What is Local Economic Development?What is Local Economic Development?

Jörg Meyer-Stamer

jms@mesopartner.com

What is a local economy? For What is a local economy? For instance, it may be like this:instance, it may be like this:

An integrated furniture cluster

A garmentcluster

A large metal-working company

Regional service providers:• Health care• University• Wholesale trade

Farmers and small food processors

Local producer services:IT, transport, construction, ...

Local consumer services:Retail, beauty, ...

Government

Wood valuechain

Textile + garmentsvalue chain

National / foreign buyers

Traininginstitutions

Businesspromotion

Financeinstitutions

It may also look like this:It may also look like this:

A footwearsurvival cluster

Some isolatedgarment producers

Regional service providers:• Wholesale trade

Farmers and small food processors

Local producer services:IT, transport, construction, ...

Local consumer services:Retail, beauty, ...

Government

Traininginstitutions

Businesspromotion

Financeinstitutions

Definitions of LED: World BankDefinitions of LED: World Bank

Local economic development is about local people working together to achieve sustainable economic growth that brings economic benefits and quality of life improvements for all in the community. "Community" is here defined as a city, town, metropolitan area, or sub national region.

What is and isn’t Local Economic What is and isn’t Local Economic DevelopmentDevelopment

What it is not only:SME promotionUrban / regional

planningStrategic planningCreating a LED agency

What it is not at all: Industrial policyCommunity

development

What it is:A broad set of activities

which aim at creating a competitive advantage– for the city/region– for the companies in

the city region ... in order to create

income and jobs

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Local Economic Development

More specifically: What is Local More specifically: What is Local Economic Development?Economic Development?

Activities by local government local business associations local companiesother stakeholders

– alone or in close collaboration

which remove bureaucratic obstacles for local firms tackle market failuresstrengthen the competitiveness of local firmscreate a unique advantage for the locality and its firms

There are also overarching There are also overarching objectives of LED initiatives:objectives of LED initiatives:

Create opportunities to practice and learn the management of LED projects

Overcome fragmentation, stimulate networkingCreate trust and social capital among local

stakeholdersDevelop a joint perspective at LED (objectives,

instruments, governance pattern)

What does LED look like in What does LED look like in practice? Industrialised countries:practice? Industrialised countries:

What does LED look like in What does LED look like in practice? Developing countries:practice? Developing countries:

Focus and Synergy, 1:Focus and Synergy, 1:Separating LED and other Separating LED and other approaches to local developmentapproaches to local development

Economic Development:Quick results

CompetitivenessSustainabilityConsumers

Urban Planning:Long time horizon

PlanningAesthetic criteria

Social Development: Support for disadvantaged

and marginalisedBeneficiaries

Solidarity

Time horizon

Visualvs.

substance

Profit vs.solidarity

Focus and Synergy, 2:Focus and Synergy, 2:ConnectingConnecting

EconomicDevelopment

Urban Planning

Social / communityDevelopment

Improvinglocational qualityCreate a unique

profile

Apply businessprinciples in social

endeavours

Improve qualityof living in low-income areas

Redefine socialproblems as

business opportunities

Focussed,demand-driven

skills deve-lopment

Stimulateentrepreneurship

(as early in lifeas possible)

Leverage infra-structure and

facilities developmentfor LED

Again: What is and isn’t Local Again: What is and isn’t Local Economic DevelopmentEconomic Development

SME promotion

Industrial policy

Urban / regional planning

Community development

Strategic planning

Creating a LED agency

is an important element of a LED initiative, but it also involves large companies

symbolizes top-down approaches, not local, bottom-up initiatives

is related to LED initiatives, makes them easier

follows a different logic, though there can be synergy

may be a medium-term result of an LED initiative, not the starting point

may also be a medium-term result of an LED initiative

Which focus for LED initiatives? Which focus for LED initiatives?

The orthodox view: Define strategy and

plan firstAddress the main

problems / bottlenecks for growth and poverty alleviation

Focus sectors with a strong growth potential

The PACA view: Do quick scan, implement

first actions swiftly Address problems which

can be solved easily and quickly

Focus sectors with a strong problem pressure and motivation for action

What is a good LED project?What is a good LED project?

Three main criteria: realistic and feasibleapt for quick

implementationpotential for quick,

visible effect

Further criteria: builds on local resources connects local resources

(networking) can be implemented by

Salami Tactics builds trust, confidence,

motivation makes markets work strengthens competitiveness contributes to a unique

profile of the location

Thank you for your attention!Thank you for your attention!