Local Economic Development Concepts & Discussion Shannon Hiemstra & Colin Mitchell Stone Soup Development (Pty) Ltd West Coast District Piketberg 12 November 2013

What is LED? LED is an ongoing process by which key stakeholders and institutions from all spheres of society, the public and private sector, as well as civil society, work jointly to create a unique advantage for the locality and its firms, tackle market failure, remove bureaucratic obstacles for local businesses and strengthen the competitiveness of local firms’

LED & Competitiveness at the Local and Regional Level: The Hexagon Process Management Governance Sustainability Policy focus and synergy Locational factors Target group

The 1 st Triangle: The Target Group Process Management Governance Sustainability Policy focus and synergy Locational factors Target group

Enterprises and Firms streng- thening local firms Attraction of new firms Promotion of start-ups and entre- preneurship supplier development, outsourcing, spin-off; support for owner succession Attract suppliers and complementary firms, manufacturers of capital goods, service providers franchising

LED activities around the 1 st triangle streng- thening local firms Attraction of new firms Promotion of start-ups and entre- preneurship supplier development, outsourcing, spin-off; support for owner succession Attract suppliers and complementary firms, manufacturers of capital goods, service providers franchising address market failure business skills business contacts, networking, info address market failure entrepreneurship skills business contacts entrepreneurs’ networking coaching, business angels professional investment promotion locational marketing targeted investment promotion investor after-care

Main messages General principles: Identify and remedy market failure (e.g. barriers to entry, information access, etc. ) Avoid market distortions and discrimination Reduce barriers to entry Pursue a balanced approach: look at each of the 3 types of companies Look at the synergies between the 3 types

Food for thought? Research by the Edward Lowe Foundation; the RUPRI Centre for Rural Entrepreneurship and the Kauffmann Foundation provided evidence that for every 100 new jobs created in the private sector: 55 Jobs will be created by the expansion of existing local businesses 44 Jobs will created by new start‐up companies 1New job will be created by a “greenfield” corporate relocation.

The 2 nd Triangle: Locational Factors Process Management Governance Sustainability Policy focus and synergy Target group Locational factors

Intangible locational factors Tangible locational factors -- quality of housing -- environmental quality -- schools and HE -- health facilities -- social facilities -- culture and recreation -- efficiency of government -- business climate -- availability of related industries -- supporting institutions -- geographical location -- real estate -- transport and communication infrastructure -- skilled workers -- energy and environment -- taxes and levies -- subsidies Locational advantages Relevant for firms: Relevant for individuals:

The 3 rd Triangle: Sustainable Development Process Management Governance Policy focus and synergy Locational factors Target group Sustainability

The triangle of sustainable development economic develop- ment ecological develop- ment social develop- ment e.g. Review of economic priority new types of living and housing (for instance for retirees) e.g. processing of locally available bio-mass Green manufacturing e.g. regional recycling economy Ecological priority e.g. labor-intensive rehabilitation and maintenance of ecological infrastructure

Main message Address ecological and social problems as business opportunities Look for win-win-opportunities – finding an innovative approach to LED by thinking out of the box Ecological infrastructure development & maintenance can be good business

The 4 th Triangle: Policy Focus and Synergy Process Management Governance Sustainability Locational factors Target group Policy focus and synergy

Focus and Synergy, 1: Separating Economic Development: Quick results Competitiveness Sustainability Consumers Environmental Sustainability: Water management Air quality Social Development: Support for disadvantaged and marginalised Beneficiaries Solidarity Time horizon Visual vs. substance Profit vs. solidarity Urban / Regional Planning : Long time horizon Planning Aesthetic criteria

Choices & Trade-off’s Local Economic Development is about making the best use of what will always be a limited amount and quality of resources!

The 5 th Triangle: Governance Process Management Sustainability Policy focus and synergy Locational factors Target group Governance

Local government Business associations The Triangle of Governance Civil society Not always representative. Sometimes protectionist. Can be a powerful ally if representative. Trade-off’s are necessary. Trade-off’s accepted if well articulated. Communication and consistency is key Democracy Development Paradox. Want’s vs. Need’s mismatch. Resource constraints. Red tape. Profit / development dilemma CSR vs. CSI CSF Transparency & Trust

Main message Current approach in successful localities: Social Capital & Trust Network governance – Distribution of responsibilities between various governmental and non-governmental organizations – Negotiation and co-ordination without a clear decision center Subsidiarity and decentralization Participatory approaches.

The 6 th Triangle: Diagnostic Planning, Monitoring & Evaluation Governance Sustainability Policy focus and synergy Locational factors Target group Process Management

Participatory diagnostic (PACA / Genesis) Shared Strategic intent Participatory planning Continuous engagement Participatory: M+E, Benchmarking, Organisational alignment Implementation Motivation Feedback Reference The Triangle of Process Management

Main message Successful LED is based on learning LED is about sentiment and momentum Don’t waste too much time with research & discussing, -- get into action quickly! LED is an iterative process Development is systemic

Process management Governance SustainabilityPolicy focus and synergy Locational factors Target group The fifth and sixth triangle Hard-core LED Innovation & Differentiation Governing the process of LED

Sustaining Development interventions Small business promotion Investment promotion Start-up promotion Promotion of BDS Efficient public administration Enabling environment Competitive infrastructure Skills Synergy between different fields of local development Innovation: Addressing LED from a new angle Encourage independent business associations Public-private partnership Effective governance Participatory approach LED = iterative & learning Process Governing the process of LED Innovation & differentiation Hard-core LED

We are not born with rights - we are all born with obligations! Jewish Philosophy We know what to do, we know why we should do it, and we know how to do it. Yet most businesses and individuals don’t do what is good for them because the pain is today and the benefits are only in the future. David Maister – Strategy & the Fat Smoker