Financing Cities in the Global Economy

Module 1. Location and Geographical Economics (LGE)

First presentation Simulation for LGE

Group 3Galina KirillovaJuan Granados Mitiku BeyeneVlastimil Huba

May 4/2005

Content

Geographical location (country of study)

General diagnosis

Main cities interconnected

International trade flows

Basic criteria to select the country

Geographical Location – South Africa

Area: 1.2 million sq. km.Population: 46.6 million (2004)

Geographical Location – South Africa

6 Border countries: BotswanaLesothoMozambiqueNamibiaSwazilandZimbabwe

Coastline: 2,798 km

Administrative subdivisions: Nine provinces

General diagnosis

++ points

•Middle-income, emerging market with an abundant supply of natural resources

•Well-developed financial, legal, communications, energy, and transport sectors

•A stock exchange that ranks among the 20 largest in the world

•A modern infrastructure supporting an efficient distribution of goods to major urban centers throughout the region

General diagnosis

- - points

•Growth has not been strong enough (volatility)

•High unemployment rate (27% in 2004)

•Daunting economic problems remain from the apartheid era, especially poverty and lack of economic empowerment among the disadvantaged groups

•Infant mortality, HIV and low life expectancy (50 years)

•South African economic policy is fiscally conservative, focusing on targeting inflation and liberalizing trade as means to increase job growth and household income.

•GDP average: 3%•GDP composition (2003): Agriculture and mining (primary sector)--11%; industry (secondary sector)--24%; services (tertiary sector)--65%•South Africa's GDP is expected to increase gradually to 4.3%. •GDP (2004): $213 billion. •GDP per capita (2004): $3,480

General diagnosis

Main cities interconnected

CITY Population 2001

% Contribution to SA GDP in

2000

JohannesburgCape Town

DurbanPretoria

East RandPort Elizabeth

2,962,7592,858,7432,981,2371,454,2902,054,1331,015,334

14.98%14.01%7.77%8.55%7.78%2.46%

Total % 13,326,496 55.6%

•Six major cities contribute 55% of GDP •Represent 31% of total population

.

Taken from Willem Naude and Waldo Krugell, (2002) `An Inquiry into Cities and Their Role in Subnational Economic Growth in South Africa’, Potchefstroom University (Source of data: STATSSA, 2001; PIMSS, 2001)

.

Main cities interconnected

•Six major cities contribute 55% of GDP

•Six secondary cities have population over 1 million

•East London•Umtata•Pietersburg•Thohoyandou•Middelburg•Rustenburg

.

Taken from Willem Naude and Waldo Krugell, (2002) `An Inquiry into Cities and Their Role in Subnational Economic Growth in South Africa’, Potchefstroom University (Source of data: STATSSA, 2001; PIMSS, 2001)

.

Main cities interconnected

South Africa's transportation infrastructure is well-developed

supporting both domestic and regional needs

•7 commercial ports and harbors: Cape Town, Durban, East London, Mossel Bay, Port Elizabeth, Richards Bay, Saldanha (115 million ton per annum)

•Johannesburg International Airport serves as a hub (10 airports over 3,047 m)

•34,000 km Railways and 57,568 km highways paved

•The domestic telecommunications infrastructure provides modern and efficient service to urban areas,

International Trade - Flows

Major destinations -U.K., U.S., Germany, Italy, Japan, East Asia, Sub-Saharan Africa.

Major suppliers--Germany, U.S., Japan, U.K., Italy.

International Trade - Flows

•South Africa is the world's largest producer and exporter of gold and platinum and also exports a significant amount of coal.

•The value-added processing of minerals to produce ferroalloys, stainless steels, and similar products is a major industry and an important growth area.

•South Africa has made great progress in dismantling its old economic system:

–Reduce the government's role in the economy and to promote private sector investment and competition–It has significantly reduced tariffs and export subsidies–Loosened exchange controls–Cut the secondary tax on corporate dividends, and improved enforcement of intellectual property laws

Basic criteria to select the country

•Developing country

•Modern infrastructure supporting an efficient distribution of goods to major urban centers throughout the region

•12 cities over 1 million inhabitants

•The Government of South Africa has been applying policy to open markets, privatization, and a favourable investment climate with its release of the crucial Growth, Employment and Redistribution

Financing Cities in the Global Economy

Module 1. Location and Geographical Economics (LGE)

First presentation Simulation for LGE

Thank you!