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Regional development, innovation and pro-poor development:
Missing links in the South African planning system
Doreen Atkinson
Centre for Development Support,
University of the Free State
Conference on Overcoming Structural Poverty and Inequality in South Africa
20-22 September 2010
CONTENTS
1. Introduction: Why are development strategies yielding so little
results in South Africa?
The problem of poverty can be addressed at many levels: Household, community (both qualify as "micro"), city-wide, municipal and provincial. In the past, government policy has focused primarily on micro-interventions, including the LED1 programme, Working for Water, and the Expanded Public Works Programme. The only exceptions to this micro-scale were the infrastructural programmes (housing, water and sanitation) and social grants. Neither of the latter focused significantly on empowering the poor to become economically independent. This paper argues that there is a major missing link in South African development planning. Since 1995, the South African developmental system has been governed by a system of inter-sectoral planning (known as "integrated development planning"), at provincial, district and local level. A great deal of effort has been taken to compile and revise Provincial Growth and Development Strategies (PGDS) and Municipal Integrated Development Plans (IDPs). This directive came from national government, and was systematically implemented throughout the governmental system. Increasingly, government departments were required to pinpoint their development plans within the PGDS and IDP system, in order for public funding to be made available. This system had the merit of promoting at least some degree of inter-sectoral co-ordination, and to overcome the notorious "silo mentality" which characterises government. However, there has been a total obsession with political jurisdictions – probably because new political elites, at provincial and municipal level, are locked into a system of political advancement which is completely based on official jurisdictions. Consequently, the question of inter-jurisdictional collaboration has been systematically neglected. In fact, it is possible to argue that international collaboration (such as the new transfrontier game reserves) is easier to achieve than interprovincial collaboration. This is because international collaboration has a recognised channel of communication (the Department of Foreign Affairs) whereas the institutional mechanism promoting provincial collaboration (the MINMECs2) have remained underdeveloped. The fact that the Western Cape now has an opposition party in power has also undermined systems of interprovincial collaboration. Provincial boundaries very often lead to turf battles or mutual envy, thus effectively preventing the identification of common interests. In fact, provincial rivalries create an unintended urban bias in development. Because provinces are reluctant to work together on issues or opportunities which straddle their borders, they tend to focus their development initiatives in localities which are safely away from the borders. Very often, these are metros or cities. This means that an estimated 50-100 km along each side of each provincial border becomes developmentally neutralized. This problem has prevented the identification of new development solutions, which have to be tackled on a regional basis. The ANC Government has not, as yet, come to terms with the Local Economic Development. Committees bringing together national Ministers and provincial Members of Executive Committees. concept of "economic regions" – a concept which was foregrounded, but rather discredited by the National Party government, which used it to bolster politically dubious "homelands". Under President Zuma, the ANC Government has undergone a sea-change, in ways which it most likely has not yet fully understood. In particular, the issue of rural development has now been rescued from the complete neglect it suffered under the Mbeki presidency. This brings the question of regional development much stronger to the fore, as rural regions typically cross political jurisdictions. Whereas metropolitan areas are often neatly situated within provincial boundaries, rural regions straddle boundaries. Once the importance of rural development (and hence regional dynamics) is recognised, the argument has implications numerous sectoral arenas, including tourism, agriculture, energy, mining, water management, and transport. The stage is now set for a significant reconsideration of the obsession with political jurisdictions. Internationally, there is a growing recognition of the need to plan and promote development across sub-national and national boundaries. It is important that South Africa gets into step with these international trends. While the goals of regional development may vary, the main concern is to secure some level of "balanced development" amongst advanced and backward regions, to even out the gap in life chances, employment opportunities and real income of citizens, across unequal regions (Telfer 2002: 112). Typically, regional policies assist peripheral regions to develop economic opportunities and to balance national development outcomes. Regional planning is an effort to attain the best possible spatial pattern of development. This is a far cry from the National Spatial Development Perspective (NSDP), which became prominent under the Mbeki government, and which systematically promoted economically advanced areas (such as metros) at the expense of economically backward areas (such as rural regions). It is now time that the NSDP becomes overhauled – or at least re-interpreted – to take cognisance of the huge potential offered by rural areas. This will require a reconsideration of the powerful development potential of economic regions in general – an orientation which will overcome the limitations of planning based on political jurisdictions. Such an orientation will pose new challenges to government planners, line departments and municipalities. This paper suggests some of the implications for our current system of planning, and the ways that this can be overcome by means of pro-poor economic regional planning and systems of innovation. From sectors to regions
In South Africa, sectoral departments have held sway over public budgets. Despite attempts to co-ordinate and promote inter-sectoral planning, the main locus of allocative power has been situated within sectoral line departments, at national and provincial level. The principle of regional economic planning requires a different focus. Economic regions may be better served by comprehensive area-targeted programmes than by traditional sectoral investments and subsidies (Pezzini 2001: 138). In Europe, there is a growing shift from sectoral policies to a territorial policy approach – a view sometimes referred to as "the new regionalism" (Deas and Giordano 2003: 228). This has several key implications, which are explored in the next few sections. The definition of a "region" is somewhat controversial. Smith (1995, in Telfer 2002: 114) outlines four definitions of "region": Firstly, it can refer to an administrative or political unit; secondly, it can have an objective set of internal similarities; and thirdly, it can be a functional region, with a high degree of internal interaction. In the case of the arid areas of southern Africa, it is primarily an objectively defined region (based on its common characteristic of aridity), but there are the inklings of a functional region, with some cross-border activities and collaboration. The purpose of this paper is to examine its potential to become a much more effective functional region, at least as far as tourism is concerned. This leads to a fourth possible definition of a region, as a "contiguous area that has been explicitly delineated by a researcher, planner or public agency as having relevance for some aspect of … planning, development or analysis" (Smith 1995: 175 in Telfer 2002: 115). Regional development requires measures to stimulate growth poles, which contain enterprises that generate spread effects through investments, leading to cumulative growth. Economic agglomeration occurs through both forward linkages (suppliers attracting buyers) and backward linkages (buyers attracting suppliers). If tourism is to be a successful development tool, it will be essential to strengthen linkages within the local economy (Telfer 2002: 119). In fact, two sets of linkages are important: relationships with the exterior economy (including goods, services, capital, information and foreign exchange earnings), and linkages between local economic actors. Different rural areas are diverse in nature. "Regions have certain basic resources and characteristics that shape to a large extent their development trajectory and potential geographic location; proximity to markets; topography and climate; natural resource endowments; industrial heritage; and endowment of human, social and physical capital. The point of departure for policy makers should be the identification of possible development strategies per type of region" (Pezzini 2001: 139). The process of regionalisation starts with the acquisition of territorial awareness, in which informal boundaries receive a degree of popular recognition. Thereafter, the development of social