A logistical hub as a local economic development initiative for the Vaal region

Abstract

The purpose of this thesis was to show that a logistical hub would be a perfect local economic development initiative for the Vaal region given its current level of poverty and unemployment and the potential excess capacity that exists within its dominant industries. The research methodology applied by the study was twofold. First an analysis of relevant literature relating to the theoretical perspectives regarding local economic development and spatial development initiatives was undertaken. This established the link between the need for an LED initiative within the Vaal region and a possible vehicle for the project, namely an SOl or IDZ. The benefits of industrial clusters were highlighted in order to further establish the need for all three components of the VLH. A situational analysis of the Vaal region was undertaken in order to determine the extent of poverty and unemployment within the Vaal region. It was found that 53.5% of the Vaal population is unemployed, while 51.6% live below the respective poverty lines for the region. The sectorial analysis indicated that 22% of all employment opportunities within the Vaal originate from manufacturing activities. The secondary economic sector also provides the greatest source of backward and forward industrial linkages and sectorial multipliers available to the region. It was determined that any initiative instituted in the Vaal should be have the secondary sector as its main focal point. The VLH would be established to ensure the sustainable growth of the Vaal's dominant industries. This study suggests that the VLH would enable local industries to take advantage of the opportunities presented by its proximity to two of South Africa's major trade routes, thereby increasing output and eventually economic growth and development. By using similar projects as a template for the VLH, it can be assumed that the project would generate over R 1 billion in investment revenue and would create between 28 000 and 42 000 direct jobs (those relating to the actual VLH) while 9 000 to 14 000 jobs would be created from the downstream activities located in the VIDZ. There is no question that the VLH would increase LED within the Vaal region.