2nd World Forum of Local Economic Development Governance for Local Economic Development
Online Discussion Synopsis
Governance for Local Economic Development Moderated by UNDP
“A key challenge is to reshape the nature of local economic growth to achieve goals of sustainable development.” – Kishan Khoday* This paper reviews the results of an open query posted on UNDP Teamworks between July and October 2013 aimed at taking stock of successful experiences and good practices in promoting local economic development (LED). The query process aimed to stimulate a broad, multi-stakeholder dialogue informing policymakers at all levels through feeding into the II World Forum of Local Economic Development in Brazil. LED practitioners and stakeholders from a wide range of organizations participated in the query, indicating a keen interest in the topic in the lead up to the Forum. Key lessons learned and conclusions related to LED governance, capacity development, and its interface with sustainable human development are summarized below. Governance for LED The emergent understanding of LED as a strategically planned, locally driven partnership process indicates that governance considerations are an integral dimension of LED. The success of LED outcomes in areas such as employment creation, poverty reduction, sustainable livelihoods, and environmental sustainability depends on the quality and effectiveness of local administration; the inclusiveness, transparency, and accountability of local policy making procedures; and the degree to which principles of justice and equity shape
how power and authority are exercised at the local level. The contributions to the query delineated a number of key features of effective governance for LED. Adaptability: That LED policies and institutions have been adopted and delivered on desired outcomes in diverse country settings—from Albania and Ecuador to El Salvador and Mozambique—attests to the flexibility of the model. Governance for LED does not depend on pre-determined statutory structures with a legally established representation and mandate. Rather, it should be based on careful context assessments and consultation with key stakeholders. Integrated, multi-level: The integration of LED governance institutions with national and decentralized policy and institutional frameworks is a crucial determinant of its relevance and impact. LED practitioners in El Salvador, for example, found that clearly establishing the legal and functional relationship between the Ministry of Economy and the LEDA, “La Union”, was a prerequisite for effectively coordinating support for SME’s and promoting job growth. Centrality of local governments: “If I am in Sengerema and you ask me why the market fails, one of my answers will be local government. It is their duty to understand market failures and find ways to remedy them. The question is do local governments have the capacity to carry this function?” – Daimu S. Mkwawa The query dialogue underscored that local governments are key actors that need to be included at all decision-making levels to promote LED. Local governments with clear
*All quotations from query contributers, UNDP Teamworks, June-October 2013 DISCLAIMER: The findings, interpretations, and conclusions expressed in this discussion summary are those of the discussion participants and do not necessarily reflect the policies or views of UNDP, the United Nations, or the participants’ organizations.
mandates, adequate financing, and sufficient capacity help drive development. They have the convening power to bring public, private, and non-governmental stakeholders together and serve as a critical interface with other tiers of government. Territorial approach: From a practical standpoint, the best coverage for LED governance tends to coincide with an intermediate level of government administration—at the regional level in Tanzania, for example, or the provincial level in the Dominican Republic. It is here that LED governance structures can strengthen the presence of the state at the local level and offer a decentralized point of reference for policy action. Furthermore, the scale of territorial governance should coincide with a critical mass of endogenous resources that can trigger self-sustaining development while taking into account the real possibility of active popular participation. Territorial governance structures: The establishment of organized, territorial structures, including industrial districts, local economic development agencies (LEDA’s), and co-operative networks are central features of LED governance. In essentially all the countries discussed in the query, including Tanzania, Ecuador, the Dominican Republic, and Mozambique, LEDA’s have emerged as a core enabling governance structure, providing a key forum to co-ordinate and negotiate LED planning and implementation among government, business, and civil society stakeholders. Explicit, locally-responsive national policies for LED: “The only way to institutionalize LED in African countries is to legislate on a national LED framework, making it into a compulsory mandate for all local governments.” – Serge Zelezeck A coherent national policy framework for LED is required to articulate the nature, objectives, and scope of LED and define institutional arrangements for LED at all levels of governance. Crucially,