and cultural symbols tends to develop a wider sense of territorial identity (Deas and Giordano 2003: 236). Region-building is an economic, cultural and political trend, which can be consciously enhanced by the development of cultural symbols. Deas and Giordano (2003:239, following Lovering (2001)) refers to the "regional service class" – the spokesmen and actors who have promoting regional agendas. A regional identity is the identification of a group of people with the social system of a region, its culture, history, traditions and landscape (Smallbone et al 2007: 75, following Paasi, 2003 and Raagmaa 2002). Following Paasi (2003), there are four key influences which shape regional identity formation:  The territorial shape  The symbolic shape – the system of visible symbols that create a shared feeling between the inhabitants of the region  The institutional shape (formal institutions such as government, education, firms and NGOs, but also informal relationships)  The emerging socio-spatial consciousness of the inhabitants, and their identification with institutional practices and symbolisms (Smallbone et al, 2007: 76). Other factors which can shape a region's development is the degree of "institutional thickness", governance structures, the autonomy of local authorities to use resources in a creative way, and the region's branding strategy (Smallbone et al, 2007: 78) The World Bank's report The Development Potential of Regional Programs: An Evaluation of Multicountry Operations (2007) notes that regional programmes can help address problems and opportunities which countries, provinces or municipalities cannot handle efficiently on their own. This can be done in several ways: By building and sharing knowledge, by co-ordinating large-scale investments, by harmonizing policies, and by integrating services (2007: 3). The multi-jurisdictional nature of such initiatives makes them complex to design and implement, but they can have far-reaching beneficial impacts. Regional programmes typically have two types of aims. Firstly, they aim to create public goods or conditions for the production of private (marketable) goods that countries cannot create cost-effectively by acting on their own (World Bank 2007: 4): "They provide ways for countries to deal with regional externalities that arise when the consequences of actions by one or more countries inescapably spill over national borders, creating benefits (positive externalities) or costs (negative externalities) for neighbours in the region". Secondly, they provide ways of achieving economies of scale in the production of public or marketable goods and services, and thus generate increased inefficiencies in the achievement of national goals. In the UK and elsewhere, a significant factor is that regions are no longer seen as part of a redistributive agenda, to distribute resources from wealthier to poorer regions. Instead, regionalism takes the form of "competitive regionalism" (Norris 2001: 558), where regions are encouraged to coalesce and compete for resources and grants at the national and EU scales (Jonas and Ward 2002: 386). In the South African context, the implication is that rural areas should be developed primarily in order to redistribute welfare, but to promote the development of rural economic advantages. Good practice regional development policy needs to be sensitive to the specific strengths and weaknesses of the target regions. Such policies need to be based on empirical evidence (Smallbone et al 2007: 135), to determine potential competitive advantage. This requires a re-orientation of planning imperatives. Specific policy measures for regional development might be concentrated on four different aspects: (Smallbone et al 2007: 136):  Developing the supply base (skills, education, innovations, communications) of regional products  Developing the demand-side of regions, by finding new markets for their products  Developing the institutional framework on a regional basis (development agencies, business associations, political representation)  Identifying firm-level interdependencies, exchange relations and rationalities that work to local advantage, as well as those that hinder the development of local initiatives. Significantly, this can be done in areas that are economically underdeveloped: "In less favoured regions, initiatives that seek to build a sense of pride and regional identity may be a helpful tactic, when introducing new policies and in seeking to gain support for them. Moreover, in a cross border context, where border regions artificially divide cultural regions, with common traditions and a common language, developing this regional identity could well benefit from a cross border element" (Smallbone et al 2007: 136). There are excellent international examples of such regionalism. In Australia, for example, the efforts of Desert Knowledge to promote the regional advantages of the remote desert "Outback" illustrates the potential success of such initiatives. For policy-makers, policy priorities might be: Creating a vision for the region, using symbols accepted by the regional community, to create a regional brand  Promoting participatory decision-making and informational transparency to enhance the benefits for local communities  Identifying firm-level interdependencies, exchange relations, networks and synergies that work to local advantage, as well as those that hinder the development of local initiatives;  Building local social capital through projects designed to restore a pride of place, community development programmes, and building social capital  Targeting active labour market programmes towards vulnerable social groups such as young people, under-qualified people or ethnic minorities  Assisting informal enterprises to upgrade their operations, by means of bridging loans and specialized services  Providing training to increase human capacity (Smallbone et al 2007: 137). Internationally, some regions are now being identified according to their clustering characteristics. Companies which are associated with one another , generating knowledge and learning and co-operative relationships (Deas and Giordano 2003: 227). Clustering can create positive externalities and increasing returns to scale, it can build on geographical ties, relational assets, local tacit knowledge, long-standing social norms, and local conventions of communication and interaction (Smallbone et al, 2007: 136). Increasingly, central governments are recognizing the need to develop tailor-made regional policies (Pezzini 2001: 140). This means support for bottom-up development initiatives, such as the Canadian Community Futures Programme and the EU LEADER Program (Pezzini 2001: 142). The idea and style of regionalism can differ from one country to another. Regions can vary according to design differences, wider political contexts, and the multi-scalar institutional relationships of different interests. The re-discovery of regionalism is taking on different forms in different settings. In the US, for example, regionalism refers primarily to city-regions and metropolitan areas, whereas Canada has focused on larger geographical entities, many of which extend to the rural hinterlands of metropolitan areas (Deas and Giordano 2003: 226). The key questions, in each case, would be: "Where are its boundaries? What interest groups are implicated in different models of regional governance? Who drives the process of regional institutional reorganisation? At what spatial scale(s) are the interest groups driving reorganization mobilized?" (Jonas and Ward 2002: 397). Towards regional governance
This, in turn, means that local and regional governments are becoming more important. The diversity among rural places makes it very difficult to design a national rural development policy that can take into account locally specific needs. This, in turn, implies the decentralisation of functions, with its associated characteristics of fiscal federalism, citizen participation, and building intergovernmental co-ordination of functions (Pezzini 2001: 141). Governments at the lowest levels are receiving new mandates. This has led to intense debates about "regional governance", as defined as "the multiplicity of state and non-state actors and arenas through which power in and between cities and regions is exercised and the decisions that affect the trajectory of development and redistribution within, across and between cities and their regions" (Jonas and Ward 2002: 381). The term "governance" refers to "conscious collective action extending beyond government, and deploying the capacities of businesses, community groups and academic institutions (Smallbone et al 2007: 125, following Hart 2003). The growing focus on partnerships reflects this increased participation of non-state organisations in policy-making (Smallbone et al 2007: 127). In addition to the promotion of local, regional and supra-national institutions, a new style of institution-building is becoming evident. There is a growing focus on local and regional partnerships, which include governments, NGOs and the private sector (Pezzini 2001: 142). This is presenting new challenges, such as promoting the accountability and inclusiveness of such institutions, and the question of moving from joint strategic planning to the issue of decision-making and implementation. A new phenomenon is the rise of an array of cross-scalar