Working papers

Overview and learned lessons on

Local Economic Development,
Human Development, and
Decent Work


Giancarlo Canzanelli





































October 2001

2
Territory is a work of art,
perhaps the highest, the
most coral, humanity have
expressed.
A work that take form through
dialogue of human entities
persons, nature-
in the long course of
the history.
alberto magnaghi
Index
About this paper 3
1) Introduction 4
2) The theme 9
3) Local Economic Development between decentralisation and globalisation 20
4) Local Economic Development, Human Development, Decent Work 25
5) The international best practices and the learned lessons 34
6) Recommendations 46
3
About this paper
This paper is part of a study that the ILO Programme Universitas has realised with the
aim of analysing the trends in the conceptual frameworks and the experiences in theme
of local economic development.
It illustrates the fundamental pillars, that sustain the LED experiences, the advantages
mainly for poor areas, the contribution to the human development and the decent work
strategies, the main constrains and the learned lessons about the gaps to be overcome.
The paper is concluded by a chapter that provides preliminary recommendations for
policy makers for fostering local economic development policies and instruments.
The other papers of the study are:
Paper 2: Best practices on the issue of local economic development
Paper 3: Bibliography and web sites
Paper 4: How to establish Local Economic development Agencies: Case studies
Methodology
The paper has been written by Giancarlo Canzanelli (ILO), with the collaboration of:
G Francisco Alburquerque-Llorens, Centro Superior de Investigacin Cientfica (Madrid)
G Antonio Vazquez-Barquero, Universidad Autonoma de Madrid
G Sean Barron, Shannon Development Agency (Ireland)
G Renato Caporali, Sebrae (Brasil)
G Claude Courlet, Universit de Grenoble (France)
G Maurizio Del Bufalo, ILS LEDA (Rome)
G Gioacchino Garofoli, Universit di Pisa (Italy)
G Andrs Rodriguez-Pos, London School of Economics
G Christian Saublens, Eurada (Brussel)
G Edoardo Terenziani, Soprip (Parma, Italy)
A preliminary draft was prepared, and a workshop
1
was organised on the base of the
different comments from the collaborators network. The workshop gave the final inputs
to this paper.
Precious contributions were provided also by:
Giulia Dario, Unops; Giordano Dichter, Ilo consultant; Roberto Di Meglio, Ilo; Philippe
Egger, Ilo; Alfredo Lazarte, Ilo; Philippe Mercadent, Ilo; Mohammed Ould Sidi, Ilo;
Bernhard Schlachter, Unops; Mara Steccazzini, Ilo; and Gianluca Vignola, Undp;

1
Geneva, 22-23 October 2001
4
1. Introduction
In the course of the two last decades, the economies and societies of the developed and
developing countries have been experiencing, on different scale and with different
intensity, deep processes of structural change. This new phase of technological and
organizational reconstruction affected so much the production forms, organization and
enterprise management, the role of public intervention in economy and the relative
socio-institutional regulations, as well as the activities of any type of public or private
organizations, and the labour market, that many experts called it a radical or
paradigmatic change.
The increasing globalisation of important sectors of the international economy adds
complexity to this structural change. The answer offered to the weakest countries for
allowing them to make use of the opportunities provided either by the new innovations or
by globalisation, has been the structural adjustment policies, whose aim was of
creating the national economic-financial conditions for participating to the global
economy.
Macro-economic policies have been then
applied for lowering the exposition to
international finance, lowering the public
expenses, controlling the inflation, stabilizing
the monetary exchange market.
The result of such policies is evident: more
poverty, more exclusion for women and men,
less safe environment, more gaps between
developed and developing countries, between
rich and poor people.
Conventional centralised policies had little effect to help the more marginalized areas to
growth. Endogenous weakness, low income, poor human resources qualification, low
productivity, difficult insertion in national and foreign markets remained. Furthermore
conventional development policies did not correct depopulation tendencies, population
aging and income loss
2
.
Such policies are too much concentrated on the provision of infrastructure instead of
other goals, such as productive system stimulus, and have had little effect on the
development potential of local resources
3
. They perhaps fostered the development of the
most dynamic areas of a weak region, such as large cities or relevant urban centres, not
mitigating, but increasing the regional unbalance.
In this vacuum bordered on one side by global processes, which leave apart the majority
of the world population, and national macro-economic policies, which chase external
investment and internationalisation, local development initiatives took place in many
parts of the world, for providing the necessary answer to the needs of job creation and
inclusion, and addressed mainly to small and medium local enterprises (including the
informal sector). This sector, in fact, in many part of the globe, is the backbone of local
economies and employment, and the producer of that 70% of goods not interested so far
to global markets.

2
See Andrs Precedo Ledo in A regionalisation strategy to promote integrated local development, European
Planning Study Vol. 8, N.1, 2000
3
See A. Rodriguez-Pos, Socioeconomic restructuring and regional change: rethinking growth in the European
Community, Economic Geography 70, 1994
Economic and technological
structural changes,
globalisation, and structural
adjustment policies did not
assure suitable conditions for
the consolidation of national
systems of small and medium
enterprises
5
Sometime local administration pushed by the community pressure on job creation and
income, sometime the community itself looking for shared solutions, sometime group of
entrepreneurs organising cooperative initiatives, sometime partnerships between public
and private actors, sometime even national efforts, brought to develop initiatives with
the aim of strengthening the local productive system.
Nevertheless creation and growth of smmes, the backbone of locale economies, depends
on a number of integrated factors, such as mainly the following:
a) availability of human resources
b) availability of external economies (services, suppliers, markets, etc.)
c) legal and fiscal regulations
d) access to credit
e) access to technology.
Especially (but not only) in poor contexts the access to the above-mentioned factors of
production is difficult for single entrepreneurs. That is why entrepreneurs in many
experiences gather together in mutual cooperative forms for realising critical mass and
synergies and making easier to form human capacities, share business services, realise
interconnected chains of value (supply-production-clients), organise mutual solidarity
credit schemes, exchange and share innovations and new technologies.
Furthermore the modern competition is more and more generated by territorial
systems. Local networks with suppliers and clients, as well as with business service
organizations, human resources qualification, or others, in order to catch the externalities
derived from the associative cooperation, the territorial proximity, the economies of
agglomeration, reduce uncertainty levels and the costs of transaction. The territory
become, in this way, instead of simple stimulus of innovations and amplification of
information, a "pro-acting actor" of strategic resources and positive externalities for the
productive efficiency and the enterprise competitiveness.
Another important aspect that comes from the international experience consists in the
needs to involve not only the entrepreneurs, but also other local actors, if employment
and development strategies have to be realised.
It is evident that local administrations are under pressure for providing answers to
unemployed women and men, but they cannot provide it without the involvement of the
private sector. On the other hand the private sector, even if strongly associated, cannot
give solutions alone, because of the need of institutional framework and regulations,
regarding the use of the space, of the natural resource, the training, the business
services, and, least but not last, the consensus of the population about the development
strategy for avoiding possible conflicts, and the lobbying with national and international
institutions for different type of support (financial, legal framework, incentives, etc.).
A new role of the Central States, too
small for globalisation and too big for
economic development strategies, is then
appearing, where devolution of decisions
at local level is the core issue. The
national governments have, of course,
responsibilities over all the matter,
because they can stimulate, impulse and
support the development of local
systematic initiatives; they have to
provide regulatory scheme and national
strategies, where local policies have to fit;
they have to monitor, compensate, and
balance the different local initiatives.
Single enterprise has difficulty
to access to the factors of
production and to scale
economies. Organised
territorial systems compensate
it, constituting milieus, able
to generate and maintain
competitive advantages and
differential value
6
It is, in fact, evident that local economic development cannot become local egoism, and
the role of the central state in this is basic.
The territory is, then, considered a "specific resource" and as well as a "main actor" of
the economic development, and not solely as mere space or frame of the economic or
social activities, it constitutes a "milieu" with capacity of generating and maintaining
competitive advantages and "differential value".
4
The creation of this "territorial innovating milieu" is becoming more and more the
crucial element of the competitiveness, also at international level.
Competitiveness, in fact, is the product of complex and dynamic interactions among
the State, the enterprises, intermediary institutions, and society's organisational
capacity. This complex organisation model must be supported by extensive dialogue
among the productive sector, the technological-scientific sector, intermediary institutions,
and the public sector, for the purpose of ensuring structural change.
Many economists look at the local specificities or differences (social, economic, ethnical,
cultural) as a deformation or as an obstacle to the spreading all over the world of the
possibility of exploiting the resources (labour force and nature) in an efficient manner,
and for global market growth. Other ones highlight these differences may represent the
fundamental resource for a more equilibrated, socially acceptable, human development.
Many ecologists have demonstrated the safeguard and the valorisation of the bio-
diversity not only eliminates the risks of environmental resource destruction, but also it
contributes to their more effective and efficient use.
Diversity may, in fact, produce knowledge and technology, facilitates participation,
develops governance capacities, responds to needs and culture of people, and it follows
non-standard paths and models.
Development appears, then, as a result of a complex combination of macro, micro and
meso policies and initiatives, where the local-meso dimension is the right cross which
links and drives each component.
At macro level macroeconomic stability, budgetary, monetary, and fiscal policies,
competition rules, foreign exchange and trade stability will be pursued.
The micro level includes management capacity, integration of technological cooperation
networks, business strategies, management of innovation, business logistics, improved
practices in the entire production cycle, interaction among suppliers, producers, and
users.
The meso level policies concern local
development strategies, instruments and
services; physical, educational,
technological, and research infrastructure;
industrial, environmental, and regional
infrastructure; and finally the mechanisms
enhancing interaction among the three
levels.
This is the reason for the growth of
"milieus", territorial meso environments
where small businesses can find those scale
economy they cannot effort alone:

4
see mainly F. Alburquerque Desarrollo Econmico Local en Amrica Latina Mujica Ed., 1999; Maillat D.
Regional Productive Systems and Innovative Milieux OECD, 1999; A. Vsquez-Barquero and G. Garofoli,
Desarrollo Econmico Local en Europa, Madrid, 1995.
Development is the result of a
complex combination of macro,
micro and meso policies, where
the local meso-dimension is the
right cross, which links the
other ones.
Territory and its potential
endogenous resources is the
main resource for
development, not solely a mere
space.
7
research on innovation, professional training, information systems, flexible value chain,
services to production, gender vision promotion, etc.
Their strength is based on few elementary factors:
they exploit a critical mass of local potential resources (natural, human, traditional
know how), rendering infinite the possibilities of generating new product (positive
sum game)
they, through cooperation (on external economies) and competition (on internal
economies and products) realise frequent innovations and high productivity
they are based on and they build a territorial awareness, a territorial system
(businesses, services, governance), which turn as the real competitive factor, able
to multiply the business opportunities and the attraction of new external
investment.
Local economic development, therefore, because of its capability of creating suitable
conditions for sustainable employment, small and medium enterprise creation and
growth, is gaining more and more consensus from policy makers.
Two are the main virtues to Local Economic Development
5
:
a) It overcomes market failures, mainly because it generates trusts, leads to match
collective and individual interests, and reduces, after an initial period, production
costs;
b) It galvanises the population, mainly because it provides objectives and sense of
purpose, and it stimulates citizens to participation and entrepreneurial ventures.
In many countries policies that turn local economies potential to account have been
designed and pursued.
The European Union (EU) has become active in local development by introducing the
local development concept into the operation of the Structural Funds and certain
Community Initiatives.
6
The European Union has recognized the success of local cooperation and has launched
substantial programs to foster it. Territorial pacts, area contracts, industrial districts,
local system of small businesses, local economic development agencies, and cooperative
networks are nowadays part of its policy lexicon and features of its largest programs.
Many European Governments have adopted similar policies (England, France, Spain,
Portugal). In the United States, Canada and Oceania as well, local economic networks
and initiatives have been multiplying and gaining strength.
In Latin America a recent IADB (Inter
American Development Bank) survey
7
on
best practices shows many and different
experiences on the effectiveness of the
LED approach for fighting poverty and
support the improvement of economic and
social outputs.

5
See A. Rodriguez Pos, ibidem
6
See OECD-LEED Best practices in local economic development, 2000
7
BID Best practices on LED in Latina America, in publication
Local economic development, is an
appropriate process for creating
suitable conditions for sustainable
employment, small and medium
enterprise creation and growth;
for promoting human
development, and decent work.
8
Many initiatives carried out by international cooperation programmes which included a
partnership between ILO, UNDP, UNOPS and the Italian Cooperation led to establish
Local Economic Development Agencies (LEDA)
8
in different countries (El Salvador,
Nicaragua, Honduras, Guatemala, Costa Rica, Dominican Republic, Mozambique, South
Africa, Angola, Bosnia-Herzegovina, Albania, Serbia) and other similar structures were
supported by ILO in Croatia, Cambodia, and Bulgaria.
Such initiatives have demonstrated their consistency with the fight to poverty and social
exclusion, with the promotion of decent work, with human development.
At local level the differentiation between development and welfarist policies can
disappear, because there is the space, the knowledge, and the interest for orientating all
the resources to profitable objectives.
At local level the relation between social and economic objectives is much more visible,
because they lead to the same final aim, that is the well being of the population, the
maintenance and improvement of the conditions for better living in the same place,
including for the future generations. So attention to gender equality, education, health,
social security, workers protection, entrepreneurial values, and environment are part of
the same strategy.
Human development and decent work are at the same time an outcome of LED initiatives
and their strength. A LED policy, which have as focus human development and decent
work principles, reinforce, as it will be seen after, the convergent factors to its success,
such as social dialogue, participation and partnership, valorisation of the human
resource, balanced distribution of the opportunities, socio-economic and environmental
goals.

