 There's an indication of just how strict our share is. I got a one minute sign as soon as I sat down at the desk. So plenty of pressure. So what we're gonna be talking to you about today is border development zones, which I imagine is not a term that we hear a lot about in many conferences. In Southern Africa, when we talk about borders, what we're actually often talking about is customs posts. It's about one-stop border posts. It's about making our customs officials more efficient. But what we're talking about when we're referring to these border development zones is actually developing the town and the areas around the border itself. So border regions particularly. This is a first part of a two-part study that myself and Clarence are doing, which first of all attempts to look at international examples of how border regions have been developed, what policies have been used to drive development there, and then to apply it in the second part to two examples within South Africa, in Massime and Mafeking, and try and develop some strategies that could take advantage of the unique location of these cities to really drive development. So why exactly would we care about border zones? Really, we see three key factors that would drive these border development zones. The first is regional integration. We tend to think about regional integration as this big macro-level trade policy, perhaps coming down to trade facilitation and customs and things like that. But what border development zones do is they create a direct space through which you can have some kind of co-production between two countries. It's the meeting point of two countries and you can kind of use it as an experimental place where you can have some experience of producing across countries and having direct creation of value chains. The second thing is about the distribution of growth, and I think this is really the most important thing. We tend to talk about growth as happening to a country, but of course it's extremely differently distributed across the country. In Southern Africa, growth tends to be concentrated around big urban agglomerations, and smaller areas and more rural areas often just don't get the same level of attention and don't have the same level of development policies. And this is one example of a small town development strategy focused on one particular part of that. And then the third thing is that there's certain unique features about borders that make them very interesting from an economic perspective. The first is that they're a small town, sure they're kind of like most rural villages, most rural cities, but they're on major logistics through fares that mean that they're much better connected and tapped into different markets around the country. And then the second thing is that you have the advantage at times of two separate productive structures that can be combined in interesting ways. We tend to think about in economic theory that places that are very close together will create, what we'll tend to trend towards one type of productive structure, one type of economy, but we don't see that in practice. Where there's a border that creates a very distinctive difference between the two economies and that's rigid even in very integrated areas like the European Union. And what you can do in cases where you have different productive structures and different complementarities is you can mix the two sides of the border to create something unique and something more productive. The classic example of this is the US and Mexico where you have a large consumer market on one hand and a large productive base based on low cost labor which can be combined to basically benefit both sides. So that type of interesting complementarity. So the way we're looking at this is we're first of all trying to create an international study about examples of border development zones because there hasn't really been a lot of work on bringing all this research together into one place. So I'm gonna mainly talk to you about the international examples we looked at and then Clarence is gonna talk to you about some of the ways we're gonna apply this or our preliminary recommendations about applying this in South Africa. So this is an overview of the countries and the places we looked at. Excuse me. This double counts a lot of the case studies we looked at. There were really 43 case studies that we examined of different border development strategies. You can see two here on the side are based around the Mexican productive hub along the US border and you get a couple of smaller ones like Turkey over here which just has the one example. But the overwhelming majority are based in East Asia and centered around China. China is really the center of most of these border initiatives and they drive a lot of development in the border areas. China and to a less extent the Mekong Delta the countries like Laos, Cambodia, Thailand, Vietnam. So that's kind of our geographic distribution. I'll go through them more or less as a whirlwind tour but focus mainly on China because as I say China is really where a lot of this is centered. China has of course a huge land border that covers a whole lot of countries and every time you see an arrow here that's one of their border economic cooperation zones. Now if I was to just go back for a second the US for example and Turkey their border strategies are very much based on more general things like trade. So having special exemptions on customs and in the case of Turkey developing certain export strategies. The rest of the countries are really focused on basically having special economic zones at the border but special economic zones that are specifically crafted to the border environment. So that are targeting cooperation with the country across the border. So there are SEZs like anything else you'd see but they have specific changes that have been put in place and they vary across the different regions. So China of course has a history with special economic zones that has been very important. It was a key part of its opening up and most of the SEZs that you saw the classic Chinese SEZs are along the coast around your Shanghai, Guangdong type areas. And what this was was an attempt to try and spread that out to other parts of the country particularly to the border areas. Each of these border zones with different countries tend to have different rationale