). According to the Kleu study group, the primary sectors, especially agriculture, should be developed to their fullest possible extent (South Africa, 1984b). Agriculture has a favorable ratio of employment creation per unit of increased capital stock, compared with mining and manufacturing. However, as a result of the limited capacity and inconsistency of the market for surplus production,*’ work cannot adequately be secured by the primary sector, especially agriculture alone. The study group recommended more emphasis on labor-intensive industrial development in the future, but with labor as a competitive factor of production compared with capital goods. The application of a basic needs strategy in South Africa might reduce premature migration (Lo and Salih, 1978) from the peripheral areas to core areas. It also might reduce the possible brain drain from peripheral areas - a common result of rural-urban migration (Hirschman, 1972). Too much emphasis on the basic needs approach, however, would also tend to reduce exposure of people in peripheral areas to the innovative societies of the core areas - i.e., the so-called neighboring effect (HBgerstrand, 1965) - which in the long run does make a difference. It would also require the application of some form of the “spatial closure” concepts” in order to protect the vulnerable underdeveloped economic sector (Geyer, 1988). This again, could be an encouragement to the South African government to continue its segregative spatial closure practices. A basic needs strategy might, also decrease the pace of the transition of the economies of peripheral areas for the take-off (Rostow, 1974),29 due to an increase in labor-capital ratios, especially in the primary sector. An undesired increase in labor-capital ratios could in the long run reduce the per capita income of the peripheral areas. Eventually, this would lead to increased economic dualism, and hence, would make it more difficult for these communities to make up the difference in an ever increasing disequilibrium in the economy. Too much emphasis on the basic needs approach and neglecting the stimulation of the sophisticated formal sector can, therefore, be counterproductive to these objectives. To improve human quality of lifeM (both in the core and peripheral areas) remains one of the ultimate objectives of the development process. The multidimensional nature of the comprehensive development approach3’ provides a basis for

the formulation of a flexible development program with the potential to strike a balance between economic growth on the one hand, and social development (Friedmann, 1972) on the other - a process in which positive elements of both the basic needs and center-down approaches are exploited to the maximum advantage of South African society, especially the underdeveloped sector. Financial and community leaders have expressed the need to expand economic output, both for short-term, cyclic stability and for sustained. long-term growth. Growth is especially needed in the formal sector, because this sector must help carry the burden of development in the peripheral communities in South Africa. An increasing, but more stable growth rate would improve conditions for private sector job creation and would provide the necessary resources for meaningful indirect and direct productive action’” in inner and outer peripheral areas. Lombard (1985) suggests “inward industrialization” as one of the options to attain the desired increase in economic growth. This implies an increase in urbanization, a possible increase in per capita income in peripheral areas due to more favorable labor-capital ratios, and increased exposure of the developing component of the population to innovative practices at the core (only if accompanied by the elimination of segregational practices, however). Ultimately, it opens the door to a better balance between development in the periphery and development in the core. Although there is an obvious need at present for a basic needs approach in South Africa, there is also room and need for a radically revised development center approach.

4. FUTURE DEVELOPMENT ALTERNATIVES Due to the dualistic nature of the South African economy, a combination of the basic needs approach aimed at the social and economic upliftment of less developed communities - and the development center approach aimed at the sfimulation of growth and the creation of job opportunities in the formal sector at a few preselected locations - seems to be inevitable. A stimulation of growth of commerce and industry at locations which are favored by entrepreneurs, as compared to locations which are favored by politicians, could result in an end to the “growth point boycott” of some entrepreneurs. This, in turn, could lead to an increase in the average economic growth rate, which is