8
See ILO, UNOPS, EURADA, COOPERAZIONE ITALIANA, Local Economic Development Agencies, 2000
9
2. The theme
Local Economic Development is a process where the local actors shape and share the
future of their territory.
We could define it as a participatory process that encourages and facilitates partnership
between the local stakeholders, enabling the joint design and implementation of
strategies, mainly based on the competitive use of the local resources, with the final aim
of creating decent jobs and sustainable economic activities.
Of course different definition of such processes exist, prioritising one or other aspect of
the process.
The OECD recognises that:
One of the most important trends in recent years, and one that is linked to the
emergence of the local development approach itself, has been a reorientation of
economic and social policy away from top down sectoral instruments towards bottom-
up local development strategies. Top-down instruments to create new physical
infrastructure (such as transport and communications facilities and industrial sites and
premises), to implant externally-owned investments or to support declining sectors have
often failed to lead to the anticipated trickle-down and growth in lagging areas. By
contrast, it is increasingly recognised that bottom-up support for endogenous
development can be highly effective in supporting long-term development through
measures such as support for entrepreneurship, developing human capital, spreading
innovation and building local institutions and firm networks. The shift towards bottom-
up and endogenous development strategies is linked to new conceptions of the process
of economic development and in particular new theories of the importance of local
environment to the competitiveness of firms.
9
The departure hypothesis is that the
localities and territories have various
resources (economic, human, institutional
and cultural) and unutilised economies of
scale, that constitute their potential for
development. Each locality or territory is
characterized, for example, by a
determined productive structure, a labour
market, an enterprise capacity and know
how, a dowry of natural resources and
infrastructure, a social and political
system, and a tradition and culture, on
which the processes of local economic
development articulate.
The processes of endogenous development take place thanks to the efficient use of the
local economic potential, which is facilitated by the support of the local institutions and
by existing, although informal, mechanisms of regulation in the territory. The form of
productive organization, the familiar structures and local traditions, the social and
cultural structure, and the codes of conduct of the population condition the processes of
local development, facilitate or limit economic dynamics and, really, they determine the
specific footpath of local development.
The concept of endogenous local development grants a predominant role to the local
companies, organizations, and institutions, and to civil society in the processes of growth

9
OECD-LED Best Practices....
L.E.D. is a participatory process
that encourages and facilitates
partnership between the local
stakeholders, enabling the joint
design and implementation of
strategies, mainly based on the
competitive use of the local
resources, with the final aim of
creating decent jobs and
sustainable economic activities.
10
and structural change. It is a " bottom-up " approach that considers the local, public
and private actors in charge of the actions for investment and of the control of the
processes.
At local level, in fact, the local stakeholders:
know the resources they can valorize and they know how to use them.
know their specific needs for development and how to respond to them.
can gather and coordinate resources, thanks to the familiarity, the reciprocity, the
common needs and objectives.
can lobby and channel more resources.
The key success factors of such process appear to be an extra-economic one
10
: there is a
general consensus that the local social capital is their real strength.
The willingness and the capacity of the local stakeholders of cooperating for establishing
shared objectives, strategies, and actions for local economic development is
demonstrated to be the base of the success of the italian districts, the clusters and the
productive area's systems, of the Ledas, and of all the other initiatives on local economic
development.
If women and men recognise themselves into a common identity, concentrate their effort
to turn the belonging to a territory as their strength and their competitive factor, they, in
the years, will experiment (through trials and errors) their own specific development
path: this will be their differential competitive advantage.
This competitive advantage often derives from a systemic competitiveness, which
facilitates small and medium local enterprises to succeed, manly through cooperative and
competitive modalities. It appears also evident through forms of territorial marketing,
beyond individual trade: everybody knows the parmisan cheese because it comes from
Parma, but nobody knows the individual entrepreneurs who produce it. Nobody worries
about the producer, but about the origin, if she/he has to buy Champagne or Bourgogne
or Chianti wines; or Swiss watches; or Sri-Lankas tea.
The following scheme may be useful to provide a comprehensive approach to Local
Economic Development processes:
A LED process always starts when local people, eventually together with national or
even international institutions, joint for discussing together about how to establish
common strategies for achieving determined aims and objectives, generally dealing with
employment, fight to poverty and exclusion, improvement of the territorial quality and
competitiveness.
This initial Local Forum is also the embryo of the participatory forms, which will assure
good governance to the development strategies in the area.
The embryo will then develop its own growth and models, according to the local culture,
the cooperation levels, the established strategies, and the defined implementation
instruments or structures.

10
See F. Alburquerque-Llorens Desarrollo Econmico local y Distribucin del progreso tcnico Cuadernos del
Ilpes, n.43, 1996
11
The initial Local Forum has the main task of identifying:
1) what is the vision the local actors have for the sustainable future of their area, what
the main aims they want to pursue;
2) what is the strategy they consider appropriate for achieving the above-mentioned
objectives and aims;
3) what are the operational and organizational instruments for implementing the
strategies.
The strategy has to do with the definition of the priorities, the commitment of the
actors, the feasibility of defined actions, and also with the identification of the
sustainable structures needed for carrying on these actions. Without implementing
mechanisms and organisations (it could be the network of already existing
organisations, or brand new ones), especially in poor context it is very difficult to
organise an effective plan of actions leading in a coordinated manner to established
objectives.
Nevertheless in disadvantaged areas the problem of the sustainability of the LED
process is critical. The scant resources often at disposal, either from the public sector
(public investment, public budget) or the private one (private investment, savings), do
not allow the provision of sufficient funds for supporting all the LED initiatives. The
grants of the international cooperation, even if finalised to LED plans, finish when the
projects are over. The credit lines, if not appropriate and not revolving for permanently
financing LED projects, also have limited period of time.
The financial sustainability is then approached since the beginning of the process, and
form part of the overall plan. Often a combination of the above-mentioned mechanisms
STRATEGIES
IMPLEMENTATION
BODY
SUSTAINABILITY
MECHANISMS
INITIAL
PARTICIPATORY
FORUM
From G. Canzanelli, LED
Processes, ILO working
paper, 2001
12
is needed, rendering possible to address and coordinate them towards the same
objective, without spreading resources.
The sustainability is not only financial.
If the actors are not able to achieve agreements and share the same vision and the
same strategy all along the process, it will become socially not sustainable.
If the local administrations are not fully committed to support the process and to
channel to it all the public initiatives addressed to the area, it will become institutionally
not sustainable.
Financial, social, and institutional sustainability are important at the same level.
From the local economic development experiences and from the international debate
within universities, centres of research, and the international operators and agencies, the
following common features can be associated to local economic development processes:
1. Social capital
2. Strategic vision
3. Systemic competitiveness
4. Implementation structures
2.1 The social capital
Social capital is the ability of people in working together for a common objective and in
an organised and voluntary manner, sharing rules and values able to subordinate
individual interests to collective ones. The social capital is based on the reciprocal
confidence, in the mutual expectation of future benefits, linked to the existence of
cooperative behaviours and shared rules
11.
The social capital in local economic development processes is nothing pre-existent to it.
It has a more pragmatic value and it is a rational answer to the individual logic; it
depends on the local actors perception that mutual cooperation is necessary for
achieving also personal objectives. Each actor, in fact, sees the territory in different
manner and has different strategies, and inevitable asymmetry between them, for
differences in power, prestige, resources, leadership, etc.), render the participatory
process particularly difficult.
Nevertheless, in some circumstances, the individual strategies come to a common
platform where cooperation is recognised opportune, when objectives, such as the quality
of the territory, are considered common interest.
It happen when catastrophes occur, or for
reinforcing peace processes, or because of
economic crisis and changes, or due to new
opportunities, or for the effort of leaders.
Cooperation is, in any case, a learning
process, which is different case by case, and
it starts from different conditions.

11
Fernando Barreiro Cavestany, Desarrollo desde el territorio. A propsito del desarrollo local in Redel
Documents, November 2000.
The ability of people in working
together for a common objective
and in an organised and voluntary
manner, sharing rules and values
able to subordinate individual
interests to collective ones,
constitute the social capital for local
development initiatives.
13
It is a learning process, that uses various instruments and tools for managing a long-
term, permanent path, beyond conjuncture factors, and it is generally produced from
specific circumstances of threaten or risk for the territory.
While market mechanisms are characterized by the absence of dedicated coordination
among decentralised actors and hierarchic governance relies on government as an
autonomous governance actor, the new forms of governance are marked by loosely
coupled interaction between private and public actors, with the goal of shaping structures
in a policy field. Government here acts as an impulse generator and moderator,
promoting a dialogue-oriented industrial location policy. In other words, governance
mechanisms between markets and hierarchies are based on a coupling of the logics of
free-market mechanism and hierarchic, classically statistic forms of governance
The benefits of the social capital are evident:
I. It reduces the transaction costs for complying to obligations, simply because it
reduces the number of transactions, which are generally managed or controlled by
third parts.
II. It facilitates information exchanges and improve the exploitation of the economic
opportunities and agreements
III. It facilitates coordination between local actors.
IV. It reduces the risk of opportunist behaviours, up to illegal actions, because of the
social control, due to the frequent contacts, proximity, and cohesion.
The formation of the social capital has indeed a cost, mainly time cost, but the
governance depends on it.
Generally, participatory governance improves the performance of the public and the
private sector.
Neither one nor the other, in fact, has the appropriate resources for solving the
development problems, but together they can pursue it.
Public administration, which continues to have the role of catalysing the local
environment, to set legislation, and to establish local planning and operational rules,
does not have and it should not have- the capacity of delivering development services
and activities. It lacks of professional competence, of flexible delivery organization, of
capillary monitoring system on the economic processes. It is bureaucratic, financially
constrained for expenditures decisions (because of the necessary public budget control
system), short-term objectives oriented, because of the electoral systems and the need
to provide quick responses to the electorate, whereas sustainable development strategies
need long-term management.
Public administration, therefore, needs the partnership with the private sector, in order to
set up mechanisms, which allow deliveries in terms of projects, activities, fund raising,
business services, financial support, in a coherent manner with the established
strategies.
Private sector, which has the fundamental role of realising economic initiatives and
businesses, relying on its capacity of exploiting market opportunities and organising the
factors of production in entrepreneurial form for adding value to the local economy and
creating jobs, cannot realise its role without legal framework, rules about location,
administration, investment facilities and incentives, management of environment, labour
market rules.
The private sector in this case is not represented only by the existing entrepreneurs, but
especially in poor regions- by all the potential ones, that are the majority of the active
population of women and men, which is seeking for opportunities.
The performances of the public-private partnership are above the sum of performance of
each one. In fact the result is not only the coherence between reciprocal commitments. It
allows new added value for the development of the territory. It allows generating
14
development, jointly managed structures for the efficient delivery of projects and
services, saving transaction costs, pursuing social objectives, and realising lobbies
towards national and international institutions.
The meso-level can be shaped neither by government nor by the private firms or
intermediary institutions on their own. What is meant here are policy arenas in which
either government objectives can simply not be achieved via direct government action
without cooperation from the firms and intermediary institutions; an implementation of
government programs by public administration would be require undue control efforts,
thus rendering it too expensive, or would prove ineffective without active cooperation of
the private sector. The shaping of structures at the mesolevel thus requires high levels of
technocratic competence on the part of public actors, a high degree of social
organizational skill, and willingness on the part of the actors involved to engage in
strategic interaction.
Only in this way can the relative loss of autonomy of the actors, such as the dependence
of the success of one actor on the effectiveness of others be translated into dynamic
development.
12
OECD also suggests reinforcing partnership at local level. It states partnership is a key
defining feature of successful local development approaches. Partnership helps bring
synergy and co-ordination between different actors operating within the local area and
can lever in additional project proposals, resources and competencies. Local
development policies should aim to put in place a genuine partnership between public
agencies (local and regional authorities and offices of central government) and social
actors (including employers, community and voluntary organisations, trade unions, co-
operatives, development agencies, universities and so on). It should nonetheless be
recognised that there is no one model of partnership. Different models will be
appropriate in different local conditions, depending on the characteristics of the
problems, institutional environment, political factors, experience and culture.
13
The new social dialogue enhanced by territorial coalitions or pacts overcomes the
traditional entrepreneurial partnership of the first wave of the industrial districts, and
also the new partnerships between business and finance. The new coalitions are among
places of production, knowledge, research, and all the actors operating in the society.
The aim is of creating a new climate, where the economic operators may derive the
resources needed for competing.
14
2.2 The strategic vision
The strategic visions elaborated by an ample group of social actors, represent a
fundamental instrument for the structural change of a region oriented to the
competitiveness, fulfilling an orientation, coordinating, planning and motivating function.
In addition, they impel and they facilitate the consensus between different social actors,
for example, between the expectations of the experts and other actors or between
enterprises and institutions
15
.
Flexible long term strategic planning, integrating all the economic and people for drawing
new development alternatives for the future conversion of the area has to be promoted
for a sustainable development process.
16

