Industrial Development Zones (IDZs) have been and still are important vehicles used by developing countries to facilitate investments, create jobs and boost exports. The attractiveness of IDZs is characterized primarily by their association with the adjacent location of an airport or port, good basic infrastructure and duty-free imports of production-related raw materials and inputs to enhance the key export oriented focus of the zones.
In South Africa, the establishment of IDZs is a recent phenomenon intended to attract investment, increase exports and the competitiveness of South African products. Currently the country houses four IDZs in Port Elizabeth (Coega IDZ), East London (ELIDZ), Richards Bay (RBIDZ) and Gauteng (OR Tambo International Airport). In addition, further sites have been identified and already some are being developed.
The proliferation of IDZs in the country has led to increased interest in the subject. To date the lacklustre investment in the country's industrial development zones and their failure to meet their ambitious goals have attracted mixed reviews regarding the international competitiveness of South African IDZs.
Against this background, this paper therefore aims to contribute to the ongoing IDZ debate. It discusses the economic rationale for IDZs in South Africa, reviews the context in which an IDZ policy is being promoted in the country and then evaluates South African IDZs' economic performance. Accordingly of added value, this paper also reviews the types of incentives offered by Southern African countries in attracting investments in their development zones.