DEVELOPMENT

POLICY IN SOUTH AFRICA

needed to support a viable basic needs program. In the formulation of a revised development center policy for South Africa to complement a basic needs strategy, one should be aware of the possible effects such a policy might have on all relevant aspects of community life. Development is seen here in the widest possible sense of the word. It not only implies economic development - structural changes mainly in the formal and informal commercial and industrial sectors - but also social and institutional change to accommodate both the developed and underdeveloped components of the economic community.33 Such a process involves the entire urban structure, whether it is industrial development, commercial development, housing schemes, or the provision of health and educational facilities. It also involves changes in the political and administrative structures to reinstate basic human rights in the country. Three development center policy options are generally available (Herrick and Kindleberger, 1983). The first is to develop a relatively large number of isolated growth points in the intermediate and outer periphery,34 relatively far from the core areas. A center-down industrial decentralization policy associated with the designated growth points, many of which were in the intermediate and outer periphery of South Africa, proved to be less successful (Coetzee, 1986). By 1980, industrial points and “other points” - many of which have qualified for economic incentive measures over the past 15 years - have contributed a mere 0.0002% to the estimated total South African GGP (at 1983 prices), excluding so-called independent South African black reserves (South Africa, 1986b). The second option is that of increased urbanization. Increased freedom of movement in the future will, no doubt, as in Zimbabwe (Simon, 1986), lead to increased migration from rural areas to the metropolitan areas. Although there are, as mentioned before, certain advantages attached to this option, there are also distinct disadvantages. In 1980, the dependency rate of urbanized blacks in the four main metropolitan areas combined, based on the minimum subsistence level (South Africa, 1986a) - i.e., people with no income or an income below the subsistence level - was 70%. The unemployment rate of blacks in the Port Elizabeth area was 54.3% in 1986, and the dependency rate (excluding the underemployed) was 72% (Levin and Du Plessis, 1986). If the underemployed - i.e., those with an income well below the subsistence level - had been added to the latter figure, the dependency rate would, according to Levin and Du Plessis

389

(1986) have gone up to approximately 90% in Port Elizabeth. A rapid increase in the population of metropolitan areas due to rural-urban migration may increase the dependency rate even further. This, in turn, may aggravate present social problems associated with the high levels of unemployment in these metropolitan areas. In the South African context the third policy option, that of intermediate center concentration, may be a compromise between Higgins’ (1978) idea of a development center as a center of attraction, and the idea of a development center as a center of diffusion. The stimulation of industrial, commercial and service activities in intermediate size urban centers would require the provision of incentive measures, as well as the improvement of the social overhead structure of, and a commitment to direct productive activities in these centers. This would, inter ah, mean a shift in emphasis in industrial development away from development centers in the intermediate and outer periphery to centers located in the inner periphery closer to the core areas (Geyer et al., 1988). The population figures of intermediate urban centers - i.e., the 11 “A’‘-centers in the hierarchy of central places as determined by the Department of Constitutional Development and Planning (South Africa, 1984a) - show only limited population growth between 1970 and 1980. However, the average annual increase in their contribution to the gross geographic product in terms of urban-oriented economic sectors was higher than that of the four metropolitan areas as well as the national average for this period (Tables 2 and 3). In contrast, the percentage annual population increase of the 545 other small urban areas was proportionate to that of the metropolitan areas and the national average over the same period. The average annual growth of its urban-oriented economic sectors, however, was only approximately 60% of that of the intermediate size cities from 1968 to 1978, and well below the national average for this period. This is notwithstanding the industrial incentive measures which were mainly available at urban areas in this category. The relatively rapid increase in the population of small urban areas may, however, be attributed to the aggressive urbanization policy of the government in the black reserves over the past two decades. Due to this policy, the urban population in these areas increased from 1970 to 1980 at an annual rate of 11.29%. If this population component were to be omitted, the average annual growth of the population of the remaining small urban areas would have been only 0.81% from 1970 to 1980, which is also well

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below the national average increase for this period. In terms of their economic performance, the intermediate centers listed in Tables 2 and 3 clearly have a population capacity far surpassing their present sizes. These centers - some of which already have a metropolitan character should, therefore, be stimulated to act as migration filters, accommodating people who would have migrated from rural areas directly to the large industrialized metropolitan areas of the region, but who have been prevented from doing so by the present policy of orderly urbanization. Contrary to the present industrial development points, these intermediate centers do seem to have the potential to act as counter weights to the metropolitan areas. The fact that the designation of so many industrial development points in South Africa is questioned does not mean that the suggested revised development center approach is regarded as the only possible means to successfully counter declining economic growth in the country. It does, however, mean that, according to statistical evidence, an intermediate development center strategy based on sound economic principles, combined with a vigorous basic needs approach in order to improve the living standards of the underdeveloped sector of the society, may solve some of the most aggravating economic problems presently experienced in South Africa. However, unless the basic human rights of the majority of the country’s population are restored, the success of the proposed reciprocally supportive development strategy would be meaningless. It would remain a strategy forced down from above; a pleasing but empty success. 5. CONCLUSIGN Since the apartheid constitutional model was accepted as official government policy in 1960, a double-barrelled physioeconomic development policy has been pursued in South Africa. An ideologically modeled industrial decentralization policy cast in an apartheid mold - a policy aimed at the provision of white controlled job opportunities for blacks near black reserves - formed one cornerstone. The other was based on a basic needs development strategy aimed at the advancement of the standard of living of blacks, especially those in the black reserves. Although this basic needs policy was presented as a bottom-up process, it was modeled on the same ideological lines and was executed from the top downward. Almost no attention was given to the economic and constitutional development of black communities in the white areas, while more