12
K.Esser, W. Hillebrand, D. Messner. J. Meyer-Stamer, Systemic Competitivenes, Ed. F Cass, London 1996
13
OECD-LEED Best practices in local development, 2000
14
G. de Rita, A. Bonomi, Manifesto per lo Sviluppo Locale, Bollati Boringhieri 1998
15
see F. Alburquerque La poltica de Desarrollo Econmico Local, BID/GTZ, 2001
16
Eurada, Creation, development, and management of Regional Development Agencies , 1997
15
The elaboration of a strategic vision for the development of a certain territory is, indeed,
the first step the local actors pursue for clarifying what achievements they share. It is
also the first step for the learning process for building the social local capital and a
fundamental exercise for fixing collective ideas, exchanging interests and values,
identifying strengths and weaknesses of their territory, all the necessary issues for the
assessment of future coherent actions.
The elaboration of the strategic vision
represents an important way for improving
the social cohesion. It is not an easy
result; sometime it takes time, because of
the different and contradictory positions
and interests, but, once the local actors
achieve an agreement on what they jointly
want, on how they imagine their territory
become in ten-twenty years, all the rest
turns easier and more effective.
A rural area may be imagined transformed
in specialised agro-industrial system; a
marginal area could exploit tourism
attractions for realising an integrated agro-
artisan-industry-service system.
Forestry could turn as resources for tourism and wood industry; specific geographic
location can be exploited for setting industrial and services activities, etc.
Depending on the starting conditions, the way to achieve the above-mentioned strategic
objectives could be long. Thats why the consensus of the local actors about priorities,
the identification of specific implementing tools, and of the decision making process is
important.
A development strategy is always a trade-off between the promotion of local firms and
the attraction of external investment. All depends on the starting conditions, but in
marginal areas local firms at beginning are preferable or the unique solution, due to the
weak territorial context. It, furthermore, will reinforce the economic system, improve the
labour market and stimulate new infrastructure , so to render attractive the area for
external investment, above the advantage for cheap labour costs.
The risk of a development based only on local enterprises is a non competitive system or
closed to local markets businesses. The risk of a development based mainly on external
capital is dependence and fragility to respond to national or international crisis
17
.
A balanced strategic vision of the development consolidate through a virtuous circle
either local businesses, or the infrastructure and the labour market (see figure)

17
Andres Rodrgues-Pose
A strategic vision for the
development of a certain territory
is the first step the local actors
pursue for fixing collective ideas
and images, exchanging interests
and values, identifying strengths
and weaknesses of their territory,
and all the necessary issues for
the assessment of future coherent
actions.
16
2.3 The systemic competitiveness
As already mentioned before, competition in the
current economic context does not depend on the
antagonism of single companies, but relies on the
environmental conditions that allow a certain
territory or attracting investment or selling its
products or services, or facilitating advantageous
agreements.
The German Development Institute has elaborated
the concept of systemic competitiveness
18
.
Industrial competitiveness comes about neither spontaneously via a change in the
macro-framework nor merely via entrepreneurship at the microlevel. It is, rather, the
outcome of a pattern of complex and dynamic interaction between government, firms,
intermediary institutions, and the organizational capacity of a society. One factor
essential here is a competition-oriented incentive system that compels firms to undergo
learning processes and increase their efficiency.
An economys competitiveness rests both on targeted and interrelated measures at four
system levels (the meta-, macro-, micro-, and mesolevels) and on a multidimensional
pattern of control and guidance consisting of competition, dialogue, and joint decision-
making; this pattern involves the most important groups of actors.
Three elements are important at the metalevel: first, a social consensus on the guiding
economic principle; second, a basic pattern of legal, political, economic, and overall social
organization that bolsters national innovative, competitive and growth advantages; and
third, the willingness and ability to implement a medium- to long-term strategy of
competition-oriented development.

18
Much of what is reported in this chapter is taken by K.Esser, W. Hillebrand, D. Messner. J. Meyer-Stamer,
Systemic Competitivenes, Ed. F Cass, London 1996
Competition in the current
economic context does not depend
on the antagonism of single
companies, but relies on the
environmental conditions that
allow a certain territory or
attracting investment or selling its
products or services, or facilitating
advantageous agreements
LED
Local Firms
External Investment
Labour Market
Infrastructure
1
4
4 3
3
2
2
1
Balancing internal-external investment
17
The main concern at the macrolevel is to
create the framework for effective
competition, a stable macroeconomic
framework that ensures undistorted prices and
favorable financing terms; a competition
policy.
The key issue at the microlevel is an effective management of technical and
organizational learning processes at the firm level. The mesolevel is concerned with
shaping the specific environment in which firms operate. This is where the state and
societal actors on the national, regional, and local level are creating locational
advantages.
Of particular significance are: a competition-related configuration of material
infrastructure (transportation, communications, and energy systems) and sectoral
policies, above all education/training policy, research policy, and technology policy; a
specifically formulated trade policy and regulatory systems (e.g. environmental
standards, technical safety standards), the selectively support to emerging industrial
clusters, that contribute to the emergence of specific local/national competitive
advantages.
Particularly important for is the promotion of clusters for exploiting the scant resources
they have and build around them a coherent smmes system, which represents a
sustainable way of constituting chains of territorial value.
Cluster promotes both competition and cooperation. Rivals compete intensely to win and
retain customers.
According to the M. Porter definition a cluster is a geographic concentration of
interconnected companies and institutions in a particular field. It includes, for example,
suppliers of specialistic inputs such as components, machinery, and services, and
providers of specialised infrastructure. Cluster often extend downstream to customers
and laterally to manufacturers of complementary products. Finally many clusters include
government and other institutions, such as universities, think tanks, vocational training
providers, information, research, education, and technical support structures.
Clusters represent a kind of a new spatial organisation form between the market and
hierarchy, turning as an alternative way of organising the chain of value. Compared with
market transactions among dispersed and random buyers and sellers, the proximity of
companies and institutions in one location foster better coordination and trust.
19
Clusters are the concrete way of realising the systemic competitiveness, and are
particularly effective in areas with scant resources. Let, for instance, take the example of
a rural area, whose main resource is fruit and vegetable.
One of the first steps for developing the
production and the employment is, together
with efforts to improve agricultural quality
and productivity, to create a agro-industrial
sector, which transform the rough material
and open new markets at local, regional,
national level.
This simple step implies, however, a number
of collateral factors, such as:

19
M. Porter, Cluster and the new economics of competition Harvard Business Review, November-December
1998
Four policy levels lead to the
systemic competitiveness:
- meta
- macro
- meso
- micro
Clusters of small and medium
local enterprises, utilising the
territorial potential, are the
concrete way of realising the
systemic competitiveness, and
they are particularly effective in
areas with scant resources.
18
- the availability of working tools, instruments and technology, which may be afforded
by new small business producing them, or by an information system, orientating the
entrepreneurs in the choice and in the management of new technologies and
techniques.
- The availability of trading support, such as transportation, packaging, storing, trade
services, labelling, quality insurances, legal services, etc.
- The availability of skilled women and men, which implies the formation of professional
schools and training schemes.
- The formation of agriculture and industrial competitive enterprises or cooperatives,
which needs a comprehensive business service system, either for technical assistance,
or training, or financial support.
- A marketing support programmes, which is able to promote the local products,
eventually via a local trademark and related management, the organisation of fairs and
the participation to international fairs.
All this leads to form a specialised territorial chain of value, also from simple common
productions, and to provide opportunities for smme to born and growth in a sustainable
way, because interrelated with all the other part of the system.
This first important cluster could, in a second phase produce sub-specialised industries.
In the case of the Cesena fruit and vegetable district in Emilia Romagna (Italy), the need
of the farmers for conserving, transform transport and the products led to create high-
specialised small firms. These firm learned to realised more and more sophisticated
products (trucks, freezers, dedicated machinery, specialised technologies, etc.), which
attracted clients from all over the world, so creating an own market, still related to the
original cluster, but with some independency.
The role of the University, the creation of a research centre for innovation (and recently
of a Technological Park, Centuria) in the different sector of the chain was important for
its development, so that of the Chamber of Commerce, and the local administration, as
general stimulus and support.
Implementing all this return to the fundamental role of the local actors and on the
instruments they decide to realise.
An economic geography characterized by speciailization and dispersion, that is a number
of diversified cities and metropolitan areas, each specialised in own clusters appears to
be a far more productive model than one based on concentration.
2.4 The implementation structures: Local Economic Development
Agencies
In local economic development processes implementation structures are needed for
making effective the realisation of the objectives, strategies and plans shared by the local
actors, enabling their transformation into concrete projects, and into business proposal or
orientation.
This function needs, indeed, the organisation of competent resources, which, networked
with the other territorial organizations and institutions, make the projects feasible and
compatible with the objectives.
In absence of such structures the management of the local networks and coordination is
difficult and risks being chaotic.
Different models of such structures have been experienced either in developed or
developing countries, and countries in transition.
19
Differences consist in specific aims, type of delivered services, level of involvement of the
local actors.
The most comprehensive structure, established in the framework of local economic
development initiatives, is the Local Economic Development Agency (LEDA).
It is not a case that OECD in its recommendation for promoting Local Economic
Development processes gives priorities to the establishment of such structures.
Initially local development structures need to be created, involving the creation or
nomination of a lead agency, the recruitment and training of managers and development
workers and the establishment of partnership mechanisms with other local agencies.
This should be done within a supportive national and regional framework.
The creation of a functional structure, or Local
Economic Development Agency, is likely to
contribute to success. Such a structure will help
establish an identity and visibility for the local
development initiative and act as a vehicle for
communication between partners and interest
groups. This structure should be tasked with
drawing up a long-term overall strategic plan and
helping access finance for the implementation of
projects. The structure should have stability and
permanence, since few tangible results are
achieved in less than five years and fundamental
transformation requires at least ten years
(Commission Europenne, 1994). It is also
helpful if the structure has a degree of autonomy
from political pressures so that it may develop a
long-term strategy rather than be forced to
respond to short term priorities
20
The secret of their success is in relationship among productive local priorities, and a joint
service of technical assistance and credit, which allow the most vulnerable people to
access to the economy, and the business growth according to the identified priorities.
They generally help elaborating strategic plans for the territorial development, choosing
priorities, and creating a favourable environment for businesses. They provide a
comprehensive service system addressed to the needs of the population without
resources, for creating new businesses and reinforcing the existing ones.
They organise the local competences to make the best use of the endogenous resources
and add value to local economy. They reinforce the local business and workers
organisations, the cooperative movement, the civil society to take advantage of the
economic opportunities.

20
OECD-LEED, Best practices in local economic development, 2000
The creation of a functional structure, or
Local Economic Development Agency, is
likely to contribute to success of LED
processes. Such a structure will help
establish an identity and visibility for the
local development initiative, act as a
vehicle for communication between
partners, provide the technical skills for
developing projects ands support
entrepreneurs, facilitate coordination of
efforts and initiatives.
It can have long terms objectives, since
it is stable, self-sustainable and
permanent.
20
3. LED between decentralisation and globalisation
Two opposite trends seem to characterise the economic development: decentralisation
and globalisation. Is this contradictory?
Decentralization of powers and initiatives leads to adapt the response to employment
needs and economic paths to the local conditions where the enterprises act, and it allows
more autonomy to local actors in deciding what is best for development.
Globalisation has different aspects: one is the concentration in the hand of the few large
trans-national companies of the domain over each market of the world, the other one is
the diffusion of opportunities offered by the fall of boarders in communication, and
possibly in trade for reinforcing capacities, and widening the trades.
The two processes are, indeed, interrelated: decentralisation can improve the
international exchanges because it strengthens the local capacities, rendering them more
productive and more competitive, and liberating not standardised new products;
globalisation reinforces decentralisation, because provides opportunities for improving
the local capacities, enabling exchanges and spread of practices, learned lessons,
technologies, and methodologies; and it may also stimulate innovative ideas for new
products or processes, or for the adaptation of existing ones to the local conditions (that
is also innovation).
A new term has been formulated glocalism, for meaning the possible role of local
economies in a global context.
The reasons that have encouraged in the past states to centralise include primarily the
rising density in towns, the concentration of companies, the development of social
struggles, the emergence of national organisations (political parties, unions, etc.) and
competition between states themselves. Thus, the creation of development models
devised at a central level and that then trickle downwards in a homogeneous fashion to
all levels has gradually come to affect all areas of public life, including education, health,
social security, regional development and other policies.
Now all this is not possible anymore.
The Diputa!ao de Barcelona identifies four main factors which pushed decentralisation in
developed countries:
21
financial crisis faced by States, differentiation in needs for
assistance policies, globalisation, and rise of organisations in civil society.
The report of the UNDP Global Forum on Innovative Policies and Practices in Local
Governance, held in Gothenburg (Sweden), on September 1996, gives a comprehensive
understanding of the public commitment about decentralisation.
In the process of decentralization, that is to say, the redefinition of structures,
procedures and practices of governance to be closer to the citizenry the importance of a
general sensitisation of the public and a heightened awareness of costs and benefits,
especially for direct stakeholders, both at the central and local levels, has to be
emphasized. The process of decentralization should be understood from such a
perspective, instead of being seen in the over-simplistic, and ultimately inaccurate, terms
of a movement of power from the central to the local government. The reality is that
government capacity is not a simple zero sum game. In fact, experience shows that
strengthening local government inevitably produces enhanced capacity at the center as
well.