“bottom-up” participatory processes should guide the design of national policy to guarantee alignment with local priorities and aspirations. This is illustrated in the context of Mozambique, where the Ministry of Public Administration has initiated a multi-actor, multi-level consultative process to guide the elaboration of its national strategy on LED. Capacity Development and Knowledge Sharing for LED Many contributors to the query shared their work on capacity development for LED, including UNDP country offices in Albania, Ecuador, Mozambique, El Salvador, the Dominican Republic, and Tanzania. Practical experiences and lessons learned related to: Support for the enabling environment: Capacity development interventions should focus on fostering the socio-economic and institutional environment conducive to LED. Assistance with the design of territorial development plans ensures that LED-specific interventions are effectively coordinated with broader local development planning in areas such as infrastructure development and delivery of social services. Support should include empowering local decision makers with vital data and information to understand the overall structure of their economies. In Tanzania, for example, UNCDF and UNDP assisted two rural districts with socioeconomic assessments, institutional mapping, territorial marketing, and value chain analyses in order to identify challenges and opportunities for promoting local economic growth. Support for enterprise development: “The best answer for why a business is not prospering will be given by an entrepreneur herself because she is the one facing the challenges.” – Daimu S. Mkwawa In practice, the promotion and support of local businesses has in a sense been the “core business” of LED. Small, medium, and micro enterprises play a vital
role in the economic diversification and growth of local economies and in the generation of employment opportunities and incomes. Query contributions from UNDP offices in Albania, Ecuador, El Salvador, and Tanzania, all indicate that enterprise development is a core axis of their interventions. This has included support for the analysis of product value chains and clusters, the formulation of business plans, training of human resources, and financial assistance through lending, provision of guarantees, and diversification strategies.
LED and sustainable human development
Workforce and skills development: Besides serving small operators already in business, a crucial task is providing training to expand the number of potential entrepreneurs and to enhance the skillsets of the overall workforce. The experience of Tanzania and other countries illustrate that seminars, business simulation workshops, thematic meetings, and other training activities can help foster a culture of enterprise to stimulate the entire economic environment.
Poverty and inequality: Query contributors discussed LED as a means to “democratize” economic development territorially so that the poor and socially excluded can be brought into the economic sphere through institutional innovations and the provision of technical, financial, and market resources. The experience shared by UNDP in Ecuador where LEDA’s helped create 1,134 start-ups among disadvanted youth demonstrates the significant impact LED may have for social inclusion.
Contribution of decentralized cooperation: “Innovative financial partnerships between regional and local actors have proven to be an important vehicle to achieving universal access to water and sanitation (MDG-7c).” – Ivan Draganic Inclusive, horizontal cooperation among subnational actors has established itself as a proven source of capacity development for LED. In Mozambique, decentralized cooperation actors (AECID, Generalitat Valenciana, ACCD, AEXID, Fondo Gallego) helped drive the LED process generating key outcomes for territorial planning and marketing. Intuitively, knowledge exchange among actors at similar territorial levels has a distinct comparative advantage over traditional forms of cooperation. This has borne out in practice as mutually reinforcing international partnerships in the form of South-South and triangular cooperation continue to gain traction among policymakers and stakeholders in the local sphere.
LED is deeply rooted in the broader, more general conceptual frame of sustainable human development. It is practical in design, serving as a means to operationalize the local interface of poverty, environment, and governance and overcome the gap between conceptualization and implementation of development goals at the territorial level. It is, therefore, strongly aligned with the Rio +20 Agenda and expected post-2015 development goals.
