Transcript Local Economic development LED

L.E.D.
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 Planning local economic development,
Theory and practice
 Edward J. Blakely, Nancy Green Leigh
 Fourth edition, 2010
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Argument for L.E.D.P
- All local entities in a global economy have the challenge
and the opportunity of creating their own Economic
destinies.
- This is true for the poorest as well as the wealthiest
localities.
- L.E.D.P. is severely challenged the two trends rising
inequality and global warming.
- It is also challenged by the over whelming force of
globalization.
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The Influence of National and
State Policies on L.E.D.
 The use of national industrial and social policies to
simulate and sustain the economy has a long history in
the United State and other countries.
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Three Approaches to National
Economic Policy:
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1. Invokes the past traditions with nationwide
reindustrialization. It seek to rebuild the nation’s
industrial stock through:
- New set of targeted tax incentives, and:
- National financing of infrastructure development.
- To limit the power of unions to shape industrial
actions.
- Refocuses E.D. programs on sectors the nation must
remain internationally competitive.
- This approach includes the transformation from old
to new industrial and commercial activities.
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Second approach: favors
less tax, lessgovernment involvement in
economic development:
- This include:
- Movement to the free market.
- Minimum wages either abolished or floated like the
currency to absorb unemployment groups in the
nations.
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Third group of planners suggests that
both free-market and regulated
industrial policy perspective aiming at
firms alone are misconceived .
This is because they are base on the
long-held but increasingly false premise
that what is good for businesses is also
good for the community and workers.
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Elements of National industrial
policy: for: O’Connor (1999-PP.117-119)
1. Focus efforts to eliminate poverty and reduce income inequality
through creating better job opportunities and reducing race and
tax and discrimination.
2. Reassert a real role for the federal G. at the community and
economic problems to the states and cities.
3. Built a political collaboration a way the stakeholders for a
progressive agenda, like the labor, civil rights, community and
church org.
4. Design a strategy that acknowledge the interrelationship of race
and poverty, and seeks to eliminate racial barriers to better
housing, transportation and Job opportunities.
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The “OECD, 1986” Support the
L.E.D. in order to both:
- Organization
for Economic
Development (OECD)
Cooperation
and
- Moderate the impact of rapid economic change on
firm's local likes and individuals.
- Revitalize
local economic and facilitate their
adjustment to the transformation of the national
economy.
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Special objectives of regional and
l.E.D. should include:
1. Strengthening the competitive position of regions and
localities by developing human and natural resources potential.
2. Realizing opportunities for indigenous E.G. by recognizing the
Opp. Available for locally produced good services.
3. Improve employment level and long-term career options for
local resident.
4. Increase the participation of disadvantaged and minority
groups in the L.E.
5. Improve the physical environment as a necessary component
of improving the climate for business development, and of
enhancing the quality of life of resident.
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Policies to accomplish these aims
include:
- Sustained investment.
- Medium and long-term job -creation.
- Building the local institutions.
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Different Policies for economic
development:
1.
2.
3.
4.
5.
6.
Monetary and Tax Policy
Trade policy
Welfare to workfare policy
Health-care policy
Employment policy
National policy targeting L.E.D.
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1. Monetary and Tax Policy:
 The objectives are:
- Controlling interest rate to reduce the high cost of
borrowing for the nation business.
- Combat inflation.
- Reduction of inflation and economic stability has increase
business confidence and stabilize wages and prices.
- Deal with a high-consumption / low production Economy.
- Controlling rapid economic growth.
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Cont.
 Tax policy has always been a major component of
economic development (E.D.) policy. Taxes are
sophisticated instrument designed to steer private
investment capital.
- A prime example for the benefits of this strategy tax
write offs and loopholes has been strong support by
congress for the development of the internet without
tax inference or government control regulations.
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2. Trade Policy (TP):
- U.S. continues to experience on of the worst balance of
payments in the history of the nations.
 To some extent the T.P. of the European common Market,
Japan, and other Major trading partners are not as open as
those of the U.S. Market.
- Until 2007 the U.S. Dollar – as the world currency – was
maintained a high level that it was difficult for the U.S.
Manufactures to complete in overseas marketplace.