attention was given to the economic development of blacks living in the reserves. Although these development policies have undergone certain cosmetic changes since 1982, the development center concept remains fundamentally the same. Both the industrial development program and the basic needs program are still designed to support apartheid; they are both still Bantustan and group areas oriented, not primarily people oriented. An attempt was made to analyze the results achieved with the existing development center and basic needs policies over the past two decades. It is found that due to an aggressive urbanization policy pursued by the government in the black reserves, the urban population there increased significantly. This may create the false impression of a significant increase in population growth in small urban areas in general between 1970 and 1980. However, despite the availability of extensive incentive measures at designated industrial development points - most of which fall within the small urban area category - their relative contribution to the total GGP has decreased over the same period. On the other hand, the population increase in a selected number of intermediate size cities was insignificant, but their proportional contribution to the GGP was greater than that of the industrialized metropolitan areas of the country, without the aid of incentive measures. These cities obviously could perform much better economically if they were to be stimulated in a manner similar to the present geographically isolated “industrial development points” near the black reserves. They also have the potential to accommodate much greater numbers of people than they presently do. It is suggested therefore that a development center strategy be implemented in addition to the present basic needs strategy. The emphasis in industrial development should, however, be placed on a limited number of intermediate size cities rather than the present ideologically molded development center policy, with its many industrial development points within the border areas of black reserves. In the present industrial development points, on the other hand, attention should be focused on grassroots industrial, commercial, and service activities as part of the basic needs program. These locations would, however, only make sense from a spatial economic point of view if the boundaries of reserves were depoliticized. Finally, a widening of the democratic base of the country is necessary if the basic needs development strategy is to stand a chance to succeed at all.

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NOTES 1. .According to Hart (1983). developmentalism refers to an emphasis in spontaneous human locational patterns on favorable locations in terms of economic production factors generally, as opposed to advantageous locations in terms of favorable living conditions in the case of environmentalism. 2. The term “development center” is used instead of terms such as “growth pole,” “growth center,” “growth point,” etc. (Darwent, 1969; Moseley, 1973a) which are frequently used in a similar context. 3. The NRDC Natural Resources 1947).

was established in terms of the Development Act, 1947 (No. 51 of

4. These black reserves are also known as Bantustans (Wellings and Black, 1986) or as homelands by those generally in favor of the apartheid system. 5. Two members of the commission submitted a minority report, recommending the rejection of industrial development within the reserves on a black-white partnership basis (South Africa, Union of, 1954, Vol. 14, Ch. 36, p. 10). This recommendation was eventually approved by the government (South Africa, Union of, 1956a). 6. Not all capitals areas.

of reserves

7. Incentive measures interest rate concessions, for whites, cash grants,

are situated

in border

included financial aid, tax and capital loans, housing loans and transport rebates.

8. Until 1986, this legislation made provision for the declaration of controlled areas. In terms of Sections 3, 5, and 6 of the act, the expansion of industrial land and the establishment, inrer ah, of industries with higher than officially approved black-white employee ratios are prohibited in such controlled areas. The discriminatory Section 3 was abolished in 1986, but control over the establishment of industrial estates in these areas by means of the act continues.

government repeatedly stated during the election campaign of the first half of 1987, that it will retain the principles of the Group Areas Act at all costs. Subsequently, during October 1988, the Group Areas Amendment Bill and the Free Settlement Areas Bill were tabled in Parliament. This legislation would enable the State President to declare “fee settlement areas,” i.e., areas open to all race groups. Only a few small residential areas in major metropolitan areas have been earmarked as possible open areas. These changes will only have a marginal effect on de facto apartheid, however, since almost all of the country remains segregated, especially the rural areas where most growth points (which later became the “industrial development points”) are located. The policy of orderly urbanization, which is an indirect form of influx control (see note 15) remains firmly intact. 11. According to Potgieter (1977) commercial and industrial development have not taken place normally in many of these dormitory towns near boundaries inside Bophuthatswana, one of the reserves. 12. This view is based on Geyer (1980). Point P in Figure Al represents a growth point on the white side of reserve boundary AC. Due to the lower per capita income of the black population and its lower degree of mobility, center P initially only serves area DEF within the reserve. Job opportunities at P would, however, lead to the clustering of blacks at point Q, because they are prevented by the government’s control measures (see notes 10 and 15) to settle at P. In the long run, if Q can overcome its competitive disadvantage in comparison with P, it can be expected to develop into a fully fledged urban center with its own industrial and commercial areas adjacent to P. If, under such circumstances, urban center Q expands its tributary area to ABC, it would result in a duplication of centers; two centers, P and Q, serving an area which under normal circumstances could have been served by P or Q alone.