institutions – i.e. institutions which operate at a range of different scales, such as transnational, national, regional, district and local (Deas and Giordano 2003: 225), a phenomenon also known as "glocalisation". This has also been described as the "hollowing out of the national state", with national governments losing functions to supra- and sub-national institutions. But at the same time, the key role of the nation-state remains important, but often as "orchestrators" instead of "drivers" of economic development (Deas and Giordano 2003" 226). In many countries, regional institutions are being established, and about 3 000 regionally based economic development agencies now exist in Europe (Deas and Giordano 2003: 228). In the United Kingdom, Government Offices of the Regions (GORs) were created in 1994. Each brought together regional branches of central government departments, and this brought the regional question back into the mainstream political agenda. The government then set about a program of regional institution-building, through both the conceding of functions downward (from the center) and the ceding of functions upward (from the local) (Jonas and Ward 2002: 384). Regional Development Agencies were established in 1999. The RDA Boards were appointed by government, to reflect a variety of interest groups, including the private sector, voluntary sector and local authorities. This system has led to a web of initiatives at the sub-regional and local level which are dependent on a loose network of regional co-ordinators, promoting various strategies, such as employment creation, skills development and local capacity building (Diamond and Liddle 2003: 108, following Robson et al, 2000). A great deal of regional governance seems to be built on coalitions and networks of private actors and business interests, which cross local jurisdictions (Jonas and Ward 2002: 381). Internationally, there has been a great deal of attention paid to the idea of regional institution-building, often associated with terms like "multi-level governance" and "joined-up policies", to reshuffle state institutions on a regional basis, because that is perceived as "the optimum size and spatial scale for a critical mass of organisations and economic actors to learn, innovate and compete in the new economy" (Jonas and Ward 2002: 381). The role of government is, then, to "create the institutions that foster local leadership and facilitate co-operation among business, government and educational organisations throughout the region" (Rondinelli 1998: 95, in Jonas and Ward 2002: 382). But such institutions need not be highly formalised. The notion of "governance" captures the flexible and fluid nature of post-modern institutions. The term "governance" reflects the "interaction of a plurality of 'governing' actors who are not all state or even public actors" (Morrison 2006:146, following Papadopoulus 2000:211). Institutions can be conceptualised as formal and informal networks of social interaction, negotiation and contestation, across the public, private and voluntary spheres. And in many cases, such regional governance systems are based on voluntary co-operation (Norris 2001: 559), in which people can best regulate themselves through horizontally linked organisations (Savitch and Vogel (2000:161, in Norris 2001: 559). In this process, the pioneering role of individual actors and institutions should not be underestimated (Morrison 2006: 149). But the complexity of such new regional networks may mean that the developmental outcomes will be unpredictable. It seems that there can be a continuum of formal regional institutionalisation, from "regional co-operation" at one extreme to "regional government" at the other. Of course, the impact of "co-operation" may not always be very effective, particularly on tough and controversial issues, and it leaves open the opportunity for endless renegotiation and even withdrawal from agreements (Norris 2001:560) One key activity for such flexible institutions would be to attempt collaborative planning at the regional scale, to facilitate diverse actions to think and act through the active generation of social, intellectual and political capital (Morrison 2006: 146). The creation of regional network has implications for other levels of government. Generally, it seems that the role of the national level remains central to the orchestration and re-scaling of state functions in urban areas and regions (Jonas and Ward 2002: 397). But the status and role of local authorities may become uncertain. Their relationship vis-a-vis these regional networks could enhance or detract from their inherited status (Diamond and Liddle 2003: 110). Local governments can play an important role in regional development, particularly in providing and facilitating social and physical infrastructure (Smallbone et al 2007: 146). This could include promoting entrepreneur and workers associations, local technical skills, credit co-operatives, strong networks of local banks committed to local lending because of an extensive knowledge of client's trustworthiness and local economic conditions, technology transfer centres, and the marketing of the region. In the United Kingdom, at least three modes of regional development emerged in different parts of the country: Managerial/strategic (focusing primarily on the co-ordination of service delivery), regional/democratic (advocating formally elected regional government), and democratic/local (focusing on the strengthening of local as opposed to regional government (Diamond and Liddle 2003: 110). This diversity of opinion highlights the fact that, even though many people agree that regional devolution is necessary, there is a lack of consensus on the organisational framework for regional government, as well as its roles and responsibilities. These examples hold a great deal of value for South Africa, which still clings to the importance of formal jurisdictions and powers. Towards cross-border development
A further implication of this new regional approach is that many regions transcend artificial administrative boundaries. Increasingly, the solution is seen as "co-operation between communities and the creation of horizontal partnerships between public and private actors over areas sufficiently large to define coherent, common strategies" (Pezzini 2001: 141). Cross-border positions regions more strongly in the market. This makes a lot of sense, because of the nature of specific economic sectors. In tourism, for example, tourists will often have a regional rather than a specific destination in mind. Borders have emerged as a "new frontier" in international tourism research (Rogerson 2003: 33). In agriculture, it enables appropriate products to be developed within an ecological biome (e.g. the "Nama Karoo. It can also allow the rationalization of investments in infrastructure by allowing a sharing of facilities, such as airports. Furthermore, by co-operation amongst governments, different features can be combined from each of the countries to provide complementary tour circuits (Cleverdon 2002: 23). According to Smallbone et al, "Internal cross-border regions emerge as new spaces of social and economic activity, … eventually becoming centres of gravity of economic activity" (2007: 26). Such entities may gradually acquire more autonomy to develop and implement their own policies and to build their own institutions of governance. The "new regionalization" refers to increasing interconnections between areas, which are located in neighbouring states. Furthermore, such relationships could local authorities have acquired a central position in the evolution and functioning of cross-border regions. There is a global tendency for firms to use cross-border alliances to strengthen their position in the market-place (Smallbone 2007: 16), by expanding their operations and broadening their knowledge base. Regional economic co-operation can play an important role in increasing economic and investment activity within a particular region (Smallbone 2007: 17). For very small-scale businesses, the relationships are often based on kinship ties, shared cultural or linguistic background, professional linkages or personal acquaintanceships (Smallbone 2007: 18). Networks between companies can promote innovation. Economic or functional regions may emerge spontaneously, and may subsequently develop into a system of governance and regulation, which may include communications, industrial organisation relationships, and political co-ordination mechanisms (Smallbone 2007: 21). A cross-border region is characterised by a network of firms which co-operate across borders. Such regions can be situated in highly competitive regions, or in regions characterised by poor levels of competitiveness - the economic "periphery" (Smallbone 2007: 22, drawing on the work of Kratke (2002a and 200b)). Such collaboration can therefore take different forms, ranging from co-operation (initial efforts between adjacent jurisdictions to solve common problems), to collaboration (where joint efforts are well established), and integration (where partnerships exist without boundary-related hindrances) (Timothy 1999: 184-5). This process may require a great deal of administrative effort. Nevertheless, "some degree of inter-jurisdictional networking is vital because it has the potential to reduce economic, social and ecological imbalances