This article has an unclear citation style .(March 2013) |
Local economic development (LED) is an approach to economic development, of note in the developing world that, as its name implies, places importance on activities in and by cities, districts and regions. Local economic development combines economic development activities, urban planning, infrastructure development and social development activities to improve local conditions. LED encompasses a range of disciplines including physical planning, economics and marketing, all with the goal of building up the economic capacity of a local area to improve its economic future and the quality of life for all. [1]
There are several definitions for local economic development. In one of the early concept notes on LED, the World Bank in 2006 defined LED as "the process by which public, business and non-governmental sector partners work collectively to create better conditions for economic growth and employment generation. The aim is to improve the quality of life for all in the community". [2]
In 2007 GTZ (now called GIZ) refined the definition of the World Bank by describing LED as "a process to mobilise stakeholders from the public and the private sectors as well as from civil society, to become partners in a joint effort to improve the economy of a defined subnational territory and thus increase its competitiveness". [3]
The Swiss Agency for Development and Cooperation defined LED as "a broad set of activities, which aim at creating a competitive advantage for an urban or rural territory and for the enterprises in this territory to improve territorial attractiveness and economic wellbeing". This definition was developed for the SDC by Mesopartner, a research consultancy specialising in LED that was co-founded by the late Jörg Meyer-Stamer.
Different developmental organisations tend to emphasise elements in the definitions that are aligned with their specific mandate. For instance, UN-Habitat defines LED "a participatory process where local people from all sectors work together to stimulate local commercial activity resulting in a resilient and sustainable economy." and as "an approach to help create decent jobs and improve the quality of life for everyone, including the poor and marginalized". [4]
The International Labour Organization (ILO) defines LED as "a participatory development process that encourages partnership arrangements between the main private and public stakeholders of a defined territory, enabling the joint design and implementation of a common development strategy, by making use of the local resources and competitive advantage in a global context, with the final objective of creating decent jobs and stimulating economic activity". [5]
From these different definitions of LED there are several core elements that are common:
With the rapid changes in global, national and local economies, increasingly definitions of LED are adding aspects of inclusiveness, sustainability and resilience. Many international development organisations see LED as complementary to other support measures, such as improving governance, reducing inward migration and improving urban development. International development projects or national government projects can help to establish or enhance LED locally, but should not replace or displace local effort. As a consequence, the aim of an externally support should be to establish an effective LED process locally, not to solve the problems of the locality with regards to its economy.
There are more definitions out there. Many countries, development organisations and even locations have created their own definitions.
There are two broad approaches to LED. One is about developing a strategy for a location, mainly through planning. This is often the preferred approach by international development organisations and governments in developing countries. [2] The other approach is a more iterative approach where local stakeholders jointly learn about what is possible in the local context. In this approach a broad range of private and public stakeholders cooperate to improve local conditions to create jobs and local wealth. [6]
According to the ILO, national and local governments, as well as enterprises and other organisations have to rethink development strategies to cope with ongoing events such as globalization. In contrast to traditional development policies, local economic development strategies promote local dialogue and enable people to be more proactive; help to make local institutions better contribute to development; make economic activity dependent on the comparative advantages of a specific territory, generating development by firms more capable to withstand changes in the global economic environment rather than top-down development imposed by national planners. [7] Economic development activities in developing countries tend to be unidisciplinary, initiated and implemented by just one ministry or agency. An advantage of LED approaches is that they facilitate a multidisciplinary approach. South Africa has been particularly active in promoting the concept. [8]
With the COVID-19 pandemic and associated restrictions impacting the economies of many cities and towns, local economic development responses played a particularly important role. Key approaches included support to keep businesses afloat during lockdowns and other restrictions, efforts to reactivate cities after restrictions eased, and a focus on long-term economic development. Lessons that emerged from the experience of the pandemic include the need to respond and iterate rapidly, the importance of collaboration between stakeholders and different tiers of government, and the need to maintain a focus on multiple time horizons, even in the midst of the crisis. [9]
Many LED interventions in South Africa have taken a direct pro-poor intervention, leading to questions regarding whether this approach is more effective in terms of poverty relief than the spin-offs of more pro-growth focused endeavours. The Microeconomic Reform Strategy is a central component of the 2005 policy guidelines for implementing LED in South Africa. [10] This strategy seeks to address the inequalities in the country and to build on the RDP (Reconstruction and Development Program), by focusing on issues of the geographical spread of activity, integration, black economic empowerment, knowledge-led growth, skills development and state responsiveness.
