Local/Regional Economic Development in South ... - Value Chains

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1.2 Local/Regional Economic Development in South-Eastern Europe – Introduction to
the Collection of Documents and a Brief Description of the Approaches
Margret Will, Dr. Rainer Neidhardt
The majority of the countries of South-Eastern Europe
have successfully completed the process of political transformation,
whereby the people, as the ruling power of
their countries, confirm governments in office or initiate
political change through democratic elections. In contrast,
the transition from a planned to a market economy appears
to be far more difficult to achieve than was originally
anticipated. Most of the countries are still in economic
recession, which has been evidenced, among other things,
by high rates of unemployment and inflation, greatly expanded
trade and balance-of-payments deficits and increasing
poverty.
Thus, economic development continues to be an enormous
challenge for political authorities, business and civilsociety
representatives, and international development
cooperation alike. Socially acceptable economic development
in South-Eastern Europe is crucially important for
sustainable political stability in the region.
The importance of regions for economic development
In a world of global economic interdependence, regions,
with their natural resources, people and respective abilities
and competencies, are increasingly competing with each
other, especially with the increasing realization of the strategic
importance of these potentials. As different regions
have differing economic, social, human, ecological, and
geographic resources, stakeholders at regional and local
levels must link their efforts. Only by uniting the forces
of politics, business and civil society will it be possible to
identify real potentials, develop region-specific competitive
profiles and turn strategic development approaches
into sustainable economic development.
The goal of Local and Regional Economic Development
in South-Eastern Europe, is to identify value-added potential
in rural and urban regions or municipalities, and
thereby to ensure employment and income and to create
new jobs, while protecting natural resources in the interest
of sustainable development.
It is therefore necessary to develop the relevant competencies.
These range from; strategic business and regional
management skills to organizational development, from
the transfer of new technology to the training of specialists,
and from new forms of communication and technology
to business co-operation, including the co-ordination
of production and processes and the networking of business,
civil-society, administrative, and political actors with
the corresponding moderation skills.
Networking members of private sector, civil-society and
government serves to strategically unite the capacities and
competencies found in the regions, in order to awaken the
innovative power of the regions and stimulate the dynamism
of economic development.
Local/regional economic development –
definition of terms
In liberalized markets competitiveness is the key to economic
development and thus to poverty reduction. Competitiveness,
in turn, is dependent on smooth, mutually
beneficial collaboration between efficient firms (microlevel),
competent private sector and government services
(meso level), and supportive economic, legal, and political
framework conditions (macro-level), embedded in the
meta-level (which includes the socio-cultural and institutional
structures and encompasses the ability of social
groups to learn and adapt normative structures). Measures
used in modern local/regional economic development operate
on these four system levels, according to the principle
of systemic competitiveness.
In the last few years, local/regional economic development
has evolved far beyond the earlier conception of simply
providing economic infrastructure and setting up industrial
zones. Today, local and regional economic development
encompasses an entire spectrum of instruments for
tapping economic potential:
• From the identification of regional value-added potential
and the development of regional development
concepts to positioning in specific competence areas
and location (site) marketing
• From business start-ups and advising of small and
medium-sized enterprises (SMEs) to sector development
concepts, technology transfers and the introduction
of innovative technologies
• From opening up business contacts and promoting
business co-operation to developing business networks
in the form of clusters and value chains
• From improving the credit supply for small and medium-sized
enterprises to the introduction of innovative
financial instruments (e. g. micro credit, venture
capital, and export credit insurance)
Parallel to this expanded range of instruments, the institutions
responsible for local/regional economic development
are also undergoing a process of differentiation.
Roles, functions and responsibility for implementation are
being redefined and reassigned in dialogue between government,
private sector, and civil society members. New
organizational forms of economic promotion are emerg-