that occur on opposite sides of a boundary … and will lead to more holistic and efficient planning as all parts of the attraction are considered as one, and the duplication of development projects may be eliminated" (Timothy 1999: 195). Joint efforts could include administrative frameworks, infrastructure development, conservation, human resource development, and shared promotional efforts. Africa can learn from experience elsewhere. The EU has a special focus on the development of border areas, influenced by the need to establish or consolidate ties on either side of various borders (Pezzini 2001: 140). Increasingly, geographical areas with similar characteristics (such as environmental features and problems) are recognised as cutting across administrative entities. "To adapt to such a scenario of shared authority, territorial dynamics and new economic realities, central administrations have begun to prompt the formation of new structures for territorial governance by encouraging and setting forms of vertical and/or horizontal co-ordination" (Pezzini 2001: 141). There are more than 70 cross-border regions in Europe today, operating under the names of "Euroregions" or "working communities" (Perkmann 2003: 153). Notably, the European Union's LEADER programme focuses on transnational co-operation in rural areas. There have been several phases of the first programme, starting with a focus on networking of skills as a regional development tool (1991-1994), to LEADER II, which facilitated the funding of transnational co-operation projects, and subsequently to LEADER+. Funds are made available to enable potential partners to derive a shared definition of co-operation projects, to have preliminary meetings, and to complete feasibility studies. In particular, this assists potential partners to attain a "critical mass" of their product. The programme now funds pilot projects, managed by "Local Action Groups". Such projects will be integrated territorial rural strategies, based on bottom-up participation.3 This approach sets a useful example for institutions such as SADC and NEPAD, but also to for interprovincial collaboration. Building cross-border alliances can be a lengthy task. Government officials and economic agencies on both sides of the border have to identify common interests, and then develop common strategies and plans. Areas on different sides of a border are often subject to different fiscal and regulatory regimes (Pezzini 2001: 141). Budgets and staff have to be synchronised to these plans. There is also an element of instability, as different jurisdictions may be subject to different political pressures and even ideologies. Creating "framework conditions"
The lesson for policy makers is that they need to build on and support existing enterprise initiatives (Neergaard and Ulhoi 2006). Government does not have to initiate or do everything – it can add its weight to existing cross-border networks. The existence of 3 universal and impartial political institutions together with public policies which enhance social and economic equality creates social capital (Rothstein 2005). The state plays a major role in creating "trustworthy" environments, which allow market players to develop new rules of the game (Radaev 2005). Governments should assist their rural regions to determine their competitive advantages, and to promote and commercialise their natural and cultural assets through recreation, tourism, and enterprise relocations for quality-of-life reasons (Pezzini 2001: 144). Rural regions should be branced based on local identity and market niches, by linking products to places. Governments should also finding new ways of providing public services in rural areas, such as service centers, telemedicine, and distance learning, sometimes using new communications technologies (Pezzini 2001: 145). Another useful service is to promote the flow of information about rural development activities, and their results, especially about "good practice". Promoting monitoring, evaluation and other research activities would be a key aspect of government assistance (Pezzini 2001: 143). Specific measures to promote cross-border collaboration include (Smallbone et al 2007: 160-7):  Introducing measures to raise awareness of the opportunities presented by cross- border partnerships among enterprises, e.g. by organising study tours and exchange visits  Establishing cross-border partnership search facilities, to identify suitable partners for  Fostering business-to-business contacts through joint events and distributing  Increasing the international networking capacity of business associations  Establishing cross-border partnership support programmes  Promoting business support networks in border regions, to provide information, advice and training to small companies  Planning joint infrastructure (e.g. roads, airports)  Promoting regional branding. In particular, the EU encourages the creation of packages of co-ordinated measures to develop the economy of lagging rural regions. This includes efforts to promote the quality of the business environment, building social or human capital, or providing relevant infrastructure. Instead of simply paying over subsidies to producers, the new approach involves a focus on creating quasi-public goods and "framework" conditions, which support enterprises indirectly (Pezzini 2001: 141). New approaches would be to promote investment in human and social capital; diversification of economic activity; providing key infrastructure; promoting technological diffusion; and promoting innovation and networks of knowledge and expertise (Pezzini 2001:144). There also needs to be an increased focus on the appropriate governance structures for entrepreneurship development. This includes the creation of a business support infrastructure to promote new and small enterprises (Smallbone et al 2007: 130). South Africa is no exception to this, although the implementation of such business support programmes is still at an early stage. Promoting regional innovation and research is one way in which governments can promote public goods and "framework conditions" for pro-poor development. Regional learning and innovation
In this new environment, government institutions need new ways of learning from new contexts – including areas outside their formal jurisdiction. Smallbone et al (2007: 87) noted that little is known about organisational learning, involving enterprises or institutions, in a cross-border context. We need to understand the role of knowledge and learning for organisational change and business success. In the context of cross-border co-operation, collaborative know-how and experience are both important for successful inter-organisational learning (2007: 89, following Simonin 1997). "Institutions that encourage alertness to, or awareness of, previously unknown knowledge have a potentially important role … Entrepreneurship development requires a bundle of social capabilities, in terms of institutions and policies, which will support the acquisition and diffusion of information and knowledge that are indispensable for entrepreneurship to develop" (Smallbone et al 2007: 150). Innovation policy and knowledge management are two key themes in modern development studies. These are large topics, and include a wide range of issues, including education, training, and telecommunications. In this paper, the focus is on innovation policy as a spur to regional opportunity and development. The international literature is increasingly emphatic on the need for innovation policies as a cornerstone of economic policies. According to the World Bank (2010:2), the global technical system is undergoing a profound transformation based on technologies such as IT, nanotechnology, agriculture and biotechnology. However, other sectors, such as manufacturing, tourism, services and creative industries may be equally important (World Bank 2010: 20). Innovation is increasingly regarded as the key to economic, social and environment progress: "It is the main source of economic growth, it helps improve productivity, it is the foundation of competitiveness, and it improves welfare … Adaptation to climate change, adjustment to limits of natural resources, and protection of biodiversity require fundamentally new patterns of production and consumption worldwide" (World Bank 2010: 6). Today, the production system has taken the form of a "knowledge economy or knowledge society", characterized by very rapid scientific and technical developments. "Economic growth and well-being are now widely recognized as being founded on a well-functioning knowledge and innovation system in which all actors, both the typical knowledge-creation actors (such as universities and public research organsiations) and private firms, perform well" (Soete 2007: 30). Innovation is typically regarded as an urban or metropolitan phenomenon, as well as a globalised network amongst metropolitan areas. However, it has implications for rural areas too. In rural areas, the knowledge-based economy will be a fundamental shift from the regional economy hitherto based on primary products (mining and agriculture), retail, and services. Timeous, accurate and scientific information is required to identify new developmental opportunities which are in line with international trends, in order to create a competitive region. Once again, the focus is on economic opportunities