Gender and youth empowerment: “Gender responsive decentralization that focuses on building capacities of local government while increasing women’s participation in decision making and financing programmes that address women’s needs and demands are key to advancing inclusive gender equitable development.” – Julie Diallo LED requires strong local institutions that empower women and youth—especially the poor among them—in order to deepen inclusion, cohesion, and institutional accountability. UN WOMEN and UNCDF’s work in Africa shows that incorporating a gender perspective into LED tools such as the territorial planning cycle can significantly improve women’s livelihood conditions and access to services. Practical experience with LEDA’s to date has shown that women’s organizations are among the most active members and have significantly benefited from grant loans for women. The
same operational effectiveness of LED holds promise for tackling the growing problem of youth unemployment by integrating youth in LED governance and programming. Environmental sustainability: “Local governments stand on the frontline of the goal to expand the use of sustainable energy and combat climate change.” – Kishan Khoday. LED is an important approach for capitalizing on and protecting environmental resources at the local level. The experience shared on Dubai shows that LED may serve as a useful framework for cities to coordinate local and global partnerships and investments in solar energy and other low-carbon solutions. Other country LED experiences illustrate that integrating environmental concerns into territorial planning and business plans has succeeded in stimulating markets for organically grown products and encouraging environmentally sustainable business practices. Peace and Stability: In countries emerging from devastating conflict, the peace process and the material and social reconstruction of affected areas are the primary concern. In post-conflict settings, LED has emerged as a specific and reproducible formula to help reestablish the social contract between government and the people through revitalizing economic activities and job creation. Conclusions Country experiences exchanged through the query suggest that governance institutions and polices for LED should be adaptable, integrated, multi-level, territorial, and center on the role of local governments and inclusive public private governance structures. To overcome resource and technical constraints, capacity development interventions should focus on supporting an enabling environment and providing skills training to public and
private actors, while leveraging the valueadded of decentralized cooperation. With capable governance structures in place, LED has shown to be effective in addressing multiple sustainable human development dimensions including poverty, inequality, environmental sustainability, gender and youth empowerment, and peace and stability. Specific take-away messages from the query include: Importance of territorial platforms for integrated decision-making and inclusive participation: The practical experience with LEDA’s, in particular, suggest that they serve as an effective tool to foster participation of local, public, private and civil society actors in making joint plans, strengthening their capacities, and activating multi-level LED processes. Critical role of decentralization and local governments: “A LED National strategy must not forget fiscal decentralization and other institutional reforms needed to create an LED friendly environment.” – Serge Zelezeck Decentralization has been key in creating enabling governance structures for LED. The role of local governments in elaborating and shaping local as well as national integrated development platforms and policies must be strengthened in order to avoid overly centralized versions of decentralization that do not sufficiently empower territories and their people. LED as a response to globalization: The threats of globalization do not necessarily need to be more severe for the local economies and the communities that depend on them. The experience of LED shows that the poor and socially excluded—including women, indigenous people, ethnic minorities, and people living in remote areas—can be brought into the economic sphere when the resources they lack are made available to them.
Effectiveness of LED for integrated development: LED offers a flexible and practical approach to closing the gap between conceptualizing and operationalizing sustainable human development by integrating economic, social, and environmental pillars at the sub-national level. Challenges and Opportunities Query participants discussed a number of challenges and opportunities for LED governance and implementation including: Making LED a priority in the post-2015 agenda: Whichever global goals and commitments ultimately result from the post2015 process, the greatest challenge of a new agenda is reaching the poor through decentralization policies and bottom up and inclusive participation. Greater advocacy is needed to raise awareness about the utility of LED for “localizing” the global agenda. Enhancing LED governance: LEDA’s have received much attention for their effectiveness and flexibility in responding to the demands of LED governance. However, practitioners would benefit from a systematic survey of best practices in LEDA operation and management. What governing and operational arrangements have proven effective and why? What incentives can be put in place to encourage cooperative behavior and discourage rent seeking and competition? Sustainability: Financial and institutional sustainability present significant challenges to LED governance and implementation. A major lesson from UNDP and UNCDF’s LED work in Tanzania was the need to secure alternative sources of finance to sustain LEDA meetings after their programmes ended. Political and social factors have also proved decisive for sustainability; more can be done to build the credibility and trust that the population and local institutions accord to
LEDA’s to extend their life across electoral cycles. Need for greater gender and youth responsiveness: Despite the demonstrated potential of institutional innovations such as LEDA’s to advance the well-being of women and youth, local governments continue to have limited financial and technical capacity to deliver on their commitments to these and other vulnerable groups. Beyond their mandate for service delivery, local governments should invest in building their governance capabilities, including their ability to raise revenue, so that gender- and youthempowering LED approaches are adequately financed. Migration: “Cities and local authorities are at the forefront of managing mobility and adopting policies that seek to maximize the development impact that migration can bring to their territories.” – Aida Balamaci The synergies between LED and migration have yet to be adequately explored. With more than 3.8 billion people expected to move to cities by 2050, local authorities must find ways to maximize the development impact that migration can bring to their territories. The opportunities and challenges for LED processes to integrate migrants into decision-making processes and to provide training for migrant entrepreneurs should be further investigated. Enhanced decentralized cooperation: The increasing globalization of LED processes offers an opportunity to enhance the allocation and use of global knowledge at the territorial level. In the Dominican Republic, the national network of LEDA’s (ADELDOM) demonstrated its capacity to give birth to and manage a Latin American network of LEDA’s to improve knowledge exchange on LED across the region. The advantages of establishing platforms for systematic dialogue between territorial actors and networks on a regional or continental scale should be further analyzed.