21
See www.diba.es/promocio_economica/bones_practiques/welcome.htm
21
Any significant reform effort will require the involvement and support of top political
leadership. The role of politicians in the making of policy and the initiating of reform is
always complex. It involves the task of representing many legitimate interests while
resolving potentially destructive conflicts of interest. Development of democratic forms to
accommodate this need is an important issue at all levels of government and even in the
private sector. Multiple interests must be brought into a participatory policy-making
process, without jeopardizing the capacity to govern. A market economy is a sensitive
organism that requires a firm, stable democratic system in order to thrive and
achieve its full potential. Local self-government creates a link between the state and civil
society which can provide the basis for the effective building of democracy and the most
strategic use of a society's resources. Consequently, well-established local democracy is
a prerequisite for building a stable productive society.
Therefore, the challenge facing local governments is to gain or re-gain political strength
by being more explicit when defining goals and more consequential in achieving them.
Using market mechanisms when and where appropriate should encourage quality
improvement and cost-effectiveness. Only by applying these strategies can local
governments solve the dilemma of assuming a new relevance through simultaneously
juggling the complexity of protecting stability and consensus while seeking to achieve
significant change.
National governments sees a new challenge and a strengthened role when economic
development is enabled at local level
22
. National governments could act like catalysts and
mediators, fostering the different initiatives for local economic development; eliminating
the obstacles and facilitating the appropriate instruments; decentralizing the information,
the knowledge and the decisions; stimulating the elaboration of development plans by
the local organizations, and incorporating them in the national development strategies;
facilitating financial endorsement for the small companies (like capital seed, capital risk,
societies of reciprocal guarantee, etc.), delegating functions of control and services to
independent organisms, respecting the agreements of the territorial actors; and jointly
reinforcing the functions of evaluation with the local actors.
Through decentralisation Local Economic Development policies will certainly take much
advantage, but would it be sufficient to survive to international competition?
G. De Rita and A. Bonomi in their Manifesto for Local Development, identify six fields of
antagonism. They state:
It is true globalisation exists and it is powerful, but it also true competitiveness relies
on the strength of local development and on the local social cohesion
It is true international coherence can be assured by budget policies, but it also true
that the national capacity of facing internationalisation consists in the vitality and
intelligence of thousands of small and medium entrepreneurs
It is true the logic of the market has to be accepted, but it also true the social system
prefer dominate them (through partnerships, participation, concertation)
It is true a decisional concentration is needed at global level, but it also true it is not
useful if it does not involve the representation of interests, rights, and collective
needs
It is true there is a need for vertical decisions, but it also true society remains
oriented to polycentric mechanisms for development and decisions.
23
The conclusion of the 1999 UNDP report on Human Development is that globalisation is
integrating economy, culture and governance but fragmenting societies
24.

22
F. Alburqurque, Desarrollo Econmico Local en Europa y Amrica Latina Mujica, 1999
23
G. de Rita, A. Bonomi, Manifesto per lo Sviluppo Locale, Bollati Boringhieri 1998
24
Human Development Report, 1999, New York, Oxford University Press.
22
Economic growth may automatically translate itself in global benefit, if it is accompanied,
or better, framed into the vision of human development.
The final recommendations of the Human Development Report are:
To pursue human development, globalisation has to mean:
Ethics: less, not more violation of human rights
Development: less, not more poverty
Equity, less, not more disparity
Inclusion: less, not more marginalisation
Human security, less, not more vulnerability
Sustainability, less, not more degradation of the environment
Meanwhile the international debate try to find out shared positions, also pushed by the
increasing public opinion in favour of more equitative solutions, the main question
remains: how is it possible to use the local potentialities of disadvantaged areas for
allowing marginal areas be ready to face globalisation?
A local economic development approach could provide the right responses.
23
4. Local economic development, human development and
decent works
4.1 Led and Human Development
The Copenhagen World Summit on Social Development (1995) was concluded by
commitments agreed to all participants to fight poverty. The main ones were the
following25:
Integrate economic, cultural and social policies so that they become mutually
supportive and acknowledge the interdependence of public and private sphere of
activities.
Strengthen own capacity of people for participating in the formulation,
implementation and evaluation of decision determining the functioning and well being
of society.
Harmonise economic and social development with appropriate programs, that would
entitle and enable people living in poverty and the disadvantaged, especially women,
to participate fully and productively in the economy and society.
Develop policies to expand work opportunities and productivity, investing in human
resources development, promoting technologies that generate employment,
encouraging self employment, entrepreneurship and small and medium sized
enterprises.
Improve access to land, credit, information, infrastructures and other productive
resources for small and micro-enterprises, including those of the informal sector.
Promote access for all to education, information, technology and know how as
essential means for enhancing communication and participation in civil, political,
economic, social and cultural life, and ensure respect for civil, political, economic,
social and cultural rights.
The challenge of globalisation in the new centurythe Report states- is not to stop the
expansion of global markets. The challenge is to find the rules and the institutions for
stronger governance local, national, regional and global- to preserve the advantages of
global markets and competition, but also to provide enough space to ensure that
globalisation works for people, not just for profits. The Report recommends a
globalisation with: ethics, to decrease the violation of human rights [] ; equity, to
decrease the disparity within and between nations []; inclusion, to reduce the
marginalization of people and countries []; human security, to improve stability of
societies and vulnerability of people, []; sustainability, to reduce environmental
destruction, []; development, to reduce poverty [].
The recommendations of the UNDP Report certainly involve a vast array of actors and
places where decisions are made. Many of the decisions necessary to reverse the current
trends can only be made in the proper national and international political fora. But it is
also essential that effective technical solutions and operational strategies for combating
poverty and marginalisation become more widely disseminated.
If we could synthesise in one statement the above-mentioned conclusion, we could define
human development a process that integrates economic, cultural and social policies,
harmonising economic and social development, and enabling the disadvantaged people to
participate fully and productively in the economy and society; that expands work
opportunities and productivity, encouraging self employment, entrepreneurship and
micro, small and medium sized enterprises; that promote access for all to education,

25
UN, 1995 Report of the World Summit for Social Development, Paragraph 26, Principles item d.
24
information, technology, and know how as essential means for enhancing communication
and strengthening own capacity of men and women for participating in civil, political,
economic, social and cultural life.
The Local Economic Development approach
could play a fundamental role in enhancing
human development.
In fact, if the characteristics of such
approach, as it has been illustrated in the
previous chapters, are well analysed, it
could be found how they fit the human
development requirements.
Harmonisation and integration of economic and social issues and policies.
Economic development is not an objective per se. It is a mean for achieving well being,
according to the culture and the conditions of certain population.
Nevertheless the well being target is not the same for people living in New York or in
Maputo; only who is living in New York or Maputo could fix what they want to achieve in
the medium and long term.
This is a good first reason why processes designed at local level are more appropriate for
harmonising social and economic policies.
Another reason relies in the fact that sustainable development is pursuable if it is focused
on the human resource. Even in developed and technologically advanced countries
human intelligence makes the difference and more and more investment are realised in
improving human resources. In developing and poor countries often the human resource,
together with natural resources, are the sole strengths. Safeguarding and developing
them is the base for the future and this implies guaranteeing a physical, psychological,
mental harmony as platform for development.
At local level strategy focused on human resources is more feasible for at least two
reasons:
a) it is possible to design a more effective path for taking into account the specific local
social platform, culture, including needs, starting conditions, adequate responses
b) it is possible to involve directly the local people in this effort, avoiding mismatches,
future conflicts, and facilitating better performance.
The construction and the development of the social capital, which is at the base of local
economic development processes, is the crucial element, guaranteeing the harmonisation
and the integration of economic and social issues and policies, because it contains both
elements: the assembly of women and men demanding and object of development, and
the economic progress, as primary means for building community welfare and workfare,
and for combating poverty.
Participation in civil, political, economic, social and cultural life.
LED successful processes are based on vast participation of the local women and men
and their representatives in elaborating and implementing the strategies, finding
appropriate response to their specific and needs and unique conditions
At local level vast and representative participation is, of course, more suitable than at
higher geographic dimensions.
Through LED processes it is
possible to harmonise socials and
economic issues, favour
participation and access to job
opportunities in a decent way.
25
If a community of tens of people is considered, it is evident that decisions can be taken
involving everybody all the time.
In larger communities (five thousands people and more) participation is assured through
representation of the different sectors of the population: entrepreneurs; workers; social,
territorial, religious, and ethnical groups; women, youngsters, etc.
Participation is less direct, but realised through democratic processes.
Problem is that at community level, although participation is maximum, economic
resources for development are insufficient, and strategies based on clusters, scale
externalities are impossible.
If, for instance, two neighbour communities want to develop the same agricultural
product (probably they live on the same natural valley), they could face two constrains:
a) they will compete on the same market, whereas they will not have the strengths for
competing in larger markets, which require high volumes; b) they will duplicate costly
service companies (often without having the possibility for affording it), whereas together
they could use common facilities. Finally separately they will have less lobbing power.
Participation, to be effective and durable, has to be combined with the chances for
finalising it to practical aims.
Two opposite elements should then be considered for optimising the development
processes: participation and economic potential. Smaller the area, higher is the firs
variable, and lower the second one. The opposite happen for larger areas.
The following picture illustrates the problem.
INTENSITY
AREA
SMALL
AS A MUNICIPALITY
LARGE
AS A REGION
AVAILABLE RESOURCES
PARTICIPATION
26
Expanding work opportunities and productivity, encouraging self employment,
entrepreneurship and micro, small and medium sized enterprises
Local stakeholders, once they agree about development objectives and strategies, are in
the position of identifying and creating new opportunities.
They know their potential, they often have activities with ancient know how, they know
how to exploit their resources; if they are able to coordinate efforts, they will find
resources for investment; they understand that they have to give priority to the
development more than to personal interests. All this will liberate new ideas, new efforts,
rendering possible the realisation of product and services for the market, more than in
the case of a generalised, undifferentiated policy at national level, although a national
policy for supporting new small enterprises at local level is required and should be in
coordination with local initiatives.
The environment or milieu created at local level is certainly more adequate to address
and solve different problems concerning employment, small businesses, business
services, gender equality, harmonic relationships between economic and social
stakeholders, and with public institutions and administrations.
Once one or more potentialities are identified as vehicle for competitiveness, a system of
interlinked local businesses (the territorial chain of value) will be established for
providing the necessary services, supplies, inputs, complementarities, and new jobs will
created.
LED more successful initiatives are based on clusters of smmes, exploiting the chains of
local economic values.
Italian industrial districts, Spanish small business systems, American clusters, industrial
parks are example of such possibilities.
The Ledas established by Ilo, Undp, Unops, and the Italian Cooperation created in Central
America more than 15,000 jobs in their first five years of life, and more than 7,000 new
small enterprises or cooperatives.
Access for all to education, information, technology, and know how
Human resources are the backbone of LED policies.
Utilising all the available women and mens intelligences, capacities, potentialities, know-
how, and relations, ideas, projects, and networks can be stimulated and realised.
Undoubtedly national initiatives cannot be so spread in contacting and stimulating all the
hidden resources a certain place has. At local level two specific processes are moved:
1) proximity, which leads to achieve contacts and links with almost all the population
(directly or through representatives)
2) Involvement of all, without exclusion, which makes the contribution of everybody as
an added value to the overall economy, and reduces possible future conflicts. More
alliance and less contradiction is needed for a sustainable development.
Access of all the people to economy means the implementation of concrete mechanisms
and tools, such as credit, services, information, orientation, training, etc.
The experience teaches that such tools are more effective, if designed for the specific
conditions of the local population of women and men.
In poor contexts, for example, national-based credit schemes generally fail, and private-
based business services have difficulty to survive.
In the first case banks are not so much willing to land money to small entrepreneurs
(often if they are women), stimulation and support for application to credit is out of the
27
banks commitments, return of the credit has heavy follow-up costs, and it has difficulty
to be managed if people do not feel the belonging of the money to their community.
Matching demand and supply of credit scheme become, in such situations, almost
impossible.
In the second case initiatives which provide business services in poor territories have to
face various problems. Many times small entrepreneurs are not aware of the services
they may utilise in order to improve their business; they are not used to relating with
consultants. Even in those cases where the initial scepticism is overcome, small
entrepreneurs usually do not have enough resources to pay the fees for the services.
Furthermore the needs that entrepreneurs have on the area are usually so numerous
(technical assistance, administration and book-keeping, commercialisation, etc.) that it
may be very difficult to satisfy the demand.
Two main factors seem to create problems when business services are located in
marginal areas: a) the necessity of stimulating the local entrepreneurs, rendering them
aware of the importance of the training and advisory services which are supplied. In fact
this problem cannot simply solved on a market-oriented approach; and b) the
achievement of self-sustainability.
26
If this is valid in general, however each locality will organise the services and the access
in the most appropriate way, according to the local needs. The design will depend on the
density of population, communications, prevalent economic sectors, education of the
people, cultural homogeneity, and specific objectives.
In rural extensive areas, agriculture services will be relevant; in urban areas small
business services could take the priority; sometime, mainly in the beginning training will
take the lead; credit scheme could take the form of guarantee fund or solidarity lines, or
microlending: special attention will be paid to women needs, to disable people; specific
environmental impact analysis will be carried on in risky areas; mechanisms facilitating
economic conversion from large to small plants, or from public to private ownership could
be useful in particular cases. As far as the different objectives, different access schemes
could be designed if employment is the main aim, or economic rehabilitation and
conversion, or cluster promotion, or support to cooperatives.
All this means that the access to the means of production, know how, information, and
technology is depending on the specific conditions of women and men demanding access.
National intervention in this field can only provide a general support, not taking into
account all the national specificities, unless it is designed trough a difficult articulation,
where each different case id foreseen. But also in this case, a national management of all
these differences seems to be out of the possibilities of a central bureaucracy.

