Local Economic Development
Concepts & Discussion
West Coast District
Piketberg
12 November 2013
Shannon Hiemstra & Colin Mitchell
Stone Soup Development (Pty) Ltd
083 7771004
www.stonesoupdevelopment.com
What is LED?
LED is an ongoing process by which key
stakeholders and institutions from all spheres
of society, the public and private sector, as
well as civil society, work jointly to create a
unique advantage for the locality and its
firms, tackle market failure, remove
bureaucratic obstacles for local businesses
and strengthen the competitiveness of local
firms’
LED & Competitiveness at the Local and
Regional Level: The Hexagon
Process Management
Governance
Policy focus and
synergy
Target group
Locational factors
Sustainability
The
st
1
Triangle: The Target Group
Process Management
Governance
Policy focus and
synergy
Target group
Locational factors
Sustainability
Enterprises and Firms
Attract suppliers and
complementary firms,
manufacturers of
capital goods,
service providers
Attraction
of new
firms
strengthening
local firms
franchising
supplier development,
outsourcing, spin-off;
support for owner
succession
Promotion
of start-ups
and entrepreneurship
LED activities around the 1st triangle
Attract suppliers and
complementary firms,
manufacturers of
capital goods,
service providers
Attraction
of new
firms
• professional investment
promotion
• locational marketing
• targeted investment
promotion
• investor after-care
strengthening
local firms
supplier development,
outsourcing, spin-off;
support for owner
succession
• address market
failure
• business skills
• business contacts,
networking, info
franchising
Promotion
of start-ups
and entrepreneurship
• address market failure
• entrepreneurship skills
• business contacts
• entrepreneurs’ networking
• coaching, business angels
Main messages
General principles:
• Identify and remedy market failure (e.g. barriers
to entry, information access, etc. )
• Avoid market distortions and discrimination
• Reduce barriers to entry
• Pursue a balanced approach: look at each of the 3
types of companies
• Look at the synergies between the 3 types
Food for thought?
Research by the Edward Lowe Foundation; the RUPRI
Centre for Rural Entrepreneurship and the Kauffmann
Foundation provided evidence that for every 100 new jobs
created in the private sector:
55
Jobs will be created by the expansion of
existing local businesses
44
Jobs will created by new start‐up companies
1
New job will be created by a “greenfield”
corporate relocation.
The 2nd Triangle: Locational Factors
Process Management
Governance
Policy focus and
synergy
Target group
Locational factors
Sustainability
Locational advantages
Tangible locational factors
-- geographical location
-- real estate
-- transport and
communication
infrastructure
-- skilled workers
-- energy and environment
-- taxes and levies
-- subsidies
Relevant for firms:
Relevant for individuals:
-- quality of housing
-- environmental quality
-- schools and HE
-- health facilities
-- social facilities
-- culture and recreation
Intangible
locational factors
-- efficiency of
government
-- business climate
-- availability of
related industries
-- supporting
institutions
The 3rd Triangle: Sustainable Development
Process Management
Governance
Policy focus and
synergy
Target group
Locational factors
Sustainability
The triangle of sustainable development
e.g.
• processing of locally
available bio-mass
• Green manufacturing
ecological
development
economic
development
e.g.
• regional recycling
economy
• Ecological priority
e.g.
• Review of economic priority
• new types of living and
housing (for instance
for retirees)
social
development
e.g. labor-intensive rehabilitation and maintenance
of ecological infrastructure
Main message
• Address ecological and social problems as
business opportunities
• Look for win-win-opportunities
– finding an innovative approach to LED by thinking
out of the box
• Ecological infrastructure development &
maintenance can be good business
The 4th Triangle: Policy Focus and Synergy
Process Management
Governance
Policy focus and
synergy
Target group
Locational factors
Sustainability
Focus and Synergy, 1: Separating
Economic Development:
Quick results
Competitiveness
Sustainability
Consumers
Profit vs.
solidarity
Urban / Regional
Planning:
Time horizon
Long time horizon
Planning
Aesthetic criteria
Social Development:
Support for disadvantaged
and marginalised
Beneficiaries
Solidarity
Visual
vs.
substance
Environmental
Sustainability:
Water management
Air quality
Choices & Trade-off’s
Local Economic Development is about
making the best use of what will always be
a limited amount and quality of resources!
The 5th Triangle: Governance
Process Management
Governance
Policy focus and
synergy
Target group
Locational factors
Sustainability
The Triangle of Governance
• Democracy Development
Paradox.
• Want’s vs. Need’s
mismatch.
• Resource constraints.
Civil
society
• Red tape.
• Profit / development
dilemma
• CSR vs. CSI
CSF
Transparency
& Trust
Local
government
• Trade-off’s are necessary.
• Trade-off’s accepted if well
articulated.
• Communication and consistency
is key
Business
associations
• Not always representative.
• Sometimes protectionist.
• Can be a powerful ally if
representative .
Main message
Current approach in successful localities:
• Social Capital & Trust
• Network governance
– Distribution of responsibilities between various
governmental and non-governmental
organizations
– Negotiation and co-ordination without a clear
decision center
• Subsidiarity and decentralization
• Participatory approaches.
The 6th Triangle: Diagnostic Planning,
Monitoring & Evaluation
Process Management
Governance
Policy focus and
synergy
Target group
Locational factors
Sustainability
The Triangle of Process Management
Participatory
diagnostic
(PACA / Genesis)
Feedback
Reference
Participatory:
M+E, Benchmarking,
Organisational alignment
Motivation
Implementation
Shared Strategic intent
Participatory planning
Continuous engagement
Main message
• Successful LED is based on learning
• LED is about sentiment and momentum
• Don’t waste too much time with research &
discussing, -- get into action quickly!
• LED is an iterative process
• Development is systemic
Sustaining Development interventions
Participatory approach
LED = iterative & learning
Process
Encourage
independent
business
associations
Public-private
partnership
Effective
governance
Synergy between different
fields of local development
Small business promotion
Investment promotion
Start-up promotion
Promotion of BDS
Efficient public
administration
Enabling
environment
Competitive
infrastructure
Skills
Innovation &
differentiation
Innovation: Addressing
LED from a new angle
We are not born with rights - we are all born
with obligations!
Jewish Philosophy
We know what to do, we know why we
should do it, and we know how to do it. Yet
most businesses and individuals don’t do
what is good for them because the pain is
today and the benefits are only in the future.
David Maister – Strategy & the Fat Smoker