Local Economic Development Concepts & Discussion Shannon Hiemstra & Colin Mitchell Stone Soup Development (Pty) Ltd 083 7771004 www.stonesoupdevelopment.com West Coast District Piketberg 12 November 2013
Dec 22, 2015
Local Economic DevelopmentConcepts & Discussion
Shannon Hiemstra & Colin Mitchell Stone Soup Development (Pty) Ltd 083 7771004www.stonesoupdevelopment.com
West Coast District Piketberg
12 November 2013
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
SustainabilityPolicy focus and synergy
Locational factors
Target group
The 1st Triangle: The Target Group
Process Management
Governance
SustainabilityPolicy focus and synergy
Locational factors
Target group
Enterprises and Firms
streng-thening
local firms
Attractionof newfirms
Promotionof start-upsand entre-
preneurship
supplier development,outsourcing, spin-off;
support for ownersuccession
Attract suppliers andcomplementary firms,manufacturers ofcapital goods,service providers
franchising
LED activities around the 1st triangle
streng-thening
local firms
Attractionof newfirms
Promotionof start-upsand entre-
preneurship
supplier development,outsourcing, spin-off;
support for ownersuccession
Attract suppliers andcomplementary firms,manufacturers ofcapital goods,service providers
franchising
• address market failure• business skills • business contacts, networking, info
• address market failure• entrepreneurship skills • business contacts• entrepreneurs’ networking• coaching, business angels
• professional investment promotion • locational marketing• targeted investment promotion • investor after-care
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 companies1 New job will be created by a “greenfield”
corporate relocation.
The 2nd Triangle: Locational Factors
Process Management
Governance
SustainabilityPolicy focus and synergy
Target group
Locational factors
Intangible locational factors
Tangible locational factors
-- quality of housing-- environmental quality-- schools and HE-- health facilities-- social facilities-- culture and recreation
-- efficiency of government-- business climate-- availability of related industries-- supporting institutions
-- geographical location-- real estate-- transport and communication infrastructure
-- skilled workers-- energy and environment-- taxes and levies-- subsidies
Locational advantages
Relevant for firms:Relevant for individuals:
The 3rd Triangle: Sustainable Development
Process Management
Governance
Policy focus and synergy
Locational factors
Target group
Sustainability
The triangle of sustainable development
economicdevelop-
ment
ecologicaldevelop-
ment
socialdevelop-
ment
e.g. • Review of economic priority
• new types of living and housing (for instance
for retirees)
e.g. • processing of locally
available bio-mass• Green manufacturing
e.g. • regional recycling
economy• Ecological priority
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
Sustainability
Locational factors
Target group
Policy focus and synergy
Focus and Synergy, 1: Separating
Economic Development:Quick results
CompetitivenessSustainabilityConsumers
Environmental Sustainability:
Water managementAir quality
Social Development: Support for disadvantaged
and marginalisedBeneficiaries
Solidarity
Time horizon
Visualvs.
substance
Profit vs.solidarity
Urban / Regional Planning:
Long time horizonPlanning
Aesthetic criteria
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
SustainabilityPolicy focus and synergy
Locational factors
Target group
Governance
Local government
Businessassociations
The Triangle of Governance
Civilsociety
• Not always representative.• Sometimes protectionist.• Can be a powerful ally if
representative .
• Trade-off’s are necessary.• Trade-off’s accepted if well
articulated.• Communication and consistency
is key
• Democracy Development Paradox.
• Want’s vs. Need’s mismatch.
• Resource constraints.
• Red tape.• Profit / development
dilemma• CSR vs. CSI
CSF Transparency
& Trust
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
Governance
SustainabilityPolicy focus and synergy
Locational factors
Target groupProcess Management
Participatorydiagnostic
(PACA / Genesis)
Shared Strategic intentParticipatory planningContinuous engagement
Participatory: M+E, Benchmarking,Organisational alignment
Implementation
MotivationFeedbackReference
The Triangle of Process Management
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
Small business promotion Investment promotion
Start-up promotion Promotion of BDS
Efficient publicadministrationEnablingenvironmentCompetitiveinfrastructureSkills
Synergy between differentfields of local development
Innovation: AddressingLED from a new angle
Encourageindependent
businessassociations
Public-privatepartnership
Effective governance
Participatory approachLED = iterative & learningProcess
Gov
erni
ng th
e
proc
ess
of L
ED
Innovation & differentiation
Hard-core
LED
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