 After 2007, the fall of the dollar, has resulted in greater
U.S. exports.
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Cont. T.P.
 The U.S. labor unions, farmers and even some business
have been calling for the protection of American firms
from unfair international competition.
 New tariffs and trade regulations are now being promotes
more frequently as a major component of industrial policy.
 Another T.P. is the creation of export subsidies for
agriculture in the global competition with more heavily
subsidized farmers in Europe, Australia and Asia.
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3. Welfare to workfare policy:
 National welfare policy is confused policy.
 The public, including many poor people holds welfare in contempt and
view recipient as principally lazy licentious persons (Gotts Chalk,
2001).
 Workfare, as this approach called aims at making welfare recipients
increase their employable skills, in exchange for their dole payment or
to have nonprofit agencies employ welfare-eligible people to work in
community-serving enterprises.
 The agency receives the welfare payment plus premium to provide
social services and in turn places the welfare-eligible persons in the
payroll of a regular but high-subsidized job.
 This will offers the potential to increase human capital.
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4. Health-care policy:
- It is clear that strong attachment the labor force is no
guarantee of access to quality health insurance and
care.
- To date, there is no consensus on a national policy of
health-care reforms to deal with poor problem of
health.
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5. Employment policy:
 In 1960s employment and training plans were designed to
improve the employability of the hard-care unemployed, or
to improve the ability of certain areas to enter job market.
 If there were not enough good job, the training program
couldn’t solve the unemployment problem.
 So, training had only marginal impact on the poor people
Employment planners became concerned with increasing
the number of jobs above the poverty line.
 Due to the spatial distribution inequity, policy makers
assure the need for federal policy to coordinate with the
L.D. efforts.
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6. National policy Targeting L.E.D.
 The national government played a role in L.E.D.
through the legislation, policies, or programs, for
which federal budget expenditures are made.
 Although N.E.P. is important, it is limited in the ability
to meet the twin needs of:
- Economic sectorial adjustment and
- Regional or local economic requirements.
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National policy
 N.P. are designed to facilitate overall E.D. rather than
to address specific pop. Groups or locations.
 And because of that the N. government has been
adopting more regionally E.D. strategies including:
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More E.D. strategies
- Regional economic policies.
- Neighborhood revitalization and
- Community development banks.
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N.E.D Policies
 However, N.E.D. policies targeting localities are not
new,
 National policy can have unintended and negative
consequences for E.D.
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Coordination of local and national
development efforts:
 Communicates all over the nations are developing their own
industrial policies, using various approaches.
 Industrial policies at the national level means little unless there
is companion policies, at the local level to take advantage of
available federal resources.
 The role of federal government in the poorest regions has been
to provide the physical conditions and infrastructure to include
development rather than direct in there firm in the private
sector.
 National government should remain in the background, using its
money but not its muscle to bring out economic change.
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New policy:
 The national government has given local official more
authority to deal with fewer resources.
 This gives many local resident the impression that
local policy makers have more options to cure local
problem, but the truth is that there are more problems
than there is money.
 The new policy structure is still emerging, it is too
early to tell whether this set of policies will have the
desired impact.
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State economic development
approaches: Phases of E.D.:
1. Industrial recruitment – 1930.
2. Characterized by political critiques of local economic practices that
began in 1960s.
3. Increasing the real competitive advantages of the state in national and
international terms achieving high level of productivity.
4. Sustainable economic development, it called on to be environmentally
sensitive.
5. Characterized by two approaches 1990s.
A. Relying on market solution.
B. Promoting metropolitan or regional strategies.
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Challenges and Opportunities
inherent in E.D. Policy Making:
1. E.D. will be much less about community having lower
costs of production than about a high quality of life.
 Such, quality housing, educational system, mobility
health, and culture facilities.
2. American communities could once relay exclusively
on their regional and national market positions to
determine local economic stability, but this is no
longer the case.
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Concepts and theories of local E.D.
 Definition
of L.E.D.:
 It is a great mistake to equate E.G. with E.D.
 The blind pursuit of E.G. can destroy the foundation
for economic development.