behind them. They're trying to do different things. At the top left over here you can see you've got four border zones that are focused on Kazakhstan. Largely because Kazakhstan is the land route through which China can reach Europe and the European market. Moving across you've got a linkage with Mongolia which only has one crossing. It's a pretty small country but it's basically just focused on developing the infrastructure linkages that you have with the country. Up above that is Russia which is a large consumer market for China. North Korea which is largely driven by political considerations. And then down south your East Asian productive hub and the land route by which China connects to it. That border of course is very contentious. There's been clashes there with Vietnam until the late, until 1990. Myanmar was closed for a long time. So this was trying to catalyze development around that border that's gonna connect China with East Asia. So that's your big picture, your overview of what's happening in China. Within China there's really three types of border development zones that they use. Let me get some water. So this is the first type and sort of border economic cooperation zone. And there were 12 of them created in the early 1990s around those areas that we identified there. This one is on the Vietnamese border at Hecou. And this is in 2003. As you can see this is an incredibly rural underdeveloped area. There's not a lot there. It's pretty much just a border crossing. At this point there wasn't even really a bridge across the river. But what would happen is traders would wait across the river trying to sell their goods within China. So you had this very rough border that didn't really have a lot happening in it. And then a part of China that didn't have a lot of development and where there were concerns that the distribution of this Chinese growth story wasn't quite reaching this part of the country. But what we can see is that by implementing the zone there's been pretty rapid growth around this area. Now the main principles of this zone is that this is modeled on the coastal SEZs. They're trying to liberalize in the same way. So that's mainly about allowing foreign investment, allowing free movement of capital, empowering local governments to exercise incentives and put in place policies. And that's quite a remarkable growth. Now this policy and this model is basically that you have an SEZ in a border town. You have a small town in Heku which held two SEZs and that were focused on trying to facilitate trade across the border. Because it was a border focused post, this is mainly logistics industries operating within this specific SEZ. So it's mainly focused on creating warehousing facilities, creating logistics linkages, transport assistance, all those different types of things. So it's using the fact that this was a crossing point for trade between the countries to develop the area itself. Slightly different one is at the Chinese Myanmar border. This is the second model that China uses within its zones. And this is a little bit more interesting. So this zone you can see is not in a town on the border. It's actually at physically the border. The yellow line crossing through it there and kind of outlining the zone is where the border happens. And what that allows is that it allows special crossing basically of that border of goods and people in capital with special rules. So it's almost like the zone itself is its unique customs area. These are not required to travel into the zone. There are exemptions to customs duties paid entering the zone. And basically just everything flows a lot easier within to that zone itself because it's physically on the border. And then the third and the model that really is they're moving closer and closer towards is this one, which this is just an empty piece of land as you can see, but it's slowly developing. This is on the border with Kazakhstan, the Korgos International Center for Boundary Cooperation. And you can roughly see an outline of where it's gonna come up. This is still being developed, but this is I think the most unique example because it actually physically crosses the border and stands as its own customs area. You can enter the zone visa-free for about 30 days from either side. It's gonna have a vast array of different businesses and corporations there that don't abide by the same rules as either side of the border. It's like its own little country almost that you're developing. So these zones, they haven't been quite as successful as the coastal zones, but that's relatively to be expected because they're not in as much a high potential export area. They're in areas that otherwise wouldn't have had much development, but that through the use of these different strategies have been able to catalyze a little bit of development. Now my time is very tight, so I'll just do a whirlwind tour through the rest of them. This is an overview of the three types of zones that I spoke about, the three models that we've identified within China. Looking beyond China, so China is very much the center of all of this and we're going to a lot more detail about how the zones work, how successful they've been within the paper. But I'll look just quickly at these five examples as well. The greater Mekong sub-region is mainly about Laos, Cambodia, Vietnam, Thailand and I'm missing one, Myanmar. And so this is a very interesting region just because it's mostly countries that aren't very developed. They're all at relatively similar levels of development and geographically the places that these zones are being created were extremely underdeveloped, extremely isolated without many different types of people. So at this area for example, this is on the Laos-Vietnam border. Both countries relatively poor, both countries still developing 80% rural population within the region in which this was developed, but has seen relatively significant growth as you can see through those pictures. This has attracted about $168 million investment through 50 firms. Again, a lot of it is focused in logistics at the crossing point, but there is also some light industry coming through in a lot of these types of areas. Things like textiles in particular, but also looking at things like bicycle production, basically you're simple like manufacturing. So that's the case of Laos. Now obviously when you're creating these