Local investment incentives for urban economic development: Recent debates in South African cities

The importance of improving the local business environment is an issue of central concern for municipal authorities in South Africa. This article explores debates around territorial competition through the application of local investment incentives. The paper analyses unfolding South African debates concerning the possible introduction of local investment incentives through the policy experience of two South African cities, namely Durban and Cape Town. It is concluded that South African cities must be aware of the key lessons from international experience and formulate carefully crafted or 'smart' investment incentive policies. In particular, the introduction of investment incentives should not be a substitute for dealing with other fundamental aspects of the local business environment which impact upon investment decision-making.