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Regional industrial development has been the focus of a number of very specific policy initiatives in South African since the 1960s. Until the end of the 1980s these initiatives were driven by political imperative: to develop the homeland areas and to stem migration to South Africa's cities. They failed on both counts. In the early 1990s, industrial policy was markedly less focused on location. However more recently the Spatial Development Initiatives (SDI) and Industrial Development Zone (IDZ) programmes have both involved the identification of industrial locations and used incentives to encourage firms to locate in these areas. The SDI programme has specifically taken South African regional industrial policy into the southern African region with its cross-border development corridors. The paper questions the underlying rationale for South Africa's regional industrial policy, and in particular the role of incentives in influencing firm-level decisions, including their location decisions. The tentative conclusion is that there is no reason to suppose that the South African government could or can do better than the market in directing firm-level location decisions, and that industrial policy incentives may be far less important to the firm than macroeconomic and market conditions. Copyright © 2001 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]