and assets, which are often regional in nature, and may well transcend district, provincial and national boundaries. The international knowledge explosion requires that less developed states fast-track the production, but also the use (effective demand), of scientific information and analysis. There is simply no way that South Africa can compete internationally without creating a knowledge economy. With the exception of the metropoles, most South African regions are living on inherited knowledge bases, with the exception of a few cases where private sector investment in research has continued (such as agriculture). In many cases, such research is also too little to make a significant and lasting impact on South Africa's developmental challenges. Furthermore, such research is often aimed at enabling private entrepreneurs (such as commercial agriculture) to compete in a very tough global environment, and do not focus primarily on innovations to assist emergent enterprises or the poor. At the same time, scientific and technological innovations would create human, social and moral dilemmas. Complex policy and normative trade-offs regarding social interests have to be made, and technologies often have unintended consequences which impact on the ways that people behave. This gives rise, in turn, to institutional management dilemmas. For example, should public budgets be diverted from pre-primary or primary education to tertiary or postgraduate education? Should local communities take policy decisions on the types of agricultural and environmental technologies used by farmers? How can we overcome the digital divide in rural and urban settings? Do new types of technology lead to new patterns of social inequality and exclusion? The importance of social sciences to reflect on, interpret, and analyse technological patterns has never been more evident. The interdisciplinary nature of innovation patterns have been widely recognized. "Many new technologies are materializing at the intersection of several disciplines or sub-disciplines" (Yusuf 2007: 5). The interface between social, natural and technological research is a key case in point. According to the World Bank, Government innovation policy can and should address at least four dimensions (World Bank 2010:2): 1. Technical, financial and other support for innovators – this is at least partly being done in South Africa, through the National Research Foundation and other grants 2. Reducing obstacles to innovation in competition and in regulatory and legal 3. Promoting the educational system to secure adequate human resources, and 4. Responding to the needs and demands of surrounding communities. "The multiplication of entry points in the economic system will facilitate broader reforms. In all cases, local communities and governments must be mobilized" (World Bank 2010:3). One of the key roles of government is to "establish responsive research structures" (World Bank 2010: 8). This factor is also referred to as the "absorptive capacity" of firms and governments (Soete 2007: 34). The concept of "economic clusters" is becoming central to economic and spatial planning. A cluster is a geographic concentration of interconnected companies in a particular field, with links to related organizations such as trade associations, government agencies, and research and educational institutions. They tend to have a sectoral specialization, but involve a wide range of stakeholders (World Bank 2010: 317). "Focusing on clusters can in fact help local and national governments better understand how their local economies work" – a process of "cluster mapping" (World Bank 2010: 318). Such mapping exercises will investigate key industries, related emerging and global trends, analysis of local assets, and analysis of stakeholders. Geographic clusters create platforms for dialogue and networking between firms and other stakeholders; they allow effective sharing of information; they enable links with training programmes; and they encourage ongoing learning and innovation (World Bank 2010: 320). The presence of universities in cities and regions contribute greatly to the attractiveness of such regions as sites for investment (Yusuf 2007: 12). In this way, universities do not only assist firms with adopting new technologies. They can also lead to policy improvements, and leveraging regions into new strategic specializations (Foray 2007:49). In some cases, the presence of a key "anchor tenant" (Foray 2007:51) may make a major difference to such strategic options (the Square Kilometer Array project in the Karoo may have this impact). Is innovation a quintessentially urban phenomenon, as the World Bank (2010: 324) maintains? Cities are typically regarded as "greenhouses for innovation", because of their infrastructure, human capital, concentration of firms and institutions, and sophisticated urban governance. Cities with a diverse base of economic activities can sustain the demand for research services offered by universities (Yusuf 2007: 13). Some universities are now behaving like multi-national companies, by setting up satellite campuses in other regions or even other countries (Yusuf 2007: 18). Other university policies can also promote linkages with local or regional stakeholders, e.g. by encouraging non-university experts to give lectures, or encouraging university researchers to do consulting. However, it is arguable that the impact of new rural technologies, particularly in agriculture, may create innovation hubs in rural areas. In countries such as the UK, there has been a deliberate policy to use universities to assist the attraction of industries into formerly declining localities (Hughes 2007: 73). A great deal depends on the way in which such innovation relationships are managed (Foray 2007:53). The sheer proximity of a university is insufficient to create a viable innovation system. It involves the need to carefully identify priorities, fields and topics, and the commitment to promote intensive university-industry research collaborations (Foray 2007: 55). Such collaborations can take a wide variety of forms: Informal networks (friendly contacts, conference attendance, disseminating publications), technical infrastructure (such as laboratories), educational collaboration (e.g. employment of graduates in R&D, joint theses), joint research projects, and consulting (Foray 2007: 56). In the United States, internships are often used to promote networks between universities, government and business; in the UK, joint research projects are a more common method. "There is no one true way" (Hughes 2007: 74); a great deal depends on national innovation policies, institutional systems and political cultures. One of the key dimensions of such innovation systems is the dissemination of information. This includes data and image transmission, communication strategies, and database search (World Bank 2010: 12). Such linkages can be deliberately stimulated and promoted, by government or regional development agencies. Universities are highly strategic institutions, which can help to create a "public space" for interactions between the university staff, business and government (Hughes 2007: 73). "Trust, social norms and loyalty – all aspects of the more general notion of social capital – lie at the core of mutually beneficial and successful cooperation" (Wolfe 2007: 121). This is relational capital4, i.e. the level of mutual trust, respect and friendship that arises out of close interactions between alliance partners (Smallbone et al, 2007: 94). 4 "Relational capital" can be distinguished from "social capital". The latter tends to refer to organisational life (e.g. within a family or NGO), whereas "relational capital" highlights the relationships and networks between organisations. But the two concepts do tend to overlap. This, in turn, is influenced by the quantity and quality of knowledge transfer between partners, and the partners' willingness to be transparent to each other. The development of trust can lower transaction costs, facilitate inter-organisational relationships. A common history, common experiences, and shared codes of conduct may foster spatially clustered business systems . Informal institutions (such as conventions and social and moral norms) promote trust. In South Africa, how can such relationships be fostered? Firstly, provincial strategies need to make explicit provision for cross-border relationships, particularly where strategic assets and resources are concerned. Secondly, provinces should engage knowledge institutions, such as universities and consultants, to explore options for shared projects. Very often, strategic knowledge is located in universities, in the pages of academic journals. Thirdly, provinces should provide incentives and recognition for their officials who liaise with their counterparts in other jurisdictions. Fourth, special-purpose vehicles can be created for specific cross-border projects, to undertake joint implementation and monitoring. Finally, national government departments should play a facilitating role, bringing provinces, districts and local municipalities together on shared projects. The case of the Orange River, Gariep Dam and Vanderkloof Dam would be a case in point. Rethinking rural development as a special case of regional
development

Rural areas are often cross-jurisdictional areas, and need to be addressed at a regional level.
