mr. stals examines the role of financial cooperation in the development of the southern african development community lecture by the governor of the south african reserve bank, dr. c. stals, presented to the harvard institute for international development in boston on 1 / 5 / 97. 1. background to the formation of sadc the southern african development community found its origin in 1980 when countries in southern africa decided jointly “ to pursue policies aimed at economic liberation and integrated development of our national economies ”. one of the main objectives of the association at that stage was to make the economies of these countries less dependent on south africa - - a country that was then an unwanted ally because of its unacceptable internal political and social policies. nine1 after major political and social reforms in south africa led to the fully democratic election of a government of national unity in april 1994, south africa also joined sadc, to become the eleventh member, after a newly - independent namibia already joined in 1990. mauritius was the next country to join sadc, which now has twelve members with a total population of about 136 million people. in august 1992, a revised treaty for sadc was approved by a summit meeting of the heads of state of the participating countries. included in the main objectives of the community are the following economic goals : to achieve development and economic growth, alleviate poverty, enhance the standard and quality of life of the peoples of southern africa, and support the socially disadvantaged through regional integration ; to promote and maximise productive employment and utilisation of resources of the region, and to achieve sustainable utilisation of natural resources and effective protection of the environment. to achieve its objectives, sadc shall • • • • • • harmonise political and socio - economic policies and plans of member states. mobilise the peoples of the region and their institutions to take initiatives to develop economic, social and cultural ties across the region, and to participate fully in the implementation of the programmes and operations of sadc and its institutions. develop policies aimed at the progressive elimination of obstacles to free movement of capital and labour, goods and services, and of the peoples of the region generally among member states. promote the development of human resources. promote the development, transfer and mastery of technology. improve economic management and performance through regional co - operation. the treaty provides for other political, social and cultural objectives which are not of direct relevance for the enhancing of financial co - operation in the region. angola, botswana, lesotho, malawi, mozambique, swazi

. a more general concern is that laws can never be fixed in perpetuity. as societies and economies evolve, the details of the law, though generally not its fundamental principles, need to change. but any uncertainty about the clarity and fixity of the law adds to the risk of trade, which as i noted, is reflected in a higher real cost of capital. we in the united states endeavored to lessen legal uncertainty by embedding our most fundamental principles in a constitution, which we made difficult to amend. the commercially and economically salient specifics are typically expressed in federal or state statutes. in general, this arrangement seems to have provided us with a healthy balance of continuity and predictability and, yet, also the requisite flexibility to respond to evolving economic and societal circumstances. * * * reflecting that flexibility, the direction and the emphasis of legislative revision over the generations have mirrored the changing structure of our economy. in recent decades, for example, the fraction of the total output of our economy that is essentially conceptual rather than physical has been rising. this trend has, of necessity, shifted the emphasis in asset valuation from physical property to intellectual property and to the legal rights inherent in intellectual property. though the shift may appear glacial, its impact on legal and economic risk is beginning to be felt. over the past half - century, the increase in the value of raw materials has accounted for only a fraction of the overall growth of u. s. gross domestic product ( gdp ). the rest of that growth reflects the embodiment of ideas in products and services that consumers value. this shift of emphasis from physical materials to ideas as the core of value creation appears to have accelerated in recent decades. technological advance is continually altering the shape and nature of our economic processes and, in particular, is promoting the trend toward increasing conceptualization of u. s. gdp. the size of our radios, for example, has been dramatically reduced by the substitution of transistors for vacuum tubes. thin fiber optic cable has replaced huge tonnages of copper wire. new architectural, engineering, and materials technologies have enabled the construction of buildings enclosing the same space with far less physical material than was required, say, 50 or 100 years ago. more recently, mobile phones have markedly downsized as they have improved. the movement over the decades toward production of services requiring little physical input has also been a major contributor to the marked rise in the ratio of constant dollars of gdp to ton of input.