Local Economic Development Concepts & Discussion

1. Local Economic DevelopmentConcepts & Discussion West Coast District Piketberg 12 November 2013 Shannon Hiemstra & Colin Mitchell Stone Soup Development (Pty) Ltd 083 7771004 www.stonesoupdevelopment.com

2. 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’

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

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

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

6. LED activities around the 1st triangle Attract suppliers and complementary firms, manufacturers of capital goods, service providers supplier development,outsourcing, spin-off;support for owner succession streng- thening local firms Promotion of start-ups and entre- preneurship Attraction of new firms 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

7. 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

8. 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 • 1 New job will be created by a “greenfield” corporate relocation.

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

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

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

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

13. 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

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

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

16. 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!

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

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

19. 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.

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

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

22. 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

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

24. 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