26
These problems found a feasible solution when non-financial services are accompanied by financial ones, in a
more comprehensive framework which stimulates the local economic environment, as illustrated in chapter 6.
28
LOCAL ECONOMIC DEVELOPMENT AND HUMAN DEVELOPMENT
HUMAN DEVELOPMENT
Access
Participation
Opportunities
Harmonisation
LED is fostered by extra economic
factors, such as the social capital,
which is improved for better
development performances.
LED final aim is the well being of the
population and the improvement of the
quality of the territory
LED successful processes are based on
vast participation of the local people and
their representatives in elaborating and
implementing the strategies, finding
appropriate response to their specific and
needs and unique conditions.
Human resources are the backbone of LED
policies.
If they are harmonised towards a common
path, development is more sustainable.
LED implies the implementation of
mechanisms and tools that allow the
access of all the people to economy: credit,
services, information, orientation, training,
etc.
LED enables valorising the local
potentialities, rendering available new
opportunities for markets and employment.
LED more successful initiatives are based
on clusters of smmes, exploiting the
chains of local economic values.
Local stakeholders create an environment
enabling smmmes to born and growth in a
sustainable way, and generating a systemic
competitiveness
LOCAL
DEVELOPMENT
Basic Currents Aspects Critical non-Currents Aspects
29
Local economic development is, therefore, an appropriate approach for achieving human
development aims. However the relationship is not so automatic.
If, indeed, some aspects of the LED approach or policies are immanent to the human
development philosophy, such as participation and economic opportunities, it is not so for
the others, such as harmonisation of social and economic values, gender equality, and
facilitation of access to opportunities for the disadvantaged people.
Examples and difficulties will be analysed further in the document.
Undoubtedly, concerns about rapid change in the economic development, efforts for
short terms visible achievements, costs of capacity building, difficulty in coordinating
social policies with economic support, constrain harmonisation and equitable access
programmes.
Often, once the opportunitys picture is defined, the local authorities (either public and
private) prefer facilitate the access to them for the more capable part of the population
(existing entrepreneurs, educated women and men, up to foreign entries), for assuring
rapid growth.
In other cases long term vision suggested to avoid exclusion and allow everybody to
participate to the economic opportunities, for avoiding future social conflicts, and
permanent charge on the public budget of the excluded part of the population. Welfare
policies and economic development policies joint for gradually enabling the most
disadvantaged to come out of the social assistance and become target for economic
policies. Training programmes, supports to micro-businesses, employment tutorship,
promotion of cooperative, of social enterprises are designed in an harmonised vision of
the local development.
All this is not a philosophical matter, but a result of some experiences already realised in
numerous regions and countries, where local economic development comprehensive
approach has been utilised, and in any case protection of the local human resource and
environment are resulted strategic pillars.
4.2 Led and Decent Work
The 1999 ILO International Labour Conference,
27
according to the proposal of the
Director General, approved a special agenda for modernising and renewing the
Organization, with several objectives:
to focus the ILOs energies on decent work as a major global demand of our time;
to develop a strong consensus on common ground shared by all three of the ILOs
constituents governments, workers and employers in order to strengthen
cohesive tripartism and collective action;
to serve as the guiding principle for the institutional reform and modernization of
the ILO;
to give us a sharper policy identity in the minds of people, in order to help us in
our dialogue and interaction with other institutions and actors.
The 2001 ILO International Labour Conference approved a resolution for translating
decent work into realizable programmes and activities, within the context of a changing
global economy.
Decent work means work, which is carried out in conditions of freedom, equity, security
and human dignity.