Rural development has always posed a conundrum for modernising societies, because
modernity has become largely identified with urban development. It is in the cities that the
technological innovations tend to develop, where capital accumulates, and where people
congregate. Rural areas are often regarded as the areas where people and capital migrate
from, and which consequently run the risk of becoming economic backwaters. Rural areas
face several typical challenges (Pezzini 2001: 135):
 Employment opportunities in primary industries, such as agriculture, are generally  Public sector fiscal restraints have meant that rural services are often scaled down, and public sector employment opportunities are limited  The out-migration of young people, due to inadequate jobs and educational opportunities, has led to a demographic profile based elderly people and the very young, which is often insufficient to support provision of adequate public services  Most rural areas have difficulty in establishing the necessary critical mass of facilities, producer services and investments to support economic development, so entrepreneurs have difficulty starting up enterprises. But a range of new economic concepts have highlighted a new importance for rural areas. These require a new sensitivity to the potential offered by cross-border collaboration. Rural areas cannot be treated as homogenous with uniform problems and opportunities. There is no generic "rural" area, as contrasted with "urban" areas. Furthermore, the distinction between rural and urban is becoming increasingly artificial and obsolete, due to phenomena such as commuting, "reverse migration" (people moving from urban to rural areas), part-time farming, and tourism. "The crucial unit of analysis and intervention is not the small municipality but rather the functional region" (Pezzini 2001: 139). Increasingly, the region is recognised as the appropriate scale for intervention. A major shift in thinking is the recognition of the new "post-productivist" rural economy. In many rural areas, agriculture is no longer the mainstay of the economy. "Rural is no longer synonymous with agriculture" (Pezzini 2001: 135). Increasingly, new economic opportunities are found in agro-processing, tourism and the relocation of urban industries to rural "Greenfield" sites where land and services are cheaper. Furthermore, many urbanites are placing increasing emphasis on quality-of-life factors, including proximity to open countryside and natural amenities, The improvement of communications systems, particularly good roads and telecommunications, has meant that many rural areas have overcome geographical distance and are in regular contact with the cities. Even where agriculture is important, this can managed as part of a restructuring process towards multi-sectoral approaches. Sectors such as agri-tourism can then be promoted. This includes developing green tourism packages, such as farm holidays, nature holidays, theme routes, discovery of natural and cultural heritage, traditional farm foods, and craft work using local skills and materials (Pezzini 2001: 138). Rural policies need to transcend agriculture; and this means that government needs to focus on strategic investments to develop new activities. This, in turn, puts a greater premium on inter-departmental co-operation at national level (Pezzini 2001: 142). A key advantage enjoyed by many rural areas is its quality of life, such as good quality air, a clean environment, attractive landscapes, and cultural heritage. Even when agriculture – whether crops or livestock – remains an important part of the rural economy, it may transcend the importance of its commodity outputs. Farmers are important providers of ecosystem services (Cowling et al 2008). Governments need to develop policies to help farmers preserve their natural endowment, to attract more tourists (Pezzini 2001: 138). This means that a range of new opportunities are available to rural areas, based on a new appreciation of their developmental potential. In a globalised world, rural regions need to determine their competitive advantages. Governments need to assist regions to develop endogenous development strategies, by promoting the capacity for self-generated change (Pezzini 2001: 137). Development needs to be distributed to more backward areas, in an attempt to create balance spatial development. Analysts in third world countries, such as India, have also argued the case for evening out spatial and socio-economic disparities: "Strenuous attempts have to be made for achieving a more equitable distribution, over the whole national space, of productive forces and units and of means of production, employment, consumption and investments, as well as of services such as schools, hospitals, and vocational training" (Mukherji 2006: 328). South Africa requires a major re-think on the importance of rural development, regional development, and cross-border collaboration. In this context, the economic advantages posed by rural regions need to be addressed at an appropriate scale, which often involves inter-jurisdictional collaboration. The impacts of developments – the negative externalities - also need to be understood at a regional scale. For such understanding, special research and innovation needs to be undertaken. Cross-border innovation systems
The focus is now on "innovation systems", which refer to the reciprocal interactions between a diversity of stakeholders (World Bank 2010: 10) – research agencies, government, private sector, venture capital, and special-interest groups. The role of research agencies and universities is only beginning to be examined in South Africa. Elsewhere in the world, international organizations such as the OECD are studying innovation systems. In these studies, the impact of universities is regarded as critical: "Virtually every industrial country is moving to make university-industry links a centerpiece of its innovation systems, and the notion of a triple helix – representing the symbiotic relations yoking together the government, the universities and the business community – has acquired wide currency" (Yusuf 2007: 7). During 2010, the UFS undertook a OECD-funded study of the various impacts of the University on the regional economy. This research lays the groundwork for improving the impact of scientific research in central South Africa in future. Where such relationships are institutionalized, a system of "associative governance" develops. In Ontario, Canada, for example, the state government has been very assertive in promoting links between universities and business, and to encourage innovation. Guided by the provincial Ministry of Enterprise, Opportunity and Innovation, universities began to emerge as key partners in economic initiatives (Wolfe 2007:127). At city level, the Toronto City Alliance created the Toronto Regional Research Alliance (TRRA). Sufficient funding has been generated to create the Ottawa Centre for Research and Innovation, a not-for-profit organization dedicated to helping the city's technology community shape its economic future. This Centre assists the Ottawa Partnership, a group of public and private leaders, to advance the local economy. Specific measures can be taken to promote cross-border learning and innovation. This includes study tours, exchange visits, assisting cross-border partnership searches, hosting joint events, promoting business support networks, promoting regional branding, and planning and funding joint infrastructure, such as roads and airports (Smallbone et al., 2007: 160-7). The importance of regions is that it offers critical mass in new (or re-equipped) economic sectors and industries. Such "critical mass" could refer to economic or industrial "clusters", or to intense regional value-chains. Hence it offers adequate scope for innovation. How, then, are the poor assisted in participating in regional innovation? Clearly, this is larger than the typical micro-scale interventions which South Africa has experimented with in the last 15 years. Regionalism, innovation and the poor
