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

3.2 Local/Regional Economic Development (LRED) –
Short Description of the Approach Using the Example of Schwäbisch Hall
Ulrich Höcker
Local/Regional Economic Development (LRED) is a program
that works to promote and improve the efficiency
of economic areas, particularly working with the private
sector, to prepare them for competition between localities,
and to create permanent jobs. Central to the program is
to enable local and regional actors to identify and implement,
by way of social and political consensus, economic
development and employment promotion initiatives. Local
initiators learn to design strategies to meet the defined
objectives, through analysis of an areas potentials and deficits,
and in dialogue with stakeholders in their community,
district or region. Key qualifications of local initiators
are the ability to create dialogue and co-ordination platforms
and to moderate decision-making processes.
Project implementation
A broad range of proven approaches and instruments from
the areas of private sector promotion, rural development
and regional, municipal and urban development are available
for the implementation of strategies for local/regional
development identified through the LRED processes. In
the projects that it carries out on behalf of BMZ, GTZ
does not follow a set format, but develops demand-driven
approaches that are oriented toward the following principles,
among others:
Division of labor between the public and private sectors:
the local and regional administrations make their contribution
to favorable framework conditions for private sector
activity. The private sector articulates its interests and
works to create income and employment. Co-operation
occurs in such a way that market mechanisms and initiatives
are meaningfully linked, and active development and
location strategy processes arise. The moderation of these
processes plays an important role.
Activation of private sector forces and initiatives: LRED
depends on the mobilization of private sector resources
through involving the business sector in a sustainable and
profit-oriented manner, for development of the region.
Thus, for example, Public-Private Partnerships (PPP)
should play an increasing role in co-operation projects
between public administrations and the private sector to
expand municipal policy options, particularly where public
finances are limited.
Incorporating the economic, political, social and environmental
dimensions of development: Local/regional economic
development should also integrate poor population
groups into the active production and growth processes.
Broad-based employment is achieved primarily through
an employment-oriented focus on sectors and locations,
which leads to the functional integration of marginalized
and dominant economic areas. Policies that create equal
opportunities need to be strengthened in order to secure
these processes.
Promoting competitiveness through competition: Regional
economic development is linked to competition
between the regions. Taking into account cross-regional
interdependencies and the relative importance of the different
regions of a country, each of the regions is assisted
to develop their own profile.
Creation of a system of incentives: Subsidies of public
and private efforts must not necessarily be excluded, however
they must be employed in accordance with the principle
of subsidiarity, so must be time limited, and should
have the least possible negative impact on economic efficiency.
Subsidies should always be designed as incentives
to stimulate efforts by the recipients. Initial public sector
inputs are sometimes needed, for example to develop infrastructure,
in order to mobilize regional resources.
Participatory advice is at the heart of the methodology,
to create transparency in decision-making processes and
identifying stakeholders with the objectives and activities,
to release energy for the implementation processes.
The participation of various social stakeholders in all critical
decisions regarding the process of regional economic
promotion is a profitable investment in future successes.
When necessary, German advisers support local/regional
actors in identification, organization/planning, motivation,
moderation, management and implementation.
Impact
The existing local/regional economic potential is specifically
identified and activated in order to increase the
competitiveness of selected locations and economic zones.
Public-private collaboration mechanisms at the local/regional
level to prepare economic development strategies
for specific locations ensure effective and sustainable implementation
of these strategies, and strengthen the efficiency
of sub-national governance. As a result, new opportunities
arise for employment, and increased incomes
for the populations of these regions or locations, which,
in turn improves the financial basis of local/regional governments.
Lessons learned
Some interesting lessons were obtained, about local/regional
economic development, from the example of
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