27
ILO: Decent work, Report of the Director-General, International Labour Conference, 87th Session, Geneva,
1999
30
It implies four strategic objectives:
achieving universal respect for fundamental principles and rights at work;
the creation of greater employment and income opportunities for women and men;
extending social protection; and,
promoting social dialogue.
The ILO strategy for Decent Work relies in the fact that while the tumultuous changes are
transforming work in so many ways, the meaning of work in peoples lives has not
changed. The essence of what people want remains constant, across cultures and levels
of development. Everybody seeks a fair chance to prosper in life by their own
endeavours.
But it is equally apparent that work is where contradictions between human values and
aspirations and real life often surface. Work can require to give up rights which we hold
dear, to forfeit our autonomy, even our dignity. We can end up selling our labour to
make products or services that may be meaningless, useless or even harmful to
ourselves and others. Unacceptable trade-offs are a daily diet for far too many working
people, trapped in circumstances and systems. This experience of work is profoundly at
odds with what work at its best is about. Work can be an expression of our unique
talents, a way of contributing to the common good, an avenue for engaging deeply and
meaningfully with a community.
This complex reality lies at the heart of the
ILOs mandate. As the Declaration of
Philadelphia puts it, ILO obligations include
the obligation to further programmes aimed
at achieving employment of workers in the
occupations in which they can have the
satisfaction of giving the fullest measure of
their skill and attainments and make their
greatest contribution to the common well-
being.
That Declaration also affirms the right of everyone to conditions of freedom and dignity,
of economic security and equal opportunity. It underlines the importance of ensuring a
just share of the fruits of progress to all. That is the foundation of decent work.
These objectives are closely intertwined: respect for fundamental principles and rights is
a precondition for the construction of a socially legitimate labour market; social dialogue
the means by which workers, employers and their representatives engage in debate and
exchange on the means to achieve this. Employment creation is the essential instrument
for raising living standards and widening access to incomes, social protection the means
to provide security of income and of the working environment. In addition, gender
equality and development are themes that cut-across the strategic objectives.
The focus on decent work naturally implies a major emphasis on enterprise development
and the importance of creating an enabling environment for productive investment.
Enterprise development in an open world economy encompasses new challenges not
least of which is to go beyond the outmoded idea that entrepreneurship and worker
organization are conflicting objectives. Uncertainty for business and for working families
is a drag on adaptation, which can only be overcome by a broader vision of the
productive value of policies that promote both social justice and innovation. Increasingly,
enterprises are recognizing that sound social policies and industrial relations are good for
business.
The goal of decent work are jobs and future prospects; working conditions; balancing
work and family life, putting kids through school or getting them out of child labour,
gender equality, equal recognition, and enabling women to make choices and take
control of their lives, promoting personal abilities to compete in the market place,
Decent work implies a major
emphasis on enterprise
development and on the
importance of creating an
environment, where it may be
effectively enabled.
31
keeping up with new technological skills and remain healthy. It is developing
entrepreneurial skills, receiving a fair share of the wealth; having a voice in workplace
and community. In the most extreme situations it is moving from subsistence to
existence. For many decent work it is the primary route out of poverty; for many more, it
is realizing personal aspirations in their daily existence and about solidarity with others.
And everywhere, and for everybody, decent work is securing human dignity.
The emphasis put on the connection among different factors, for influencing decent
works strategies, and on the enabling environment for productive investment, made
possible by the social dialogue, and for assuring human dignity recall the importance of
local economic and human development approaches.
In fact experiences show that national efforts in this direction may certainly provide a
necessary regulatory framework, able to promote, to incentive, and to facilitate the
strategies conducive to decent work. Nevertheless, when the social parts have to put
together for matching social and economic goals; when the appropriate environment has
to be created for smme development and job creation; when financial strategies for
social protection have to be implemented; when people want to affirm their aspiration
and they can do it only if they participate to the decision making processes, what more
adequate than the local dimension for finding out specific answers to these specific
needs, in a specific context, that is where people leave and they want keep leaving?
Social and environmental protection may be better favoured by harmonising social and
economic policies, as it is pursuable through the common interests and actions realised
through the accumulated social capital at local level.
Respect for labour rights, and decent labour market is made possible by focusing the
development strategies on human resource, as it is more feasible at local level, through
favouring the access to work for everybody without exclusion, and because local
communities want to build a sustainable future, based to the contribution of everybody.
Social dialogue is enabled by proximity and common interest of local actors.
Decent jobs are created by favourable environment and shared aims, controlling that risk
against discriminations and insecurities are avoided.
It was not a case that the ILO general Director, in fact, stated:
Many efforts have sought to promote integrated approaches to economic and social
development at the local level. Some are modelled on the Local Economic Development
Agencies (LEDAs), social enterprises first launched in Europe which offer an integrated
model that is well adapted to the ILOs agenda.
Therefore human development and decent work achievements are strictly interrelated,
and local economic development policies can make them affordable.
The following picture illustrates the connections between decent work, human
development and local economic development.
Human development recalls four basic principles: harmonisation of social and economic
issues, participation, creation of equal opportunities for women and men, and access to
society.
Decent work is also based on four basic propositions: social and environmental
protection, social dialogue, respect of labour rights and human dignity, creation of jobs.
Local economic development policies are vehicle to build the conditions for the
application and operation of the above-mentioned principles:
- the social capital enhances harmonization and an environment where social and
economic measures can be pursued without contradictions;
32
- proximity and commonality of interests and aims at local level favours effective
participation and social dialogue;
- shared strategies and coordinated economic objectives realised at local level
facilitates new opportunities for jobs and creates an environment viable for decent
work;
- fight to exclusion, rendered possible by the focus on local human resources typical of
the LED approach, enhances access for everybody to the means of production,
respecting labour rights and human dignity.
In practical way, according to the Ilo experience, the above-mentioned LEDAs have
achieved the following results in terms of decent work:
1) in terms of social protection, the small business promoted by the LEDAs are
committed to register as formal activities and the employers are guaranteed
according to the national social protection legislation;
2) in terms of social dialogue, Ledas act in
two ways: on one side, by statute, their
members are mainly public authorities,
employers and employees organisation,
together with other social actors, such as
associations, territorial corporations etc.;
on another side they reinforce the
participatory mechanisms promoting
associations where they do not exist, and
strengthening the existing weak ones.
In some cases where workers or entrepreneurs associations do not exist at local
level, the Ledas involve the national organisations and help them to constitute local
branches.
3) In terms of opportunities, the Ledas spread information to all the population about
opportunities deriving from the strategic plans shared by all the stakeholders,
stimulate people, especially the most vulnerable ones, for exploiting the
opportunities, help them in realising business ideas and business plans.
4) In terms of access, Leda provide a comprehensive set of services for allowing
vulnerable people to enter into the economic system: technical assistance, training,
credit, tutorship. This is realised or directly or networking the existing structures.
Gender equality was pursued in many cases.
The result of this is that tha majority of the 1100 enterprises created annually by 11 Leds
in central America since 1994 provided 6,500 decent jobs per year.
The Decent Work initiative involves a number of other initiatives undertaken by ILO, such
as the global compact, social dialogue, social protection, and reduction of social
vulnerability.
Local economic approach may help the achievement of the objectives of the above-
mentioned initiatives in a coherent and cohesive manner, through coherence and cohesion
made possible by people living and operating in the same territory.
Eleven Local Economic
Development Agencies, promoted
since 1994 by Ilo, Unops, and the
Italian Cooperation in Central
America are providing 6,500
decent jobs per year.
33
Access
Participation
Opportunities
Harmonisation of social and
economic policies
LED is fostered by extra economic
factors, such as the social capital,
which is improved for better
development performances.
LED final aim is the well being of
the population and the
improvement of the quality of the
territory
LED successful processes are
based on vast participation of the
local people and their
representatives in elaborating
and implementing the strategies,
finding appropriate response to
their specific and needs and
unique conditions.
Human resources are the backbone
of LED policies.
If they are harmonised towards a
common path, development is
more sustainable.
LED implies the implementation of
mechanisms and tools that allow
the access of all the people to
economy: credit, services,
information, orientation, training,
etc.
LED enables valorising the local
potentialities, rendering available
new opportunities for markets and
employment.
LED more successful initiatives are
based on clusters of smmes,
exploiting the chains of local
economic values.
Local stakeholders create an
environment enabling smmmes to
born and growth in a sustainable
way, and generating a systemic
competitiveness
LOCAL
DEVELOPMENT
HUMAN
DEVELOPMENT
Social and
environmental
protection
favoured by
harmonisation
Respect for
labour rights, and
decent labour
market made
possible by the
focus on human
resource
Social dialogue is
enabled by
proximity and
common interest
of local actors
Decent jobs
are created by
favourable
environment and
shared aims
DECENT WORK
DECENT WORK, HUMAN DEVELOPMENT AND LOCAL DEVELOPMENT
34
5. Practices in Local Economic Development and learned
lessons
5.1 Criteria for the analysis
The development opportunities made available by the features which characterize what
so far we have been describing as local economic development have been recognized by
many international organizations as well as local governments. At local levels there are
many realities where the necessity of realizing LED strategies have led to the
implementation of specific initiatives in response to specific economic and social
situations. The birth of many of the European Regional Development Agencies (RDA)
during the 60s and the 70s meant to be an answer to the growing unemployment which
was gripping various depressed areas of Europe. The RDAs operating in the regions of
Spain are actually the tool on which the regional governments rely to respond to the
problems arisen from the decreased competitiveness of the regions themselves. The
Shannon Development Agency, operating in the Irish region of Shannon, opened thanks
to the unemployment problems arose after the closure of its airport. Since, with new
technological innovations it wasnt necessary any more, for air companies, to plan stop-
overs in Shannon when undertaking international flights. Therefore the whole sound and
vibrant industry and infrastructure developed after the airport suddenly collapsed.
Soprip in Italy started up because of of unbalance between one part of the province of
Parma and the other one. More than two hundreds RDAs are now operating in Europe.
The best practices are described in detail in the Universitas-Led Paper N 2. In particular
experiences are analysed, such as those promoted by:
G local initiatives
G national initiatives
G international development cooperation initiatives.
Practices of local economic development can be picked almost in every part of the world.
On a quantitative level they have increased constantly, thanks to the successes occurred
in terms of results and of processes activated to reach those results. But much confusion
is present when it comes to define LED strategies since no clear parameters have been
agreed upon by economic developers in order to be able to draw a line of separation
between what can be defined a LED intervention and what, for different reasons, should
not. Initiatives for SME support, community building projects, micro-credit programs are
a clear example of this. Although they tackle some of the problems which also LED
intervention tackle, they are not comprehensive programs, which try to build on the
strategies set forth in the previous chapters of this document.
Other problems occur when LED initiatives should be analysed considering their impact
on human development and decent work approaches.
To the scope of the present study, then, the experiences will be reviewed considering
some specific parameters, such as the ones described below.
Participation. It is clearly understood that, in order to realize sustainable development
at local level, it is necessary that the stakeholders share a mutual vision of the future.
This necessary, albeit not sufficient, condition is generally lacking in developing
countries, being the contrary rare exceptions to this rule. Usually the first thing to be
done is to create participation. Sharing a mutual strategic vision of development may be
one of the most difficult things to achieve and the only way to meet this condition is to
commence a long and tortuous dialogue among the local actors which may also be
35
unsuccessful. The difficulties of succeeding in the elaboration of a mutual shared vision
are strictly related to the wideness of the territory concerned, being these two factors
indirectly related. As previously stated the territory must be big enough to ensure the
presence of a critical mass of resources on which to base a LED intervention but also
small enough to allow a proper bottom-up participated approach. A LED intervention may
be considered such if it has created the conditions for future dialogue, which is deemed a
necessary condition for social and institutional sustainability.
Endogenous resources. A Local Economic Development approach should be based on
the exploitation and development of the local endogenous resources. The sustainability of
the intervention strongly relies on the positive response to this condition. Chain of
value which can trigger local development are necessarily based on local resources.
Foreign direct investment is not excluded a priori, but this should anyway be directed
towards the use of local potentialities.
Support to vulnerable groups. Local Economic Development practices, which are
undertaken at the light of human development and decent work principles, should be
carried out as means to favour gender equity and social inclusion of the vulnerable
groups. So issues such as the access to economic opportunities, the provision of decent
work, the safeguard of the environmental bio-diversity should be considered within a LED
approached activity. Empirically it is proven that this issue is better tackled by LED
practices if financial sustainability is achieved. It may happen that the activities are
undertaken with the intention of reaching sustainability, and this often vies with the aim
of supporting vulnerable people which knowledgeably are more risky.
Sustainability. This issue is the logical consequence of the previous ones. A LED
approached intervention should seek to reach the following aspects of sustainability:
G Financial Sustainability. A lasting LED intervention should be able to cover its own
expenses, possible detaching itself as soon as possible by the funding of the donor
agencies which sustained the intervention at the beginning
G Social Sustainability. This is achieved when a shared vision of future development is
reached among all the local actors
G Institutional Sustainability. This is achieved when local administrations and authorities
are fully committed to support the process and to channel to it all the public
initiatives addressed to the area.
In the first part of the paper N 3, the experiences of some international organizations
directly involved in LED strategies and interventions will be reviewed. In particular the
experience of the European Union, which fostered LED based actions through the
Territorial Employment Pacts and through the realization of some Community
Intervention Programs (CIP), will be described. The Local Economic Development
Agencies (LEDA) set up by UNDP/UNOPS/ILO with the support of the Italian Government
will be analysed as well as some smaller experiences of the Food and Agriculture
Organization which have fostered the concept of Sustainable Livelihood, and the initiative
of the IADb (Inter American Development Bank). The new strategy in terms of Local
Economic Development of the World Bank will be outlined as well. The analysis of the
above-mentioned themes will be accompanied by the description of good practices on the
field where these are available.
The second part of this chapter will contain the experiences carried out without the direct
imprimatur of an international organization, sprung by the necessity of responding to
specific economic conditions of a territory where a LED approached strategy has proved
to be successful. Practices in Europe (particularly England, France, Germany, Ireland,
Italy, Portugal, and Spain), as well as in Latin America (Argentina, Brazil, Chile) will be
overviewed.
36
5.2 Gaps and constrains
The local economic development initiatives illustrated in the Universitas-Led Paper N 2
have substantial issues in common, but they register differences in objectives,
governance, ways and tools of implementation.
In general we can say that the equation LED=H.D.+D.W. is not necessarily valid in all the
cases (LED stays for Local Economic Development; H.D. for Human Development; D.W.
for Decent Work). LED processes not necessarily include Human Development and
Decent Work approach and aims.
Nevertheless the equation H.D.+D.W.=f(LED) has demonstrated its validity: Local
Economic Development processes have the potential and the main features for enhancing
human development and decent work. In other words such strategies can rely on local
economic development for their implementation, in an effective way.
Many gaps and difficulties are generally encountered in promoting and realising local
economic development processes and strategies, and several others constrain the
coherency with human development and decent work vision.
We can frame these gaps in five categories:
a) Political constrains
b) Strategic constrains
c) Skill constrains
d) Financial constrains
e) Operational constrains
I. Political constrains
Generally the experiences developed in environments enhancing local decentralised
decisions, have achieved better performance: the Italian Districts, the recent Spanish
Ledas, the Lander initiatives in Germany, the municipal development in France, etc..
Decentralisation of decisions, in terms of financial allocations, regulatory frameworks
about smmes policies, and local planning, facilitate the implementation of LED
strategies. Countries such as England, Portugal, Ireland, Chile are, in fact, considering
and structuring adequate legislation favouring decentralised national policies.
Strong support from the national governments is generally needed for fostering LED
practices, and it regards three main efforts: one is in implementing decentralised
regulations, the second one is in providing a regulatory framework, either for facilitating
the functionality of local implementing structures, or for promoting jobs and enterprises,
and the last one to spread, stimulate and promote such policies, involve local and
national actors (business associations, trade unions, chamber of commerce, etc.) to have
a supportive behaviour for managing such processes, and realise tools for harmonising,
monitoring, and addressing such initiatives.
Decentralised regulations regard the possibility that decisions about planning, financial
schemes, incentives to the creation and support to smmes, training strategies, fiscal
regimes can be taken at local level.
The regulatory framework has to do on one side with laws that regulate the
establishment of local implementing structures, such the LEDAs (public-private
partnership, fiscal regime, incentives, statutes), their role in the general development
strategy, the monitoring mechanisms and indicators; on the other side it implies all set of
measures facilitating smmes development: fiscal allowances, banking, export, labour
rights and duties.
37
The promotion effort implies a national joint effort, which involves contemporarily
national and local governments, associations, and NGOs, for providing an homogeneous
platform for local initiatives.
All this is not easy to achieve.
Difficulties partially rely in a traditional vision of the development, which looks at it as a
spontaneous result of the structural adjustment, of the control of the macro economic
indicators (debt, public budget, inflation, etc.), and commits to market the best allocation
of the resources, no matter about spatial locations.
The two-speed development often is recalled for justifying the primary need of
responding to economic emergency or crisis, the support to the strongest or more
capable actors (located often in central sites) as locomotive of the growth, expecting a
second phase for spreading the well-being derived from the first one.
Another type of difficulty regards the lack of the resources developing countries suffer for
supporting such efforts, in terms of financial and human capacities, although often is not
just a question of how much is needed, but how to use the existing resources and what
to prioritise.
In countries where there is little support from the national government to local policies,
Many experiences including the Ilo about the establishment of LEDAs- have been
realised at local level, with the national level consensus, without, however, their effective
support. The risk, in these cases, is quite an isolation of the local efforts and distance
from national strategies, and it regards:
a) Legitimacy: although the LEDAs are totally legitimated at local level, often
national governments tend to ignore their action. It happen that
national and international programmes, realised in the area where
the Leda operate, do not realise links with them, generating
confusion and also conflicts with the local population.
b) Communication: in very poor areas communication infrastructure are often scant. In
some villages of Guatemala, for instance, only one telephone line
exists, and few hours of electricity during the day limit
communications by telephone or e-mail, whereas 7-8 hours are
needed for reaching the capital.
c) Strategy: if the strategic focus is limited too much to local markets, the need
for national opening is little felt, whereas local economies needs to
open themselves to national and international opportunities.
Not necessarily this kind of local-national linkage comes through a top-down approach.
Many experiences shows that, starting from the local, it is possible to establish positive
relationships with national and international environments, and also to push national
governments to carry out local policies.
It is, for instance, the case of Angola, Ireland, South Africa, and Mozambique. Leading
factors were the positive results of consolidated pilot experiences (Ireland, Mozambique),
or the awareness that the social dialogue at local level produced effective conditions for
fighting poverty or enhancing peace processes (Angola and South Africa). Sometime LED
initiatives at local level and LED policies at national level interacted for strengthening and
improving each other, as in the case of Spain and England. National frameworks allowed
the implementation of local processes, whereas the local experiences and innovation
have been utilised for re-planning the national efforts.
38
II. Strategic constrains
LED initiatives imply the local actors having a strategic vision of the territorial
development. Human development and decent wok strategy require harmonisation of
social and economic issues, to allow a balanced growth, respecting human dignity,
gender equality, and the environmental resources.
Often in LED practices the strategic vision is poor, and this includes the identification of a
medium-long term design, and of the strategic steps for pursuing it. Sometime local
actors elaborate generic aims, but forget them at the time of carrying out concrete
projects and actions. It could happen that protection of environment is one of the
development objectives, but huge tourism infrastructure or polluting factories are
allowed. In other cases, despite to prioritised strategic production, incentives and support
are provided to different initiatives, or gender equality is pursued, but little opportunities
to women are concretely enhanced. Coherence between strategy and action is not
practised.
In these cases the difficulty relies in the contradiction between the need to have rapid
responses, for instance for employment, and the time necessary for consolidating slower,
but more and sustainable processes. Social cohesion and clear consensus in such cases
needed, but difficult to be sustained, if some of the main actors abandon the strategy.
International cooperation programmes, that generally have short life (2-4 years),
experience particularly such difficulty. The need for achieving results in short periods
does not always match the need for consolidating the base of a sustainable development.
Further and more substantive gap regards the harmonisation of social and economic
objectives. In the LED experiences there is a general consensus that the main objective
is the well being of the population, the improvement of the local context for allowing
people to live better, a satisfactory employment, good environment, services, social
protection. The economic performance are seen as a instrument for achieving all this.
Women are often excluded by the decision process taking place at local level for
establishing development strategies and actions. Often they are beneficiary of technical
and financial support, due to their entrepreneurial aptitude, but still they are a minority
in the decisional places. Cultural constrains and traditional exclusion, which influence the
gender relationships, are still far from being removed.
Many difficulties, however, rise when such situations have to be faced and correspondent
actions have to be carried on specially when short terms results only are pursued.
Many difficulties, however, rise when such statements have to be translated in concrete
policies and actions.
First of all, again, pursuing quick responses to emergency decrease the possibility of
harmonisation. It is the case when support to well established business is prioritised,
although it does not include social performance, such as inclusion, fight to poverty,
gender, labour rights, social protection, etc. In many cases social and anti-poverty
policies are committed to special programmes and initiatives, that increment the gap
between advantaged and disadvantaged people.
National policies and measures, of course, contribute to incentive and support such
behaviours also at local level: if welfare programmes are available, or special micro-
finance initiatives are launched, or support to women not integrated into a
comprehensive gender vision is provided, the local people are stimulated to use them,
and if no autonomy is given for establishing coordination between social and economic
initiatives, the gap is impossible to be filled.
The open questions are how to make use of the economic development achievements for
addressing social needs; how to combine market and competition requirements with pre-
competitive human development requirements; how to balance short and medium-long
terms strategies; how to make synergies between private profit and local solidarity.
39
Few best practices are available and innovation in this field is required. Special mention
goes to the experiences of accompanying the enterprise economic balance with a social
balance; the ILO Global Compact programme is another frame initiative for stimulating
the entrepreneurs and the local actors to face new ethics; the LEDAs promoted by Ilo,
Undp, Unops, and the Italian Cooperation are further example and they have great
potential for implementing harmonisation; an Ilo pilot programme is going to be designed
for involving the LEDAs in micro-insurance initiatives for assuring health protection to
disadvantaged people.
III. Financial Constrains
Sustaining Led processes implies financial resources, that often are not immediately
available.
Problems regard two aspects:
The start up
The permanent sustainability
In the majority of the cases the initial start fund is provided by public finance (national,
regional as in the case of the European Commission-, local budget), or through
international co-operation programmes, as in many cases of developing countries and
countries in transition.
In the case of the international co-operation two kinds of constrain are encountered:
Lack of information about programmes and funds available for LED
Lack of harmonisation among different program operating in the same area.
The local actors often do not know all the possibilities exist: United Nations agencies,
such Unido, Ilo, Undp, Fao, World Bank, or National cooperations (Canada, England,
France, Germany, Italy, Netherlands, Spain, among others), or the European Commission
have programs and technical capacities for sustaining local economic development
initiatives. Decentralised ccoperation is becoming also a relevant source of funds, and,
recently, also IBD for Latin America has launched a programme line for LED.
Often the problem is to get such information (web-sites, internet, local embassies, local
cooperation units, etc.) and to have the capability of assembling a rigours and attractive
project for use the opportunity.
On the other side, the international co-operation often have money to spend, but not
interesting projects. They may be willing to respond to concrete needs of the population,
but do not receive sufficient inputs.
Nevertheless many times we assist to different cooperation projects carried out in a
certain locality, without a coordination, but duplicating actions, structures, current costs.
The role of the local communities is of avoiding all this. The experience show that if a
structures, committed to realise and coordinate LED initiatives, such the LEDAs, are
capable enough, they can catalyse the interest of donors, organise the coordination,
address it towards real needs, facilitate the implementation.
Major problems and difficulties occurs in providing continuity, when the starting up
resources and period goes to an end.
The experienced way of sustaining financially such processes are the following:
Public subsidies from local or national budget
Contributions from the local community
Sell of services
Project financing
40
Financial engineering
Many difficulties, however, occur especially in developing countries.
Public subsidies are difficult to maintain in the generalised cases of finance constrains in
governmental budgets. Also when initial enthusiasm occurs, not always there are
conditions to continue feeding such initiatives.
Contributions from local communities (private and public sector) much depends on
voluntary efforts, and they could stop during periods of economic crisis, just when
initiatives to sustain the local economy are more needed.
Sell of services is generally difficult in the pre-competitive field (stimulation, basic
training, first aid, information and communication, feasibility studies, etc.), and it is
possible when the following conditions occur:
Governmental commitments, through prioritised strategies and programmes, which
assign to local communities part of the public budget, harmonising different
interventions usually articulated in social and economic programmes (welfare, social
inversions, support to smmes, fight to poverty, training, etc).
Strong commitment of the local community, through consolidated practices of social
cohesion, strategic planning, and coordinated actions, which allow also to address
possible external incoming projects and finance towards the objectives jointly
identified.
The establishment of Local Economic Development Agencies, as autonomous and self-
sustainable structures, which permit to manage funds in a entrepreneurial and
efficient manner, on behalf of the members of the local community and coherently
with national policies. The LEDAs, specially when financial engineering and
commercial services are combined together, have achieved the objectives of
providing pre-competitive and business services, attending also the most vulnerable
people. They need, of course, a strong initial investment (for start-up operations and
for the capital for financial/credit operations), that has generally been provided by
national or international programme funds.
IV. Operational Constrains
A number of components is necessary for LED process to have real impact on economic
and social indicators.
The need for national regulatory framework, institutional and administrative
decentralisation, planning participatory development, harmonisation of economic and
social policies, coherence of local and national strategies, local social cohesion, strategic
long term vision, and financial support has been mentioned.
Nevertheless, although all such factors would work out, operational difficulties could still
rise, and they are referred to the banking system, to the decision making process, to the
service organisation, to the monitoring and evaluation of the results.
Banking system
National banks hardly may accompany local development. The experience teaches that
local bank, especially if based on mutual solidarity, such rural co-operative banks, are the
most appropriate. People is eager to deposit their money if it is used for supporting local
initiatives and local people, to improve their economic and social environment.
Local banks are also more flexible to establish rules and procedure adapted to specific
situation, provided national regulation allows it. They can more easily establish
agreements with local actors (local administration, business associations, chamber of
commerce, local economic development agencies) for special credit lines, guarantee
funds, and mutual solidarity funds, or for special conditions. In some cases we have also
seen local banks using part of their funds to support local social initiatives.
41
National banking legislation or conditions often make impossible or difficult the
establishment of such local banks for supporting territorial economic development
initiatives, or of procedures which allow easier access to credit.
Access to credit to all the population, also the most vulnerable one, is one of the main
constrain to the promotion of an equilibrated development, which makes use of all the
human resources a certain territory has at disposal.
Banking requirements are almost the same world-wide: collaterals, confidence, rigorous
financial planning on credit recovery. If disadvantaged people could be supported in
realising the business financial plan (by experts or service providers), certainly are not
able to meet the other two requirements.
Guarantee and mutual funds, and venture capital initiatives have been experienced as
alternative systems to provide access to the banks, but they need regulatory national
and local framework to be established in an efficient and remunerative manner.
Decision making process
Political, strategic, financial, and operational decisions have to be made for making
efficient local economic development mechanisms.
Often confusion rises in such process. Politicians want make decision about final
destination of the financial allocations, local administrators want to impose their strategic
vision, business associations wants interfere with general policies, or, more generally,
there is little habit to make common decisions and to be coherent with them
consequentially.
Difficulty have been encountered for transparent and effective decision making
processes, mainly due to the gap in know how, in individual behaviour, in absence of
national frameworks.
The Ledas experience shows that, although national policies do not include participatory
instances as mean for making decisions, their internal mechanisms and organs, including
all the relevant local stakeholders, have worked out efficient ways of actualising political
and strategic decisions in coherent actions.
Critical nodes are, then:
the identification of who does what: national governments, local administrations,
civil society, implementing structures;
the establishment of transparent interactive processes among the different
levels;
the monitoring process, allowing improvement and updating of the decisions.
The Service organisation
Support to local economic development includes capacities of putting at disposal
specialised know how.
This implies different factors, and gaps could occur in pursuing and achieving:
a) comprehensive services: pre-business assistance, business assistant, credit and
financial support, project development, information, territorial marketing, etc.;
b) coherence of the service providers with strategy and objectives of local economic
development;
c) access to services, especially for people without resources (know how, finance);
d) sustainability.
In many developing countries one of the main initial gap is the poverty or the total
absence either of business service capacity supply, or of the service demand (few
42
businesses, lack of financial capacity to access, or knowledge how to use it). Building a
system capable of demanding and supplying business services is one of the
principal gaps to fill.
Nevertheless organising an effective service system is a not easy job.
It has to do with the identification of different areas of intervention, such as:
a) pre-business services, which regard information and stimulation of the population to
make use of the territorial business opportunities, as they come out of the strategic
plans; introduction and basic training towards entrepreneurship; skill training.
b) Business start-up services, which regard all the activities (business plans, training,
market and technology assessment) needed for starting a new businesses.
c) Standard business services, which regard activities independent on the specific
product/market/technology combination, such as administration, accountability,
legal advises, human resources management.
d) Specialised business services, which regard activities dependent on the specific
product/market/technology combination, such as technology information and
assessment, production, commercialisation, marketing, control of quality, business
finance, export.
e) Financial services, which regard credit and credit access, financial assets, venture
capital, mutual solidarity funds, capital insurance.
f) Territorial marketing, which regard activities aimed at promoting the area,
attracting external investment or funds, trading comprehensive set of local product,
realising trade marks.
The experience in developing countries teaches at beginning such services are mostly
comprehended in one or few structures, either a Leda or other ones linked to it. As long
as local development consolidate the demand and supply of the services in the area, the
same Leda could promote and support more specialised private providers, specially in
fields of standard, specialised, and financial services.
Nevertheless one of the question is how to assure that private service providers pursue
individual market strategy coherently with the comprehensive economic development.
Their participation as member of the LEDAs or similar structures, and specific service
agreements could overcome such risk.
Access to services is one of the main difficulties vulnerable women and men encounter
for entering into the economic circuit. Scant knowledge of what they have to request,
and lack of economic resource for paying services are critical factors. Mechanisms that
overcome such difficulties are needed, such as free services (mainly the pre-business or
the start-up aforementioned ones), special financial arrangements for accessing to credit
without collateral, payment-by-results.
The last, but not least, difficulties is related to the sustainability of the overall service
system. In a situation of market weakness avoiding duplications and realising
cooperation are the best approaches.
A coordinating structure, such as the LEDAs, could have the role of stimulating matching
of demand and supply, providing special services (pre-business, start-up, territorial
marketing), addressing special credit lines, and coordinating local competence for
territorial development projects, whereas business associations (on the base of members
contributions) could be on charge of standard business services and private operators of
specialised ones on the base of market transactions and agreements with LEDAs,
specially for dealing with disadvantaged people.
43
Monitoring and evaluation
Local economic development processes and achievements related with human
development and decent work aims lack of shared measurement indicators.
This makes uncertain also the planning processes, where the measure of the results and
of the impact on the territory and the population is necessary for forward steps and
improvements.
Many experiences have been monitored and evaluated through absolute quantitative
measures, such as number of jobs created or sustained, number of enterprises promoted
and supported, volume of production and exportation, number of people trained, etc.
Few attempts have been made for putting the accent on dynamic variables, such as the
strength of the social cohesion created; the local capacity in facing difficulties, changes,
contingencies; the overall social balance; the capacity in avoiding social conflicts; the
quality and sustainability of the jobs and enterprises created and supported; the capacity
of facing the challenges of globalisation.
Such parameters are very important for carrying on strategy and planning exercises,
which allow to learn from experience and continuously improve the development
processes.
This should be one of the future main challenges of how many within national policies or
international development cooperation strategies are committed to promote and
sustaining human development and decent work.
V. Skill constrains
LED processes imply differentiated and specialised skills. Lack of professional preparation
may produce two negative effects:
a) constrains for the effectiveness of the impact of LED on the territory
b) risk of leadership of someone better skilled- of the stakeholders, which could
exclude the others from the decision making process.
Skills gap implied in LED processes regard mainly:
G for National public administration: Promotion Agents, Legal assistants, Smmes
experts (regulations), Financial experts (regulations), Monitoring experts, Planning
experts (regulations), and gender experts;
G for Local public administration: Planning experts (operators), Monitoring experts,
LEDA managers, Sectoral experts, and gender experts;
G for Local Economic Development Agencies: LEDA managers, Economic Animators,
Project financing experts, Smmes experts (operators and counselling), Business
administration experts, Financial Experts (credit mechanisms), Planning experts
(operators), Territorial marketing experts, and gender experts;
G for Private sector: Entrepreneurs, Business Managers, Business Service Providers,
Sectoral experts, Trainers, Technology Diffusers, Smme credit operators, and gender
operators;
G for Universities and Educational Centre: Trainers at different levels, Researchers.
In many countries it is very difficult to find the above-mentioned skills.
No university courses are realised in the current academic schedules, few post-graduate
courses or masters are available only in some countries (England, Consortium of 9
European universities, United States, Italy, Costa Rica, Argentina).
44
Specialised skills are available in many of the aforementioned sector in developed
countries, such as Smme credit operators, sectoral experts, business service providers,
business managers, entrepreneurs, territorial marketing, planning, business
administration, smmes, and project financing experts. In developing countries such skills
are more difficult to find.
Nevertheless there is, generally, no organic connection between these capacities and the
way of operandi within a local economic framework. It is not the same thing for a
professional to provide counselling to some entrepreneurs only on an individual-based
commercial transaction, or to help him, taking into consideration the local environment
moving towards certain shared objectives in a cohesive way.
The Unesco Human development faculties, the European consortium of universities for a
LED master, and the ILO Universitas Programme, for forming local economic
development agents, are typical and useful initiatives addressed to fill the existing gap in
this field.
45
6: Recommendations
6.1. Introduction
This chapter will report briefly some suggestions and recommendations which are derived
from the previous chapters, and particularly from the constrains encountered in the LED
experiences.
The following comments will be useful to policy makers and LED operators, when a
comprehensive intervention to enhance local economic development policies and
practices, specially in developing countries and countries in transition.
The recommendations regards: the regulatory framework, the promotion, the
monitoring, the instruments, the internationalisation, the education, the fund raising.
6.2 Regulatory Framework
Putting budgets and policy decisions at the discretion of different local development
agencies raises a number of issues about the relationship between local development
agencies and national and regional agents, that implies a need for appropriate national
and regional structures. Policy-makers are concerned to ensure that decentralisation
does not lead to unacceptable inequities between policy provision in different areas, in
particular between those with strong budgets and those with weak budgets. They also
need to ensure that local development approaches are sufficiently co-ordinated with each
other and with other levels of the territorial hierarchy. A third issue concerns the need to
strike a balance between allowing local development bodies sufficient autonomy to
assess and respond to local needs on the one hand and achieving a clear accountability
for public funds and a responsiveness to broad national and regional priorities on the
other28.
A national regulatory framework shall be established in order to render local economic
initiatives effective. The absence of such reference could, in fact, produce:
a) lack of institutional sustainability, in terms of weakness in the national-local
relationships, difficulty in the use of national resources and international networks;
b) weakness of financial resources, because of the difficulty in the access to national
financial channels;
c) inefficiency in the support to smmes, in absence of specific regulations benefiting the
process of generating new enterprises for disadvantaged people, the promotion of
clusters and groups of small enterprises, etc.;
d) difficulties in the provision of credit to disadvantaged people.
The regulatory framework consists of national bills and regulations, including:
G a bill, which establishes local fora for strategic local planning and Local Development
Structures;
The British, Portuguese, Campania Region, Angola, and German legislations could be taken as
reference. Fora, including public and private stakeholders, will be established at local level, with
the task of identifying the medium-long term strategies for economic development, the
economic potential, the way how to use it in the more advantageous and competitive manner,