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For example:
 If an economy’s growth based on a
exhaustible natural resources supply (e.g.
timber, seafood, coal, Retro) then it will
eventually come to a halt, and the
community, can enter a death spiral.
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What is rejected
 The same scenario applies in the case of one-industry
or one-factory town.
 We need to reject also the blind pursuit of E.G. if it is
only to create more wealth and jobs if it lead to:
- Income inequality.
- Irrevocably harm the environment.
- Worsen the plight of marginalized groups.
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What is unethical
 Economic growth that is based on exploitation of
workers with few or no alternative employment
options is not only unethical but may violate fair
labor standards and other laws, this can destabilize
the economy and the society.
 The source of growing in equality are multiple, but
often reflect a failure in E.D. leadership.
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Development and Sustainability
 Now will the use of the term development need to be
qualified by sustainability.
 We offer here part definition of sustainable local
economic development that focuses of desired end
state rather than growth-defined objectives:
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Definition:
 “local E.D. is achieved when a community standard of
living can be preserved and increased through a
process of human and fiscal development that is
based on principle of equity and sustainability”.
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Three essential elements in this
definition:
1. E.D. establishes a minimum standard of living for all
and increase the standard over time.
2. E.D. reduce inequality.
3. E.D. promote and encourage sustainable resource
and production.
 If E.D. does not incorporate sustainability goals, then
its process can create inequality between present and
future generations.
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Theories of growth and
development
 Most of theories that explain regional or local E.D.
has not made the distinction between E.D. and E.G.
1. New Classical Economic Theory.
2. Economic Base Theory.
3. Product Cycle Theory.
4. Location Theories.
5. Central Place Theory.
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 Translation theories into practice:
1. Attractive Models.
2. New Markets Model.
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Theories, Models, and Fads in
L.E.D.P
 Theories of E.D. can be influenced by any of the following disciplines:
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Business.
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City and regional planning.
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Demography.
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Education.
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Economic.
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Geography.
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Political science.
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Public policy.
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Regional science.
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Sociology.
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Overall, E.D. professional are action oriented.
Indeed, their jobs often depends on producing
results.
 A particularly notable example occurred during the
1980s, when David L. Birch put forward the theory
that “small Business in the true engine of the
economy and job creation, and the true source of
innovation.
- 80% of the jobs created between 1969 and 1976
were produced by business with fewer than 100
workers, and nearly 2/3 of firms with fewer than 20.
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Cont.
 This lead to create new centers and programs to
faster S.B. Encouraging S.B.D. is not a bad E.D. idea.
 Firms that create new markets will bring sustainable
E.D. to location.
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The concept evolution of E.D. theories
into local practice
 Four concepts sized by various theories:
1. Locality.
2. Business and economic base.
3. Employment resources.
4. Community resources- to create new foundation for
local E.D.
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Four concepts:
1.
Locality:
Old: Location near natural resources, transportation, markets.
New: Quality environment and strong community capacity.
2.
Business and E. base:
Old: Export base industries and firms create jobs.
New: Competitive industries linked to a regional network of all
types of firms
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Cont.
3.
Employment source:
Old: More firms create more jobs, even if many are minimum wages.
New: Comprehensive skill development and technological innovation lead
to quality jobs and higher wages.
4.
Community resources:
Old: Single-purpose organizations can enhance economic opportunities in
the community.
New: Collaborative partnership of many community groups needed
establish abroad foundation for competitive industries.
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Profession and Professionals
 The Local Economic Development (LED)
Profession and Professionals:
 Ask a hundred E. developers how they got into the
field?
 95% will tell you by accident (water house 1997-P.84).
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practitioners and planners
 E.D. practitioners and planners now belong to
recognized profession.
 Within the E.D. profession, there is a state association
of E. developers found across the U.S. as well as
national and international associations.
 These associations are distinct from E.D. agencies and
organizations, such as chambers of commerce or S.B.
centers or the U.S. E.D. administration.
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 The international council of Economic Development
(IEDC) is the most sig. E.D.A. in the U.S.
 While individuals of any academic background can
become certified E. developers, the E.D. field does
have academic roots in the applied disciplines of
geography, business administrator, public finance,
political Economics, and Urban and regional planning.
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