In addition to the laws and policies directly supporting and encouraging pro-poor LED, other instruments, such as integrated development planning, provide additional support for implementation. Integrated development planning is a key process used within LED, which looks toward the use of planning to situate pro-poor development and LED specifically. [11] The South African Forum for Effective Planning and Development in 1995 defined integrated development planning as, ‘A participatory approach to integrate economic, sectoral, spatial, social, institutional, environmental and fiscal strategies in order to support the optimal allocation of scarce resources between sectors and geographical areas and across the population in a manner that provides sustainable growth, equity and the empowerment of the poor and the marginalised’. [12]
In terms of what an 'integrated development plan' (IDP) should include, the Municipal Systems Act clearly brings out the pro-poor dimensions of government thinking. The act states that an integrated development plan must reflect: [13]
It is suggested that IDP can assist in the promotion of socio-economic development in at least three ways; first, in helping to attract funds from other spheres of government, donor organisations and investors through defining and packaging attractive projects and programmes; secondly in helping to create an environment that is conducive to private sector investment and the general promotion of LED; and thirdly, by proposing direct interventions in the economy through, for example, providing incentives, developing economic infrastructure, and buying, developing and leasing/selling land. [14]
A participatory approach to LED involves the inclusion of different stakeholders so that their views, concerns and issues can be included in the planning process. This is important because it is here that networks, partnerships and information sharing occur that make better, more practical, strategies possible. [15]
Variables to be considered when conducting this inventory should reflect the components of a functioning economy, such as human and social capital, financial capital, physical capital and natural capital. [16]
In South Africa, municipalities are specifically required to involve communities in the affairs of the municipality, to provide services in a financially sustainable manner and to promote development. [17] For instance, public participation is a key element of the Systems Act, and municipalities are obliged to establish mechanisms for public participation and participatory governance.
There is entrenched policy support for pro-poor development in South Africa – often being the primary focus of municipal vision/mission statements. In many cases it is treated as the partner of pro-growth/economic growth interventions. This situation is to be welcomed and reflects both local imperatives and responsiveness and local adherence to nationally identified objectives.
Given the dual challenges faced by South African society of needing to address both chronic poverty, yet also to achieve economic growth and global competitiveness, from a policy perspective it would seem that the approach adopted by Mangaung, Cape Town and eThekwini is most appropriate. These municipalities took a middle of the road approach, focusing their LED strategy on addressing both issues of poverty and growth and the fundamental linkages between the two (World Bank, 2005, 75). [18] The following case studies present pro-growth endeavours that have led to tangible pro-poor driven growth: Johannesburg's Fashion District; eThekwini'sregeneration projects; and Ingwe's rail-based tourism initiatives. [19]
These case studies show that pro-poor, community-based initiatives that are market linked, providing a viable product and operating in an economically effective fashion, can help disadvantaged community members to effectively participate in the market economy. Similarly, community-based service provision and labour-intensive employment is an effective mechanisms to extend services and create employment and business opportunities for the poor (World Bank, 2005, 78). [20]
Land-use planning and development control serve as measurable tools for LED. The assignment of property rights in land and third party enforcement are essential for the efficient operation of markets. Public intervention ensures the separation of incompatible land-uses, integrated planning and development of synergistic land uses, and the 'public goods' aspect of necessary public facilities, open space and infrastructure investment (Lai, 1994, 78-80). [21] Land use planning and development control are essential for the existence and operation of land and property markets (Alexander, 48). [22] For instance, the assignment of and control over land uses will generally reduce transaction costs and can create or enlarge markets (Lai, 1994, 91). [23]
The following are a list of public land use and development controls that the Ontario Ministry of Municipal Affairs and Housing lists as useful methods in promoting economic development. [24]
Zoning by-laws are used to specify matters such as density, uses of land, parking requirements and form-related standards – including building heights, lot coverage, setbacks, minimum lot sizes, and other building envelope specifications. To keep pace with market conditions and to create higher-quality built environments, flexible and context-relevant standards can be implemented to support economic development goals.
Municipalities can require that facilities, services and matters, as set out in an official plan and by-law, be provided in return for an increase in building height and/or density. This exchange might include streetscape and design elements – for example, protected bicycle parking, outdoor seating, non-slip pedestrian surfaces or public art – in support of municipal placemaking and economic development objectives.
More efficient built forms can be achieved through by-law standards for minimum and maximum building height and density. Community resources such as nearby services, public transit, utilities, and existing road and sidewalk networks and greenspaces, can be used more effectively while expanding the number of potential customers for area businesses.