28
OECD/LEED Best practices in local development, 2000
46
the correct approach for gender policies. National reference for the fora should be identified as
well, for the necessary proactive links between the local and the national policies. The fora will
be coordinated by the local administrations, which should take their outputs ad reference for
their plans and decisions.
Local Economic Development Agencies, such as the once promoted by ILO, UNDP, UNOPS, and
the Italian Cooperataion and illustrated in the previous chapters could be taken as reference for
establishing Local Development Structures. National indicators should be established at this
scope (general objectives, typology of beneficiaries, typology of the membership,
organisational framework, general managerial indications, process for their creation), whereas
the local fora should be allowed to identity specific objectives, modality of functioning, the
organisational chart, the financial rules.
G a bill, which allows local administrations to decide how to spend national resources on
local economic development initiatives and issues;
The European devolution initiatives could be taken as reference in this case. Either letting local
administrations to directly use local taxes for economic development initiatives or devolving
resources from the national budget, the local administrations should autonomously decide
about sectoral or factorial policies or priorities, typology of beneficiaries and companies to
support, business services, economic infrastructure. National indicators should be identified for
measuring the effectiveness of the local initiatives, with respect to the specific established
objectives, and so annually assign the required resources.
Compensating mechanisms to support weaker areas should also to be taken into account.
G regulations for establishing specific guarantee funds for facilitating the access to
credit for disadvantaged people;
The guarantee funds established by ILO in support of the LED initiatives, the French or the
Italian experience of solidarity or mutual funds could be taken as reference for guiding national
policies in this sector.
National funds generally addressed to anti-poverty policies, for social investments, for
incentives for the creation of new businesses, or granted by international cooperation programs
could be reverted to constitute a national guarantee fund deposited in a certain bank, and to be
used by the local economic initiatives to support the creation or the reinforcement of small
enterprises, particularly benefiting women and men, which have difficulty to access to the
regular credit system, and assuring a proper gender equity.
Stimulus and incentives to constitute mutual or solidarity funds could be established as well,
through tax reduction or subsidiarity mechanisms.
G a policy which facilitates the coordination of different national ministries, that address
resources to local initiatives, for avoiding duplications and harmonising the use of the
funds;
Ministries of Finance, Economy, Labour, Industry, Local Authorities, Agriculture, Tourism,
Energy and Education guide, influence and finance the economic initiatives and opportunities.
Instructions should be given to the decentralised departments or representatives at local level
to participate to the fora and to the Local Development Structures, in order to coordinate their
policies.
Inputs from this level to the national instances should then be taken as reference for the
formulation of the national plans and budgets.
G a policy which facilitates the coordinated use of the international cooperation
resources, for avoiding duplications and harmonising the use of the funds.
Ministry of Foreign Affairs, in coordination with the other ministries and the local
administrations should establish criteria for distributing in a efficient and effective manner the
resource put at disposal from the international cooperation, providing indications to foreign
47
countries about the needs and the opportunities, and making agreements according to the
interest and the capacities of the donors and the sectoral or territorial optimum destination of
the funds.
6.3 Promotion
National governments could act like catalysts and mediators, fostering the different
initiatives for local economic development, decentralising the information, stimulating
and impelling the development of local systematic initiatives; monitoring and balancing
the different local initiatives.
National initiative should be, then, implemented, such as:
G Assigning a responsibility for the promotion of the LED initiatives (LED Department),
which will spread the necessary information about the regulatory framework and the
world experiences, through different media systems (brochures, bulletins, web site).
The LED department (such as in the example of South Africa or the English Regional Policy
Forum)) should gather all the information related to LED experiences, opportunities, and realise
a promotional program, addressed to the local authorities, as well as the major private and
public stakeholders. It should organise meeting and seminars to promote LED initiative all over
the country; realise a web site for information and counselling.
Methods for enhancing local Fora and Local Development Structures should be put in place.
This unit will establish links with international networks related to LED: ILS-LEDA, Eurada,
OECD, European Union, etc.
G Promoting the LDS network, in order to facilitate the exchange of experience and to
realise scale economies.
The different LDS established at local level will be networked through a specific instance, with
the task of allowing exchange of experience and providing special common international
services (marketing, promotion, fund raising, and international operational links). This instance
should be supported by each LDS of the network.
The experience of Canada, Central America, Europe could be taken as reference.
6.4 Monitoring and indicators
National and local governments, together with other public and private stakeholders,
should establish a Committee for monitoring the different LED initiatives, for establishing
an unique evaluating and measuring mechanism, which is at the base for successive
national support. The monitoring activity should regard the sustainability, the impact, the
efficiency and the effectiveness.29
A social balance, together with the financial balance should be required to the LDS.
G Sustainability
It regards the long term permanence of the LED activities. The main indicators are referred to the
functioning of the social capital, to the different sources of finance, to the trend in the gross
product generated, to the trend in the job creation (quantity and quality), to the competitiveness of
the businesses, to the environment safeguard mechanisms, to the economic cooperation, to the
gender equality, to the effectiveness of social integration mechanisms, to the influence on national
policies and initiatives.

