A Summary of PACA Christian Schoen Jörg Meyer-Stamer Stimulating Local and Regional Economic Development

Types of initiatives to stimulate local/regional economic development improvisation / fragmentation of activities conducted by various organizations one big project = fixed idea strategic planning Participatory Appraisal of Competitive Advantage (PACA)

What is Participatory Appraisal of Competitive Advantage (PACA)? Participatory Appraisal of Competitive Advantage Involve local stakeholders Motivate local stakeholders to take an active role in an LED initiative Transfer know-how to local stakeholders and businesses Do a quick scan of the local economy Assess and refocus ongoing local economic development activities Identify strengths, skills, talents and opportunities Identify business and LED opportunities

PACA is an activity which seeks answers to a critical question: how can the local economy, by means of collective action, create a competitive advantage?

What is a local economy? For instance, it may be like this: An integrated furniture cluster A garment cluster A large metal- working company Regional service providers: Health care University Wholesale trade Farmers and small food processors Local producer services: IT, transport, construction,... Local consumer services: Retail, beauty,... Government Wood value chain Textile + garments value chain Global buyers Training institutions Business promotion Finance institutions

What is Local Economic Development (LED)? Activities by local government local business associations local companies other stakeholders which remove bureaucratic obstacles and transaction costs for local firms strengthen the competitiveness of local firms create a unique advantage for the locality and its firms

How does local economic development relate to other activities? Local development Infrastructure Transport Energy Technology Health Schools Water / sewage Community development Employment creation Poverty alleviation Housing Education Urbanization SMME promotion Local economic development Investment promotion Skills development SME development

Leading principles in local economic promotion Creating a specific locational advantage Strengthening strengths, dynamizing existing potentials -- instead of fruitlessly addressing the biggest possible challenges Networking among local firms and between firms and supporting institutions to create collective efficiency and effective markets Active integration into international value chains  Build on locally available resources  Do something instead of writing a strategy document  Go for quick, visible impact

What is the objective of PACA? Identify, with a rapid appraisal, the main strengths and weaknesses of the local economy and its main sectors (duration: weeks) Identify options for practical activities to strengthen the competitiveness of firms -- Criteria: –feasible with local resources –quickly implementable (starting next week) –quick, visible results (with 3 months)

Who is involved in a PACA? A “Champion” who suggests and coordinates the PACA –provincial or local government agency, Chamber, NGO, somebody else Other local organizations who take an active role –financing –making staff available for the PACA Team The PACA Team Various local stakeholders who participate in the kick-off workshop, interviews, mini-workshops and the presentation

What is the PACA Team? external consultants who are familiar with the PACA method and LED –to introduce a fresh view at the local reality –to transfer their know-how to local members of the team local members –for instance: professionals from the local business promotion agency, the local Chamber, the local university –not too young, too junior –with experience in economic promotion and in dealing with private business

What is the sequence of activities in a PACA? Preparation: * Advance info * Hypotheses Kick- off work- shop Findings- Workshop: Elaboration of Diagnostic + Proposals Interviews Mini-workshops Presen- tation of Diag- nostic + Pro- posals Imple- mentation PACA-Exercise (2-3 weeks) PACA-Project Fieldwork (1-2 weeks)

What about the fieldwork? Formats: Qualitative interviews (“conversation”) Mini-workshops Tools: Guideline (always) Mapping (sometimes) Life-line (sometimes) Diamond Five Forces Transaction Matrix SWOT Metaplan to define possible action –if participants are strongly motivated

Diagnostic and proposals Results workshop to elaborate diagnostic a proposals = 1-2 day exercise of the PACA Team Immediate presentation of findings to local audience

Elaboration of diagnostic and proposals

What is the immediate result of a PACA? A diagnostic of the local economy A set of proposals for practical activities –to strengthen the local economy –to stimulate the competitiveness of companies –to create new business opportunities Numerous local stakeholders who have a clearer idea about Local Economic Development

What about the follow-up? immediate workshop with local stakeholders to define priorities, activities and responsibilities for implementation and monitoring implementation of activities by local stakeholders workshops for evaluation and definition of further activities, possibly facilitated by external consultants

Implementation creation of working groups –for given sectors –around project ideas working groups initially operate independently coordination between activities –initially informally –later, as complexity increases, via a Stakeholder Forum or similar fora

What again was the basic idea of Local Economic Development? Create a business-friendly environment Improve the quality of the location for firms Stimulate upgrading in companies –through inter-firm learning –through support in fields like training, management, technology refocus and strengthen supporting institutions stimulate closer interaction between companies and supporting institutions Attract new companies, stimulate entrepreneurship

Understanding local competitiveness: Michael Porter‘s „Diamond“ Supporting institutions Main companies and rivalry Demand conditions Related and supporting industries * A local context that encourages appropriate forms of investment and sustained upgrading * Vigorous competition among locally based rivals * A core group of sophisticated and demanding local customers * Unusual local demand in specia- lized segments that can be served globally * Customers whose needs anticipate those elsewhere * A critical mass of capable local suppliers * Clusters instead of isolated industries Factor (input) conditions * training * technology * finance * infrastructure

Assessing the Local Economy of Lukhanji Municipality What are the Strong and the Weak Points of the Local Economy / Main Sectors in Lukhanji ?