The key challenge is to create a viable and ongoing relationship between knowledge producers (such as universities), economic innovators (such as private sector firms and organized producers), and surrounding communities. "Policy initiatives targeted to specific industries, sites or communities are best conceived through a collective vision and implemented in a holistic manner … Local communities, even the poorest, have unique knowledge and entrepreneurial potential that can be exploited with appropriate support form surrounding actors such as research and education establishments …" (World Bank 2010: 3). In third world countries, the issue of responsiveness is particularly acute: "Public and university laboratories are often ivory towers, cut off from local needs and poorly funded and staffed" (World Bank 2010: 14). Furthermore, they often need to be better integrated with global systems of innovation and centres of excellence. Poor areas can benefit from improved innovation, in two ways: Through the organization of formal links between poor communities and the surrounding research, education or business sectors; and through the exploitation of the specific knowledge and entrepreneurial drive present in such communities (World Bank 2010: 22). The relationship between innovators and communities operates at several levels. Firstly, it involves the recognition of the knowledge which communities already have, as well as "by blending or bundling it with knowledge of others into products marketed by them or other enterprises" (World Bank 2010: 336). A South African example would be emergent farmers on municipal commonage. Many of these livestock farmers are farm workers who lost their foothold in agriculture, but have a great love of farming and have many practical skills. Following Berdegué (2005, in World Bank (2010:336)), a pro-poor innovation system can be defined as a multi-stakeholder social learning process that generates new knowledge, puts it to use, and expands the capabilities and opportunities of the poor. Institutions play a critical role – they determine the extent to which the poor are able to participate in the innovation process and share in the potential benefits. Such institutions include laws and regulations regarding intellectual property rights; access to assets such as land, credit or telecommunications; social norms which exclude certain categories of people from innovation or entrepreneurship; social stratification (e.g. racial and economic categories) which block the emergence of innovation networks; and poorly functioning markets which deprive producers of the incentives to place their products on the market. For knowledge and science to be useful to the surrounding community, it is essential that it be translated into the felt needs of social stakeholders. "Innovation is distinct from research and in fact need not result from it. Innovations come from the entrepreneurs who make them happen and ultimately depend on a society's receptiveness" (World Bank 2010: 4). In South Africa, this is a major challenge. A great deal of research is already being done (although arguably it still remains insufficient); but the real difficulty is the accessibility of such knowledge to public and private sector agencies. This is partly due to the way in which knowledge is "packaged", and partly due to the insufficient demand for research on the part of social stakeholders. Universities and public research centers in developing countries (such as the Water Research Commission and the Agricultural Research Council in South Africa) have the potential to become central actors in pro-poor innovation (World Bank 2010: 340). The missing link is the creation of local social networks, which can be used to promote the dissemination and use of new knowledge (World Bank 2010: 303). University-led community service programmes provide students with opportunities to obtain practical and problem-solving skills (World Bank 2010: 341),, and at the same time provide valuable knowledge to local communities. Such networks can also partake of global institutions and contacts, giving rise to the phenomenon of glocalism. International institutions such as the Talloires Network unite institutions from around the world, committed to promoting the civic role and social responsibilities of higher education institutions. This network provides participating members with expertise to support the process of building civil engagement, public relations and media links (World Bank 2010: 344). Special funds should be allocated by the government for research at universities that addresses the needs of the poor. The National Research Foundation, for example, has recently advertised a Call for Proposals to university staff, encouraging them to undertake research aimed at new forms of community engagement. Localities can play at least three key roles in promoting innovation (World Bank 2010: 303): Firstly, increased innovation in targeted sites can have a strong demonstration effect and thus lead to broader initiatives; secondly, when means are constrained, small-scale projects can be more cost-effective than larger, more ambitious efforts; and third, for countries or areas with little experience in innovation, such strategies can be a testing ground for more far-reaching strategies. One way of promoting such pro-poor innovations would be to create a special pro-poor innovation fund, to provide matching grants for R&D with a pro-poor orientation. This could promote joint R&D with public research agencies, universities, NGOs and private enterprises (World Bank 2010: 343). Another approach would be to create a professional body entrusted with field trials and demonstration for diffusion, adaptation and assimilation of technologies for the poor (World Bank 2010: 343). To promote cross-border collaboration, a crucial factor is the "absorptive capacity" of an organisation or a group of organisations – that is, its ability to recognise the value of new, external knowledge, assimilate it, and apply it to commercial ends (Smallbone et al, 2007: 93). In South Africa, provinces and municipalities have often shown inadequate appreciation of the power of innovation, knowledge and research. A case study of potential regional innovation: The Karoo
As an example of the regionalist argument, this section will focus on the economic prospects of an area which is typically regarded as extremely backward and lacking in economic potential. The Great Karoo is a vast arid region located in the centre of the country, which can be defined as including Namaqualand, the Succulent Karoo, Bushmanland, the Little Karoo, Richtersveld and the Nama Karoo. This region is generally underdeveloped, particularly lacking in manufacturing. The economy is dependent on extensive farming, which has shed a great deal of labour during the last twenty years. At the same time, many of the Karoo towns have shown some developmental potential, in terms of tourism and crafts. The Karoo has vast developmental potential, in terms of agriculture, agro-processing and tourism. This paper will show that this economic potential has been systematically obscured from view, because of the fact that the Karoo straddles four provinces. Because of low rainfall and associated low productivity, the arid areas are sparsely populated, and in some areas, the population density is less than 1 or 2 person per km2. This has contributed to their political insignificance of the region, as the various provincial and national governments have invariably given more attention to their more populous regions. Map 1: The Karoo, Kalahari and Namaqualand
Nama Karoo Succulent Karoo Source: Charles Barker, Department of Geography, University of the Free State The Karoo consists of a vast inland plateau. In prehistoric times, it was an inland sea, which subsequently dried out, leaving behind a treasure-trove of palaeontological finds. Its fossil heritage is immense, with great potential for tourism. In addition, the Karoo was populated, for thousands of years, by the indigenous "bushmen", or KhoiSan. These nomadic groups left behind a remarkable legacy of rock art and stone tools, as described in books such as Karoo Rock Engravings (Parkington, Morris and Rusch 2008). Since the early 1800s, the Karoo was gradually colonised by Dutch-speaking farmers, who established the sheep and mohair industries, and created a patchwork of more than a hundred towns. Through the 19th Century, these towns developed their own quintessential Karoo architecture, consisting of square white-washed houses with characteristic finishes. Towards the end of the 10th Century, the addition of Victorian architecture to the Karoo towns created a distinctive style of gracious desert architecture. Most Karoo towns also have dramatic and elegant churches, which add distinctive church spires to the Karoo skyline. Once again, their tourism potential is immense. The Karoo has important natural, economic and social assets. Natural assets include spectacular scenery, wide open spaces, spectacular spring flower displays and a diversity of unusual plants and animals. The region is also rich in minerals including titanium and diamonds on the west coast and uranium in the central Karoo Infrastructure in the towns is generally good, and represents a great deal of investment in housing, water, sanitation, roads and other infrastructure. The game industry is becoming an important foreign exchange earner in the area. Agricultural expertise is high, with skilled and experienced commercial farmers, who are often eager to become involved in land reform, agricultural support and other initiatives. Social services are generally good, and include clinics, schools, banks, post offices and retail facilities. Some of the towns have developed significant tourism potential, with niche attractions and activities. There is also a growing phenomenon of "reverse migration", whereby middle class city dwellers are moving to the rural areas, and this brings in new sources of capital, expertise and developmental initiative. There are growing numbers of black and coloured "emergent farmers" on the municipal commonages, who represent a nucleus of new commercial farmers in the future. But it is not all plain sailing in the Karoo. The area has major and complex developmental challenges. The economy is still largely based on extensive sheep and goat farming. During the last fifty years, extensive stock farms have been consolidated, and due to the economic climate, they have shed a great deal of labour. Many of these unemployed farm workers