9. See also Losch (1954) and Hoover (1963) for a discussion of the effect of boundaries on service areas of undertakings. 10. In terms of the Group Areas Act, 1966 (No. 36 of 1966), and related legislation such as the Black Communities Development Act, 1984 (No. 4 of 1984), Coloured Persons Settlement Act, 1946 (No. 7 of 1946). Rural Coloured Areas Act, 1963 (No. 24 of 1963). Coloured Persons Communal Act, 1949 (No. 12 of 1949). etc., most land in the country is presently classified for white, Coloured, Asian, or black occupation or ownership exclusively. Although the central business districts of a few cities have recently been declared open to all race groups and although on April 28, 1988 the government announced its intention to declare open residential areas on an ad hoc basis, the

A D

PO

0

F C

@

Figure

Al.

E

B

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13. Wellings and Black (1986) also discussed at some length the locational disadvantage of the growth points on the black side of the boundaries of reserves relative to their neighbors on the white side of the boundaries. 14. This legislation made love and marriage over the color line a criminal offense. 15. The orderly urbanization policy (South Africa, 1986c, pp. 19-20) and the Black Communities Development Act, 1984 (No. 4 of 1984) have the effect in practice that people - and these circumstances apply mainly to blacks - are only allowed to settle in an urban area if approved accommodation is available. This gives the central and local authorities an instrument to control black urbanization in an indirect manner. 16. In a debate in Parliament on April 22, 1988 the State President announced what have been called farreaching policy changes by the pro-government press; policy changes to accommodate blacks outside homelands in the legislative process. Without consulting the black electorate, “democratically elected Regional Councils” were announced. These councils would apparently form (what can be seen as) the equivalent of the nationally elected white, Coloured, and Asian chambers of Parliament. The regional character of these black councils, once again, seems to be just another concealed device to manipulate the black majority into minority groups in a future (seemingly) federal political dispensation for the country; a onesided resolution without the electorate’s mandate. In addition, a National fndaba (Council) has been announced, in which the State President can appoint black “representatives.” Allegedly, this Council will have an advisory function in the legislative process at the parliamentary level. 17. Some detailed guidelines regarding the desired industrial development and population distribution patterns envisaged by the government in the major mdustrialized centers {in terms of the policy framework prescribed by the NPDP of 1975) are contained in these strategies (South Africa, 1980a; 1980b; 1981b). 18. As a cluster of metropolitan area’s, the PretoriaWitwatersrand-Vaal Triangle (PWV) area can be regarded as a megalopolis. The other major metropolitan areas are the Durban-Pinetown-Pietermaritzburg (DPP), Cape Town-Bellville (CTB), and Port Elizabeth-Uitenhage (PEU) areas. 19. Not all designations of “industrial development points” and “deconcentration points” were finalized at the time and are, therefore, not indicated in Figure 3. 20. Although it never was officially called a basic needs approach, the South African government’s action over the years to improve the standard of living direct involvement in the provision of blacks -through of housing, health services, and educational facilities, and indirectly through so-called Development Corp-