29
see at this regard ILO; UNOPS, EURADA, ITALIAN COOPERATION, Local Economic Development
Agencies, and Barreiro Desarrollo desde el territorio. A proposito del desarrollo local in
www.redel.cl/documentos
48
G Impact
It regards the effects on the local population of the LED initiatives. The main indicators are referred
to the change in the behaviour of the local stakeholders in terms of control of the actions, the
creation of new business and new business services (quantity and quality), the creation of jobs
(quantity and quality), the gender impact, the social impact (inclusion), the financial flow created,
the realisation of development projects and infrastructure, the export rate, the generation of new
ideas, technologies, best practices, and methods.
G Effectiveness
It regards the achievements of the objectives compared to what was foreseen. The main indicators
are referred to increased capacity of the local actors to work in cooperation and towards results, to
the quality of the response for satisfying the needs of the population, to the difference between
foreseen and real results.
G Efficiency
It regards the evaluation on the use of the resource with respect to the achieved results. The main
indicators are referred to a management system able to measure for each result the cost,
compared to the starting situation.
6.5 LED Instruments
National and local governments, according to their duties and responsibilities, should
facilitate the implementation of LED instruments, in terms of infrastructure, services,
financial schemes, and training facilities in coherence with the established strategies.
G Infrastructure.
The national budget for public works, or the local budget for infrastructure could prioritise economic
initiatives such as industrial parks or zones, incubators, technological parks, etc.
Incentives (de-taxation), or light long terms credits could help building such structures.
G Business Services, with particular attention to the people without resources could be
supported by public-private partnership.
At local level a policy for establishing a differentiated and specialist service system should be
pursued. The different potential and current local resources could be utilised, such as business
associations, chambers of commerce, trade unions, local NGOs, women associations, universities,
trying to avoid duplications and coordinating the different providers.
A gender vision for managing business services should taken into account.
The LDS is the reference for this system, and the Local Economic Development Agencies promoted
by the ILO/UNDP/UNOPS and Italian Cooperation programmes are the most effective example.30
The complete set of business services should be promoted, as mentioned in the previous chapters.
Incentives for establishing the LDS and the other services should be established, such as
bureaucratic and financial facilitation for registration, taxation, labour cost discounts, etc.
Training services for business start up, capacity building at technical and managerial level should
be included as well in the service system. National training programmes should be quite flexible to
allow local people to tailor them to own needs. A quote of the salary could be used as levy for
financing training projects.
G Social Services could be supported thanks to the increased economic local gross
product, and to the consolidated local public-private partnership.

30
see ILO; UNOPS, EURADA, ITALIAN COOPERATION, Local Economic Development Agencies.
49
At local level the public-private partnership build through the fora and the LDS could define a policy
aimed at identifying priority social needs, and using the income derived from the increased
economic activity for providing appropriate responses.
Promotion of social enterprises for services to disable, kids, old people, micro-insurance companies
for complementing social services, as well as public-private companies for municipal services could
be promoted.
Plans for using in a more efficient manner the public social structures and services could be
formulated and realised, through agreements with the national systems, and fostering national
facilitation to realise them.
G Financial services could be promoted through public-private partnership
The LDS could use its technical skills and credit for promoting and supporting micro-credit
companies tailored to specific territorial, community, sectoral, gender needs.
The LDS could also use part the financial patrimony as equity or venture capital in special cases.
6.6 Education
The entrepreneurship culture, as a way to find stable solution to employment and to
income, needs to become a solid value in the community. It implies a multiple effort,
which requires the contribution of the education system.
Furthermore, specific skills have to be created and reproduced for sustaining local
economic development, as the previous chapter has mentioned.
At local and national level education structures and systems should coordinate curriculum
including issues related to LED and business initiatives, and programmes such as
courses, masters, and training-actions at high school and university level should carried
on.
G High school
Basic principles about how build the future employment of the new generation should be
introduced in the high school curriculum. Guided visits to local entrepreneurs and local
development structures shall be organised to get the youngsters familiar and confident
about the local job opportunities. Information about the local economic structure will
accompany the process as well. Students of the last years should be helped if they want
to go to University in choosing the faculty, according to the labour demand and the local
opportunities, and this issue should be coordinated with the competent local structures.
G University
Local economic development could form part of the universitys curriculum, within the
economic faculties. The competent Ministry should take the responsibility for enhancing
it. Specific Masters of post-graduated courses should complete the curriculum.
Grants should also favour practices of students in their original places of residence,
within service or development structures, and local administrations.
The involved University or Universities could become part of international networks, such
as the one promoted by the Universitas Inter-University Program, and particularly linked
to the European Master on LED and International Cooperation, which involves a number
of European academies.
50
Inter-university cooperation programs could be activated through these links, for
enabling exchange of students and professors, international study tours, and other
initiatives in support of the Master.
The national Universities should become a reference for reproducing and updating the
skills required by local economic development policies.
Research in this field should also be pursued for innovating methods and practices.
Relationships between the universitys system and the other stakeholders involved in this
issue is important for allowing the continue correspondence between the labour and
innovation demand and the supply capacity of the Universities.
6.7 Internationalisation
Local areas, organised as a system, may achieve enough strength for international
competition. Nevertheless a number of national services and initiatives are needed for
facilitating their international competition, such as an harmonic territorial marketing,
recognised quality control of goods and services, international networking.
G Territorial Marketing
A common framework which guides each local territorial marketing could be realised, including a
national web site for international communication and information, a common communication
scheme which include all the information, etc.
At national level training for the local structures committed to territorial marketing should be
organised.
Coordination for avoiding areas competition for the investment attraction would be also a national
task.
G Quality Control
The guarantee on the quality is one of the main requirements for exporting goods and services.
Generally this is certified by specialised centres and through standardised quality control processes.
A national regulatory framework for these issues is then needed, which is recognised at
international level. University and research centres shall accompany the efforts of the business
associations and the chambers of commerce.
Sometime new structure or specialised laboratories are required, which can be carried on by
national initiatives in coordination with the local development structures.
G International networking
A systematic policy for assuring the link of the local economies with correspondent international
environments has to be implemented. The national LED network could be the reference for this
issue. The networking is needed for channelling experiences, technologies, methods, and finance.
Many international networks could be taken as reference, for establishing interesting links. A
complete list of these networks will be given in Universitas-Led Paper N 3 (LED Bibliography and
Web Sites).
51
6.8 Fund raising
Many international agents are currently interested to promote cooperation partnership
programs with developing countries and countries in transition in the field of local
economic development. At national level, through the LED department information about
these opportunities should be continuously updated. As example of the main current
agents a list of them follows.
G European Union, through programs Phare and Tacis, and the Stability Pact Program
for East Europe, in general for ACP countries different opportunities exist, through
programs managed by the DGII and DGVIII (decentralised cooperation). See the web
site www.europa.eu.int/comm/development, which gives all the information about
the European Union initiatives by countries and sectors.
G United Nation agencies which develops local economic development projects are ILO
(www.ilo.org/led and www.ilo.org/universitas); FAO (ww.fao.org/tc), which
provides information about emergency, investment, training, advisory, development
and inter-country programs; UNDP (www.undp.org/poverty), which gives
information about the anti-poverty programs by countries and sectors; Unido
(www.unido.org); Unops, which is an executive agency with quite an experience in
LED programs (www.unops.org)
G World Bank has recently open a new initiative (www.worldbank.org/urban/led);
G IABD (Interamerican Development Bank) also recently is developing a working line on
Local development (www.iadb.org)
G Many bi-lateral national cooperations could be contacted for this kind of project. Italy,
Netherlands, France, Germany, Switzerland, Spain, and Portugal, have quite an
experience in this field.
G A new frontier is represented by the partnerships between decentralised institutions
of a country. Many European regions are developing cooperation projects: Catalan,
Basque, and Andalusia Regions in Spain; Emilia Romagna, Tuscania, Campania, and
Veneto in Italy; and Shannon in Ireland, Ille de Paris in France, just to mention only
some of them.
G Inter-Universities cooperation programs represent other opportunity for build
capacities in the field of local economic development. National cooperation should in
this case be contacted. Possibilities are currently present in countries such as Canada,
France, Spain, Italy, Netherlands, England.