have drifted to the towns, to join the ranks of the urban unemployed. The recent advent of game farming has contributed to this trend of human displacement, although opportunities in agri-tourism and eco-tourism have created scope for new and more sophisticated types of employment. Most of the Karoo towns have grown in size, due to in-migration, and because of the South African social grant system (which encourages people to stay where they are). But the urban economy of the arid areas is very fragile. Typically, the business sector is small, and there is virtually no industrial base. There is an incipient informal sector in most towns, often linked to pension pay-out days. Although the Karoo towns are fairly well provided with infrastructure, there are worrying aspects of its socio-economic profile. Poverty levels are high, due to high levels of unemployment, and increasing rates of illness (HIV/AIDS and TB). A large proportion of income is derived from social grants, with social consequences that are not fully understood. Large housing schemes and the availability of social grants have attracted many migrants to the small towns. The local economies of small towns are characterised by weak multipliers, because a great deal of purchasing power is spent in the larger centres, or metropolitan areas situated outside these areas. The influx of migrants from the farms to the towns, and the migration from the more densely populated areas in the Eastern Cape towards the Karoo, are creating immense pressures on the existing infrastructure. There is an out-migration of skilled people, due to a lack of local economic opportunities. But the greatest hurdle to development is an institutional one: The Karoo straddles four provinces. These are the Western Cape, the Northern Cape, the Eastern Cape, and the Free State Province. In each of the four provinces, it is the neglected zone, the undeveloped backwater, the regional Cinderella. Development effort has been systematically diverted away, towards the coastlines and the capital cities. The provinces also have different levels of resources available to devote to development in the arid areas. The Western Cape is by far the wealthiest, and it can distribute some of its largesse in the Karoo. The Eastern Cape and Northern Cape are poorer provinces. In the Eastern Cape, the Karoo has to compete with much more poverty-stricken areas. The Northern Cape's approach to fiscal distribution is much more balanced than the other provinces, with the arid areas receiving a significant share of the fiscal pie; but the Northern Cape's overall budget is miniscule in comparison with its neighbours. These factors prevent a unified, co-ordinated approach to the development of the Karoo. Currently, provincial strategies towards the Karoo are deeply problematic. The Western Cape's PGDP has a deeply ambiguous attitude to the Karoo. It generally regards the Karoo as an economic backwater, from which more people will (or should) migrate, in the direction of the coastal cities and towns. It offers no concrete ideas for development in the Karoo, or how towns and hinterlands can be integrated. In fact, it proposes reasons why investments should be directed away from rural areas. Its pro-urban bias is explicit, despite its awareness that the coastal cities are becoming unsutainable. These ideas are directly drawn from the NSDP. The PGDS makes no mention of spatial balance or spatially equitable growth as a desirable policy outcome. The Eastern Cape focuses almost all its developmental effort on the traditional or tribal areas in the east of the province, as well as the coastal cities. The Free State provides little substantive indication of any economic development that can take place in the arid south. It is only the Northern Cape, with its vast expanse of arid areas, and its relatively small urban centres, that provides creative suggestions for development in the Karoo. Once the Karoo is understood as an integrated region, new types of economic opportunities may emerge, with a spatial "critical mass". These include: 1. The staple economic sectors of the Karoo, viz. wool and mutton need to be analysed (in terms of production and marketing trends), so that the maximum output and benefit can be gained from these sectors. The Karoo provinces are collaborating to investigate and implement a special "Karoo lamb brand". 2. Niche tourism markets are being developed, particularly "desert tourism", small-town tourism, agri-tourism, eco-tourism, dam- and river-based tourism, and indigenous culture. The University of the Free State is assisting the four Karoo provinces to devise a Karoo Tourism Strategy. The Karoo provinces should collaborate to build up a data-base of tourism attractions, and launching a combined "desert" marketing strategy. 3. Niche agricultural markets are being promoted, particularly "desert crops", including indigenous and exotic crops (examples are hoodia, buchu, agave, olives, pomegranates, figs, and prickly pears). The provinces should collaborate to to develop a critical mass of production with regards to new, high-value niche agricultural products, particularly for the export market. 4. Environmental conservation areas are being promoted, in terms of game parks and private game ranches. A great deal of research still needs to be done on the social, economic and ecological impacts of these developments. There are several notable cases, particularly in the succulent Karoo (Namaqualand and Little Karoo) where participatory ecological research is being done. Kamiesberg Local Municipality has set an important standard by drafting an Ecological Management Plan, with a great deal of participation by local communities in ecological fieldwork and planning. 5. Appropriate spatial planning for small towns should be done, to encourage local
business development, agricultural processing (such as abattoirs), and peri-urban agriculture. These towns should be developed with social services in support of those areas where growth will be experienced. It is therefore proposed that attention should be paid to education, health and social infrastructure in these services centres so that the quality of life of people staying there can be improved, and necessary skills be obtained. Virtually all small towns can be identified as services centres. 6. Appropriate modes of transport need to be developed between the larger towns of the Karoo, including Koffiefontein, De Aar, Calvinia, Beaufort West and Graaff-Reinet. This could include scheduled light aircraft flights between regional capitals (such as Bloemfontein and Kimberley) and urban centres in the Karoo (such as Koffiefontein, Zastron, De Aar and Beaufort West). Research has already been undertaken on the potential impacts of an airport in Beaufort West. Road maintenance schedules should be co-ordinated across provincial borders. 7. The Orange River should be promoted holistically, as a partnership between the Free State, Northern Cape and Eastern Cape. This should include agriculture, tourism, water management and land reform. Joint projects should be promoted, including the development of the Gariep Dam and Vanderkloof Dam. Much research has already been done on the ecological aspects of the Orange River, but a great deal needs to be done on the social and economic aspects of riverine development. 8. Uranium prospecting in the Karoo should be fast-tracked, to add to the incipient uranium investments in the Beaufort West area. A study is currently being undertaken of the economic impact of Karoo uranium. In all these cases, there is a great need for additional economic, social and ecological research, including grass-roots information gathering, innovations, and participatory projects. This can be done in partnership with universities, public research agencies, and private sector R&D efforts. Conclusion

The international literature shows how current and credible is international thinking on "soft
boundaries" and cross-border rural developments. Increasingly, development planners
realize that problems and economic development transcend artificial political boundaries.
Natural resource management, regional business clusters, tourism and infrastructure
development often have to be synchronized amongst provinces or nations. With the
exception of transfrontier game parks, this kind of thinking has hardly surfaced in South
Africa.
We need to investigate the potential of for business clusters and development regions to be
created, based on comparative advantages. The literature suggests the importance of
appropriate governance arrangements for future regional initiatives. National, provincial and
municipal governments can play an important role in promoting local investment,
encouraging local branding, investing in shared infrastructure, and providing business
support. However, the literature also shows that regional governance can be complex, and it
requires institutional capacity to be built.
Innovation policy and research mechanisms offer a critical pathway for such regional
opportunities, interests and assets to be identified. With special effort, such innovation
policies can be associated with grass-roots learning and research projects, which will
simultaneously empower research institutions and local communities.
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