About this discussion This query was initiated by Kodjo MensahAbrampa and Johannes Krassnitzer (UNDP) on UNDP’s web-based networking platform, Teamworks. Contributors included individuals from the Joint Migration and Development Initiative, the Local Economic Development Network of Africa, UN WOMEN, UNCDF, Miller Dickinson Blais, Global Water Solidarity, UNDP Regional Center in Cairo, UNDP Regional Center for Africa, and UNDP ART (Ecuador, El Salvador, Mozambique, Dominican Republic, Albania).
ANNEX: CONCEPT NOTE Local Economic Development Dialogue
knowledge endemic to a locality or region for organizing territorial systems that foster
CONTEXT The purpose of this paper is to present to UNDP staff and partners the context and background of the query on Local Economic Development (LED) that is launched in preparation for the second World Forum on LED, in Foz de Iguaçu, Brazil, from 29 October to 1 November 2013. As the Forum will bring together practitioners, policy makers, researchers, private sector representatives, Women’s networks and youth organizations, from very diverse backgrounds, the query is addressed to multiple audiences and intends to take stock and stimulate a dialogue between these diverse stakeholders and partners. The vast majority of people in the world live their lives in a geographical space with a radius of no more than 500 kilometers. Within that space they live, develop families, work, obtain education and health, pass their spare time, and generally spend their last days there. It is easy to infer that for any given individual, the possibility of realizing their own life dream depends, to a crucial extent, on what happens over time in their everyday environment. In turn, most people are interested in preserving a healthy and productive environment for themselves and the next generations. Sustainable LED strategies therefore build upon local people utilizing local, territorial resources and using the competitive advantage and specific
inclusive growth and sustainable human development. In an increasingly globalized economy, localities and regions come to the fore and get considerably more attention. With globalization, the pursuit of LED has changed from a low-priority function of local governments to a central concern that encompasses the interests of multiple actors at local level. These local stakeholders are faced with two major challenges that pull their attention in opposite directions: internationalization and decentralization. Internationalization operates selectively and only a limited number of actors are included in global networks in which competitiveness is central and restructuring is a constant. On the other hand, decentralization results from increased demand for public services and state responsiveness. These two trends guide stakeholders in weaving relationships of cooperation and competition in the search for opportunities to achieve sustainable LED. Before addressing more contextual issues related to the query we would like to propose a common and basic understanding of what LED is (as definitions of LED vary broadly): Local Economic Development is a strategically planned, locally driven partnership approach to enable employment growth, poverty reduction and quality of life gains through improved local economic governance. Related and complementary definitions are found from the World Bank, the ILO, UNCDF and UN Habitat. A common denominator of these approaches involve local governments working in partnership with the private and community sectors using strategic planning as the defining principle and with the
objectives to enable improved conditions for economic and employment growth, well being and poverty reduction. The United Nations Development Programme (UNDP) is the UN’s development network, an organization advocating for change and connecting over 177 countries to knowledge, experience and resources to help people build a better life. UNDP’s work in Local Governance and Local Development is guided by the principle that local governance is a key mechanism for inclusive representation and participation, shaping effective and legitimate state–society relationships, poverty reduction, and economic development, reducing inequality, strengthening social cohesion and achieving the Millennium Development Goals. UNDP (along with UNCDF and UNV) are about to launch an integrated strategy for Local Governance and Local Development that adopts a multi-sectoral systems perspective to understand the interrelationships among the different issues and concerns that come at play when addressing development challenges at the local level. The strategy proposes LED (and recovery) as an integral and important element and foresees a role for UNDP/UNCDF/UNV to facilitate LED opportunities through i) supporting local governments in developing appropriate regulatory frameworks for economic recovery and development, ii) promoting public – private partnerships, iii) supporting communities and local entrepreneurs in undertaking “green business” and local natural resource development, and iv) utilizing our decentralized cooperation opportunities to facilitate the sharing of experience of accomplished LED territories with initiating sub-national territories and create platforms for harnessing relative potentials. Through the ART Initiative and other country experiences UNDP promotes LED through a wide network of partners and international centers of excellence (e.g. organizations, associations, universities, research institutes,