orations to stimulate industrial and commercial development in the reserves (Horrel, 1972; BERBD, 1970) - had some characteristics of a basic needs strategy. This top-down basic needs strategy involved local black leaders only on a very limited scale. All meaningful planning and development decisions were initiated in Pretoria, and executed by the white government departments. 21. This is an integrated and comprehensive regional approach permitting flexibility in the implementation of rural and industrial development strategies according to differing regional circumstances (South Africa, 198%; Keeton, 1984; Bembridge, 1986). 22. This kind of enterprise is described by Hermansen (1972) and Isard (197.5). 23. The many facets of the South African development situation necessitate a subtle differentiation between the terms “bottom-up,” “basic needs,” “grassroots, ” “top-down,” and “center-down.” The bottomup approach refers to the local community, especially the peripheral society, having a meaningful say in development planning and decision making processes affecting their lives. This approach deals with the community’s human dignity, its right to determine its own future (Todaro. 1982). A basic needs approach places emphasis on the improvement of the living standard of underdeveloped people living in peripheral areas, through the provision in their basic human needs. These include housing, education, health care, and food of an internationally approved nutritional value (ILO, 1976). A grassroots approach refers to engaging the underdeveloped society in productive economic activities at the grassroots level. This includes traditional agricultural activities, and informal commercial, industrial, and service activities. Although a grassroots strategy forms part of a basic needs approach, the latter includes more than purely productive action. The provision of health and educational facilities does not form part of a grassroots approach, but does form part of a basic needs approach. A top-down approach is, in contrast to the bottom-up approach, one in which development planning and decision making is taken by the central government with very little or no involvement of the local leaders. The center-down concept refers to a growth center approach which places emphasis on the creation of job opportunities for the semi-skilled and highly-skilled labor force, and on economic growth. In South Africa one presently finds, for example, a development strategy in which people living in peripheral areas are encouraged to get involved in informal economic activities (i.e., a grassroots approach) which, together with the housing schemes and educational programs of the central government, forms part of a comprehensive basic needs strategy, initiated and executed from the top downward with very little or no meaningful selfinitiated involvement of the local community in the decision making process. Throughout this paper these differences will apply. 24.

“Induced” centers refer to development

centers

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POLICY IN SOUTH AFRICA

that are established through government involvement in direct and indirect productive action (see note 32) at designated locations in areas where little economic development is taking place otherwise (Parr, 1973; Hansen, 1978a). 25. So much has been written on this aspect of the development center concept that further elaboration would merely be repetitive.‘Standard references on this topic are: Myrdal (1964); Berry (1972); Hirschman (1972); Hermansen (1972); Lazutn (1972); Thomas (1972). 26. Nichols (1969); Misra (1972); Conroy (1973); Moselev (1973b): Hansen (1978a: 1978b): Hieeins (1978);Ldand S&h (1978); and Friedman and W&ver (1979) have attempted to prove a general overestimation by some early writers of the development center’s ability to create economic spread effects. According to Dewar er al. (1986, p. 41) “the extent to which backwash or spread effects predominate around any growth centre will depend largely on the operation of certain contextually related factors: for example, the degree of complementarity which exists between centre and periphery; the relative strength of external economies and diseconomies operating in the growth centre; the adaptability of potential entrepreneurs in the periphery; the nature of human resources movement and the degree of physical integration between centre and periphery.” Positive elements mentioned here are practically nonexistent at most designated industrial development points in South Africa. 27. The high inflation rate average in South Africa over the past decade (largely due to low productivity levels), the exchange rate collapse of the South African currency over the past five years (a factor which has also contributed greatly to the high inflation rate), and the results of the international disinvestment campaign have made agricultural input costs exceptionally high. All these negative factors, together with the import boycott on South African products have left their mark on the South African agricultural producer’s competitiveness in international markets. 28. These are measures through which an underdeveloped community is protected from excessive com-

393

petition by the formal sector through the total or selective exclusion of the latter from such underdeveloped areas (Friedmann and Weaver, 1979; Stdhr and Taylor, 1981). 29. Although the application of a basic needs approach implies a shift in emphasis away from the conventional Rostowian growth phases in terms of GNP results, economic growth must be one of the developmental goals if the elimination of income disparities in South Africa is to be achieved within a reasonable time horizon. 30. According to Todaro (1982) the quality of life refers to three human core values: life sustenance or the ability to provide basic human needs; self-esteem or human dignity; and expanded personal freedom. 31. The development process from the bottom upward, in which attention is focused on the fulfillment of basic human needs, is perceived as a process involving the local community in a comprehensive or integrated development process. This process covers remedial action over the entire spectrum of human life, as well as creating economic growth expansion to ensure the provision of capital-intensive, basic needs-oriented facilities, and to secure generally more equitable income distribution patterns (OECD, 1984). 32. Indirect productive action refers to investment of social overhead capital (Hirschman. 1972) in areas where it is most needed. Direct productive action refers to the initiation of development projects through local involvement in peripheral areas to improve selfsustenance. 33. Development is defined as a multidimensional process involving structural economic changes, changes in institutions, changes in attitudes as well as the acceleration of economic growth, the re’duction of inequality and eradication of absolute poverty (Myrdal, 1975; Todaro, 1982; OECD, 1984). 34. See Browett (1976, Figure 4) or Fair (1982. Figure 5.5) for an indication of the extent of the core areas, as well as the inner, intermediate, and outer periphery of the South African spatial economy.

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