Introduction to Local Economic Development
This week introduces the “local” in economic development and explains why LED is a particular way of pursuing development. Video 1 reflects on why LED takes place in some areas and not in others. Video 2 identifies the main drivers of local economic development. The videos have been prepared by ISS Emeritus Professor Bert Helmsing.
In this week, you will appreciate the pressures and opportunities posed by globalization on the local level. Globalization is conceived as a phenomenon in two tiers. At one level, infinite flows of information, culture, trade, financial flows, and migrants seem to move in all directions around the planet. At another level, globalization is a much more identifiable phenomenon that occurs within closed networks of cities and regions, in which specific actors exchange goods, services, investments and knowledge. As a result, some regions are included and others are excluded. Video 1 addresses the first tier of globalization and defines it as the combination of four flows: trade, financial flows, migration of workers, and their integration in global value chains. This video is prepared by ISS Professor Irene van Staveren, and is part of the MOOC on Pluralistic Economics. You will get a feel of that MOOC too, which we recommend for those that want to deepen their knowledge on economics. Video 2 explores the second level of globalization and maps global networks of cities and regions. It discusses how being included or excluded in these networks affects local economic development. We called this video The Ties that Bind Us. It is offered by South African IHS Professor Ronald Wall.
Decentralization & Local Responses
In week 1 we identified four drivers that constrain and push local economic development and in week 2 we looked into globalization as one of them. In this week, Bert Helmsing will look into another driver, namely decentralization.
The first video defines decentralization as the transfer of responsibilities and resources from central government to local government and also to actors, like private firms and citizens.
The second video delves into the ways in which decentralization has changed local governance and how local governments in some countries have assumed responsibilities over local economic development.
In this fourth week, the course elaborates on competitiveness, the third driver that affects local economic development. It discusses the factors that make firms competitive and the role of geography in promoting competitiveness.
In the first video Bert Helmsing defines competitiveness and explains how the concept has changed over time, leading to a greater recognition of the importance of space in shaping the competitiveness of firms.
The second video discusses innovation, which goes hand in hand with competitiveness. It defines innovation, why it is important, and how to promote innovation in a local economy. The video is prepared by IHS Professor Jan Fransen, specialist on innovation and clusters.
The third video introduces the relatively new concept of frugal innovation within the innovation family. Frugal innovations are simple, smart and affordable products, services and systems with low user complexity, high functionality, and high user value for relatively low-income people. The video features ISS Professor Peter Knorringa, director of the Centre for Frugal Innovation in Africa.
In week 5 the course looks into entrepreneurship as a key resource in local economic development. It pays attention mainly at small and medium entrepreneurs, which are normally 90% of the businesses in any region and those in the informal economy, which are 60% to 90% of the local economy in developing countries. This week is prepared by Argentine ISS Professor Georgina Gómez.
The first video discusses the meaning of entrepreneurship and why it takes different expressions in developed and developing economies.
The second video distinguishes survival from growth oriented entrepreneurs not as two types of entrepreneurs but as different ways of thinking about business.
The third video analyses policies to support entrepreneurs and reviews research that shows that it is almost impossible to shift from survival to growth oriented entrepreneurship. The main idea is that if we understand the different types of businesses, we can design policies that more effectively support each type and with more realistic expectations.
The fourth video focuses on women entrepreneurship as a first approach to support women in business. About 80% of microentrepreneurs in developing countries are women that raise income to support their families.
VALUE CHAINS AND CLUSTERS
Businesses sometimes come together in the local economy and configure agglomerations in which suppliers, workers, competitors, and clients play a role. In the same territory we often find supporting organisations like banks, consultancies, and governmental agencies.
The first video, by IHS Professor Jan Fransen, introduces the concept of clusters and presents them as islands of creativity. It also lists some ideas to support the formation of clusters.
The second video, by ISS Professor Peter Knorringa, expands the concept of clusters to stable networks where firms buy and sell products globally. We call these arrangements global value chains. The terms and conditions under which local entrepreneurs integrate global value chains are determined by how the value chain is organised and by whom.
The third video, by IHS professor Jan Fransen introduces a third concept in the family learning regions, which expands on the other two and brings in elements from innovation (week 3). The video discusses the concept of a learning region as a precondition for local economic development.
The MOOC started by defining local economic development as local actors using local resources to enhance wellbeing in a territory. This week, with videos by ISS professor G. Gómez, poses the dilemma between development from below and development from above and covers some alternatives of LED strategies.
The first video gives you an overview of strategies to support LED and of the governance challenges involved in the interrelationships between actors in markets (businesses), state (governmental agencies) and communities (households and various civil society organisations).
The second video presents a case of negotiated inclusion in which a farmers’ association in Nicaragua reorganized an agricultural cluster to integrate in the coffee global value chain.
The third video discusses the informal economy and how the concept has lately evolved into our understanding of collective action and the social and solidarity economy.
The fourth video presents a special case of the social economy in which governance systems and natural resources form social ecological systems. These have been known lately as the organization of the commons.