zones, there is a bit of a risk. You're trying to swim against an economic tide by locating them in a place where there isn't a lot of structure already. And so you get cases like this one for example, which is on the Laos side of the China border in Botan. This zone, as you can see, also had quite significant growth, but largely failed because it sits in a regulatory black hole effectively between the two borders. It ended up becoming a bit of a criminal nest. There was a casino base there in which the casino started taking hostage the people who owed their money. And so China eventually intervened and shut it down quite aggressively. So that actually, it doesn't have that much economic relevance, but I think it's a nice story. So I'm running out of time and I want to give Clarence some time, so I'll just quickly push through this. This is the Singapore, across the way from Singapore, across the Straits of Singapore, you get Batam and Bintan in Indonesia, the northern islands of Indonesia. Again, very underdeveloped. I think in Bintan there was 11,000 people living on the island when the zone was created on the island. And that population then grew up to 125,000. So what's interesting about these initiatives is that they are taking place in places that shouldn't be economically successful and they are having some effect in creating some kind of private sector growth. Again, here you see the use of two complementary economies. Singapore, which doesn't have land and doesn't have labor, and Indonesia, which has lots of both. Singapore, which also, of course, and was cited as being very important from businesses who invested here, has a great reputation as an economic manager and that reputation helped offset Indonesia's less than fantastic reputation at the time. ASMEX, this is very briefly, is a regional organization between the five countries that you see there. Very interesting just because it explicitly promotes border development zones from a regional organization level and that has helped facilitate these develop on both sides of the border. So you have zones across the border from each other and that kind of shows the role that region economic institutions can play within this. North Korea, very interesting. I won't go into it, there's no time. Basically, there's even amongst a very divisive border, which is very dangerous. There's lots of mines and soldiers. There has been attempts to be developed between North and South Korea. This is the K-Song Industrial Complex in 2002. As you can see, pretty much just empty land and this is it in 2015, where it employs now about 41,000 North Korean laborers. Again, because you have radically different economic structures on either side of the border. And then very quickly, just to mention Mexico and the US, this is the biggest example of border development. Mexico is Mequiladores, which go across the entire border between Mexico and the US, employ about 1.2 million people and have been perhaps the key driver in Mexico's industrialization. It's now one of the regions that produces the world's most TVs. The most many cars come from there, many light electronics. And it's because, again, you have that complementarity that the borders are particularly played off. And then, Clarence, I will give you two minutes to finish up the rest of it. The chair's indulgence, I'd like to ask for an extra minute because as you'll realize from this nifty little stick, if you look at our paper, you see it's incredibly long. And I think it's about 50 pages long and initially it was a lot longer than that. So please, give us... You're a little lost company, man. Okay, so on the practical end of things with respect to South Africa, our recommendation is to establish two border development zones. One between Mahi Keng Ramatlabama and the other at Mussina and Brightbridge. The issue here is that with the Mahi Keng border, you have Botswana, which depends for a lot of its exports, a lot of its imports from South Africa. And on the other side of the border, there are a number of villages and the closest big town is Lobatse. But then it's still not too far from Chaburone and across the border at Mahi Keng, you have only, I mean, 29 kilometers from the border, you have a fairly well-developed town with a bit of light manufacturing and there's calls to establish a special economic zone there. So our idea is that this should go further and the plan should be broadened to include a border development strategy which straddles both borders. And at the same time, we have Mussina and Brightbridge. I mean, this is the busiest border in the whole of Southern Africa, but then you have issues with the integrated border management system, you have issues with corruption, you have issues with delays. And I mean, we can still tout Chirundu as an awesome one-stop border post, but I think we need to go beyond that and add a few more, particularly at Brightbridge because it's so busy. And also another issue there is Mussina and Brightbridge already have cooperation agreements. The issue is implementation. We are suggesting a public-private partnership because it seems that at the political level, they're not doing too much to cooperate at that level because despite these agreements, one from 2005 and one that was recently signed in April of this year, the cooperation agreements have not yielded much. And without going further into that, I mean, we can go into details of that in the discussion, but then our preliminary recommendations for the border development zones in terms of how they should operate, we recommend that there should be easier movement of people. The lessons learned from the examples that Chris presented on are pretty useful in showing how movement of people could work and the uni visa that Zimbabwe and Zambia have implemented at the moment is brilliant because it's a useful testing ground for what could potentially happen. Movement of goods would also be brilliant and then testing and certification in terms of agricultural produce across the border. We can have duty-free retail centers across the border as well. And also in terms of the public-private partnerships to have border development zone works councils which would include customs people, immigration authorities, traders, business people so that they can work together to determine how the border functions. Thank you. Thank you. Thank you. Thank you.