etc.), and local governments articulate their support to LED processes through the Initiative and its framework programmes in partner countries.1 UNDP’s LED approach is deeply rooted in a broader and more general conceptual frame: the Integrated and Sustainable Human Development paradigm first developed at the local level and then articulated across national and the international levels. This entails a deep acknowledgement of the centrality and the specific features of local communities, as well as their direct involvement in supporting a territorial, inter-sectoral and integrated approach to development. The participation and ownership of local governments and other territorial actors is crucial to establish a long-term development planning process based on actual need and potential of a territory, in order to improve public services and reduce socio-economic disparities. The European Union also promotes a territorial approach to development, characterized as a dynamic bottom-up and long-term process based on a multi-actor and multi-sector approach, in which different local institutions and actors work together to define priorities, and plan and implement development strategies. Through the guidance of Local Authorities and the mobilization of additional private and community capacities and resources, the territorial approach to development could trigger a change in the quality of citizens’ life and wellbeing, ensuring a balance between socio-economic growth, equity and environmental quality and increasing the resilience of the most vulnerable.2 RodríguezPose asserted that territorial development strategies have tended to focus more on what 1 Development through decentralized cooperation (DC) is gaining rapid recognition as a means to establish and consolidate decentralized governance, promote local and national development as well as consolidate stable ‘north-south', 'southsouth' and ‘triangular’ partnerships. 2 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions. Empowering Local Authorities in Partner Countries for Enhanced Governance and More Effective Development Outcomes. May 2013.
are known as “endogenous” factors: the local economic fabric, human resources and institutional setting. One of the consequences of this change in approach is the introduction of novel development strategies – grouped under the rubric of local economic development – in which endogenous and institutional factors are integrated within a comprehensive development framework with activities to support infrastructure and foreign direct investment. In doing so, the intention is to create the right environment in which the economic potential of every space can be fulfilled. The overall objective is to make economic activity within a territory dependent on the economic and social conditions of the place, rather than viceversa.3 UNDP recognizes that despite the crises and the backlash against financial and other markets in many parts of the world, there remains a strong recognition that sustainable, inclusive and equitable economic growth is needed to achieve broad based and human development. The private sector is also increasingly recognizing that it has a role, a responsibility and an opportunity to build these new markets and contribute to broader sustainable development challenges through financially sensible pro poor investments. UNDP’s private sector strategy is to advance sustainable human development by deepening engagement with the private sector and supporting appropriate inclusive market based solutions and approaches. In doing so, UNDP seeks to work with the private sector to integrate and find synergies between economic growth, social development and environmental sustainability, i.e. integrate the three pillars of sustainable development. Special attention is given to inclusion and equity, with a clear emphasis on gender equality and supporting women’s economic, political and social empowerment.4
Also multiple high level global events have increasingly recognized the importance of public – private partnerships; for example the role of the private sector in advancing sustainable development and a greener economy as part of Rio+20 discussions. The post Rio agenda is expected to further emphasize the need for public-private cooperation and solutions while the role of public-private cooperation in the development effectiveness agenda was clearly mandated as part of the 4th High level Forum on Aid Effectiveness in Busan in 2011.
THE SECOND WORLD FORUM FOR LED5 The Second World Forum for LED is part of an ongoing process that started in the lead-up to the First World Forum of Local Development Agencies “Territory, Economy and Local Governance: New Perspectives for Times of Change ” that took place in Seville in October 2011. The First Forum gathered some 1,300 participants from 47 different countries; they exchanged territorial practices and instruments for LED and discussed their relationship with national policies on local development and their stances on the global debate on Sustainable Human Development. Linking this debate with operative tools and practices in order to overcome the gap between conceptualization and implementation in the territories is a global challenge that requires more attention, as shown during the discussions in events such as the World Social Forum (January 2012) or the United Nations Conference on Sustainable Development - Rio+20 (June 2012). The main objective of the Second edition of this Forum, in Brazil, is to facilitate dialogue and exchange between local, national and international/global actors on the efficiency and impact of local economic development in tackling current challenges through existing 5
3 Andrés Rodríguez-Pose, Department of Geography and Environment, LSE. 2001 4 UNDP Strategy for Working with the Private Sector, July 2012
The Forum is organized jointly by UNDP/ART Initiative, the Technological Park of Itaipu in Brazil, the Andalusian Fund of Municipalities for International Solidarity (FAMSI)/UCLG and the Brazilian Service of Support for Micro and Small Enterprises (SEBRAE).