The economy of Mauritius is a mixed developing economy based on agriculture, exports, financial services, and tourism. Since the 1980s, the government of Mauritius has sought to diversify the country's economy beyond its dependence on just agriculture, particularly sugar production.
Development communication refers to the use of communication to facilitate social development. Development communication engages stakeholders and policy makers, establishes conducive environments, assesses risks and opportunities and promotes information exchange to create positive social change via sustainable development. Development communication techniques include information dissemination and education, behavior change, social marketing, social mobilization, media advocacy, communication for social change, and community participation.
Governance is the overall complex system or framework of processes, functions, structures, rules, laws and norms born out of the relationships, interactions, powerdynamics, cultures and communication within an organized group of individuals which not only sets the boundaries of acceptable conduct and practices of different actors of the group and controls their decision-making processes through the creation and enforcement of rules and guidelines, but also manages, allocates and mobilizes relevant resources and capacities of different members and sets the overall direction of the group in order to effectively address its specific collective needs, problems and challenges. The concept of governance can be applied to social, political or economic entities such as a state and its government, a governed territory, a society, a community, a social group, a formal or informal organization, a corporation, a non-governmental organization, a non-profit organization, a project team, a market, a network or even the global stage. "Governance" can also pertain to a specific sector of activities such as land, environment, health, internet, security, etc. The degree of formality in governance depends on the internal rules of a given entity and its external interactions with similar entities. As such, governance may take many forms, driven by many different motivations and with many different results.
The United Nations defines community development as "a process where community members come together to take collective action and generate solutions to common problems." It is a broad concept, applied to the practices of civic leaders, activists, involved citizens, and professionals to improve various aspects of communities, typically aiming to build stronger and more resilient local communities.
Participatory budgeting (PB) is a type of citizen sourcing in which ordinary people decide how to allocate part of a municipal or public budget through a process of democratic deliberation and decision-making. Participatory budgeting allows citizens or residents of a locality to identify, discuss, and prioritize public spending projects, and gives them the power to make real decisions about how money is spent.
Poverty Reduction Strategy Papers (PRSPs) are documents required by the International Monetary Fund (IMF) and World Bank before a country can be considered for debt relief within the Heavily Indebted Poor Countries (HIPC) initiative. PRSPs are also required before low-income countries can receive aid from most major donors and lenders. The IMF specifies that the PRSP should be formulated according to five core principles. The PRSP should be country-driven, result-oriented, comprehensive, partnership-oriented, and based on a long-term perspective. The PRS process encourages countries to develop a more poverty-focused government and to own their own strategies through developing the plan in close consultation with the population. A comprehensive poverty analysis and wide-ranging participation are vital parts of the PRSP formulation process. There are many challenges to PRS effectiveness, such as state capacity to carry out the established strategy. Criticism of PRSP include aid conditionality, donor influence, and poor fulfillment of the participatory aspect.
Structural adjustment programs (SAPs) consist of loans provided by the International Monetary Fund (IMF) and the World Bank (WB) to countries that experience economic crises. Their stated purpose is to adjust the country's economic structure, improve international competitiveness, and restore its balance of payments.
Private sector development (PSD) is a term in the international development industry to refer to a range of strategies for promoting economic growth and reducing poverty in developing countries by building private enterprises. This could be through working with firms directly, with membership organisations to represent them, or through a range of areas of policy and regulation to promote functioning, competitive markets.
Community economic development (CED) is a field of study that actively elicits community involvement when working with government and private sectors to build strong communities, industries, and markets. It includes collaborative and participatory involvement of community dwellers in every area of development that affects their standard of living.
The Development Bank of Southern Africa (DBSA) is a development finance institution wholly owned by the Government of South Africa. The bank intends to "accelerate sustainable socio-economic development in the Southern African Development Community (SADC) by driving financial and non-financial investments in the social and economic infrastructure sectors".
The Governance and Anti-Corruption Country Diagnostics is a survey tool, which uses information gathered from in-depth, country-specific surveys of households, businesses, and public officials about institutional vulnerabilities. The tool is used by the World Bank and partner governments to measure and evaluate critical governance challenges within the public sector.