practices. More specifically, the objectives are to i) facilitate an international policy dialogue on LED that includes public and private actors, as well as civil society organisations, including women’s organizations and youth representatives/youth-led organizations, ii) promote the formulation of public policies on LED, ii) showcase the relevance of the territories and LED in achieving an integral development that incorporates the economic, social and environmental pillars, iv) advocate for instruments for implementing LED strategies, such as Local Economic Development Agencies (LEDAs) and/or Regional Development Agencies.
A MULTI STAKEHOLDER DIALOGUE The first as well as the second World Forum on LED were designed to stimulate a multistakeholder dialogue (MSD) bringing together relevant stakeholders from many different backgrounds. The key objective of this dialogue is to enhance levels of trust between the different actors, share information and institutional knowledge and to generate solutions and relevant good practices. The challenge lies within bringing so diverse constituencies together and building a consensus around complex and multifaceted LED issues. This query is designed as part of the process as part of the substantive preparation for the second Forum. It is hoped that the diverseness of participants will help to prompt discussion and collaboration among stakeholders, generate enhanced understanding of different positions and perspectives, build trust and relationships between stakeholder and provide a unique space for problem solving, knowledge sharing and presenting examples of good practice. The query will be followed by a written summary or a set of key points distilled from all contributions that in turn will be presented to feed into the wider policy discussion during the second Forum.
CONTRIBUTING TO THE DIALOGUE Participating in the dialogue are LED stakeholders representing a wide range of relevant organizations/institutions such as i) national, sub national and local Governments, ii) national and international associations of local governments, ii) the private or business sector (micro, small and medium scale enterprises), iii) organized business groups, e.g. chamber of commerce, industry associations, craft and commerce associations, local guilds, etc. iv) associations of organized business groups, v) cooperatives (producers, credit and consumers), vi) social economy, vii) micro finance and credit institutions, viii) diverse CSOs (including NGOs, indigenous peoples organizations, youth-led organizations, women’s organizations ix) educational institutions, e.g. universities, research institutes, think tanks, x) bilateral development cooperation agencies, and xi) international organizations. This query process should help us to take stock of successful practices, stimulate a multi stakeholder policy dialogue and thereby inform policy makers at all levels through feeding into the forum in Brazil. The aim is to develop result-oriented dialogues, with clear objectives, to ensure collective ownership over the process and achieve win-win results for all participating actors. In contributing to this query and UNDP’s dialogue on LED, we would expect LED stakeholders that are interested in the Forum in Brazil and all UNDP Advisors and Specialists to respond to two specific questions in order to keep the discussion as results-oriented as possible: 1. Governance for LED. The role of sub national and local governments in creating an enabling environment for promoting LED. The role of development partners in supporting Local Governments in the promotion of LED. What has worked and why.
Successful examples of creating an enabling environment for LED. With Governance for LED we are referring to network patterns where public, private and community actors interact in the effort to create a local competitive advantage. Good governance for LED entails improvements in the economic performance of local government based on changes in institutional arrangements, and greater accountability and transparency.
2. The challenge of implementing LED strategies. Territorial systems for strategic LED. What has worked and why. Are there particular challenges faced by youth in being involved and their specific needs addressed? Have successful innovative implementation mechanisms been put in place thanks to partnerships with youth? Some challenges are as follows: Lack of relevant skill sets; Lack of outreach to women and youth; difficulty in determining the appropriate spatial localization of LED (local versus regional); different challenges in rural and urban areas as well as small and large municipalities; lack of common understanding of LED (persistence of project based approach); lack of development partner harmonization and alignment and risk of duplication of efforts Institutions promoting LED are manifold. OECD points out that more than 15,000 development agencies exist in the world; about 500 in Europe. An example within the United Nations is the promotion of about 100 Local Economic Development Agencies (LEDAs), about 50 working within the ART Initiative framework in Latin American, African, East European, Middle East, and Asia.