Governance is a broader concept than government and also includes the roles played by the community sector and the private sector in managing and planning countries, regions and cities. Collaborative governance involves the government, community and private sectors communicating with each other and working together to achieve more than any one sector could achieve on its own. Ansell and Gash (2008) have explored the conditions required for effective collaborative governance. They say "The ultimate goal is to develop a contingency approach of collaboration that can highlight conditions under which collaborative governance will be more or less effective as an approach to policy making and public management" Collaborative governance covers both the informal and formal relationships in problem solving and decision-making. Conventional government policy processes can be embedded in wider policy processes by facilitating collaboration between the public, private and community sectors. Collaborative Governance requires three things, namely: support; leadership; and a forum. The support identifies the policy problem to be fixed. The leadership gathers the sectors into a forum. Then, the members of the forum collaborate to develop policies, solutions and answers.
Kenya Vision 2030 is a Kenyan development program, aiming to raise the average standard of living in Kenya to middle income by 2030. It was launched on 10 June 2008 by President Mwai Kibaki. Developed through "an all-inclusive and participatory stakeholder consultative process, involving Kenyans from all parts of the country," the Vision is based on three "pillars": Economic, Social, and Political. The Vision's adoption comes after the country's GDP growth went from 0.6% in 2002 to 6.1% in 2006, under Kibaki's Economic Recovery Strategy for Wealth and Employment Creation (ERS).
The Federal Ministry of Budget and Economic Planning is one of the Federal Ministries of Nigeria.
Participatory development (PD) seeks to engage local populations in development projects. Participatory development has taken a variety of forms since it emerged in the 1970s, when it was introduced as an important part of the "basic needs approach" to development. Most manifestations of public participation in development seek "to give the poor a part in initiatives designed for their benefit" in the hopes that development projects will be more sustainable and successful if local populations are engaged in the development process. PD has become an increasingly accepted method of development practice and is employed by a variety of organizations. It is often presented as an alternative to mainstream "top-down" development. There is some question about the proper definition of PD as it varies depending on the perspective applied.
The anthropology of development is a term applied to a body of anthropological work which views development from a critical perspective. The kind of issues addressed, and implications for the approach typically adopted can be gleaned from a list questions posed by Gow (1996). These questions involve anthropologists asking why, if a key development goal is to alleviate poverty, is poverty increasing? Why is there such a gap between plans and outcomes? Why are those working in development so willing to disregard history and the lessons it might offer? Why is development so externally driven rather than having an internal basis? In short, why is there such a lack of planned development?
A secondary city is an urban hub that fills specific regional and local needs related to governance, economics, finance, education, trade, transportation. A secondary city is defined by population, area, function, and economic status, but also by their relationship to neighboring and distant cities and their socio-economic status. A secondary city may emerge from a cluster of smaller cities in a metropolitan region or may be the capital city of a province, state, or second-tier administrative unit within a country. Secondary cities are the fastest-growing urban areas in lower- and middle-income countries, experiencing unplanned growth and development. By 2030, there will be twice as many medium-size cities as there were in 1990, outnumbering the total number of megacities. According to the World Bank, secondary cities make up almost 40% of the world cities population. Many secondary cities in the Global South are expected to undergo massive expansions in the next few decades comparable to city growth in Europe and North America over the past two centuries. These cities are unique environments that generally have limited data and information on infrastructure, land tenure, and planning.
Planning cultures are the differing customs and practices in the profession of urban and regional planning that exist around the world. The discourse, models, and styles of communication in planning are adapted to the various local conditions of each community such that planning approaches from one part of the world are not necessarily transferable to other parts of the globe. Planning culture can refer to how planning professionals undertake their practice in a given location, where they are "affected by both individual and collectively shared cognitive frames" that shape their view of the world. Planners, as stated by Simone Abram, are "constantly in the process of actually producing culture". The concept of planning culture also encompasses how planning actually unfolds within a community, as shaped by its culture and influenced by its people. Differing cultural contexts produce different planning and policy responses to issues "bound to specific local (cultural) contexts". Examples of planning cultures include those specific to different countries, regions, and parts of the globe, as well as differing cultures that exist within the same location, such as indigenous planning cultures.
The South African Local Government Association (SALGA) is a national, voluntary political association in South Africa. It is a public entity composed of South Africa's local governments. The association's members are made of all South Africa's 257 local governments. The purpose of the SALGA is to represent local governments of South Africa at various stages and levels of government. It supports local governments in their efforts of development, assists members in varying ways, and even works to promote women in local government.
Jörg Meyer-Stamer was a German political scientist and economic development practitioner. He was passionate about developing economic development frameworks and methods that enabled stakeholders in developing countries to diagnose and improve their contexts. He developed methods and frameworks that enabled stakeholders to diagnose and improve local economic development, clusters, value chains and innovation systems. He also wrote several papers on structural change, technology, innovation and industrial policy.