Local Government Authority(LGA) as a Key to Local Economic Development

Local Economic Development offers local government, the private and not for profit sectors, and local communities the opportunity to work together to improve the local economy. It focuses on enhancing competitiveness, increasing sustainable growth and ensuring that growth is inclusive. Local Economic Development encompasses a range of disciplines including physical planning, economics, and marketing. It also incorporates many local government and private sector functions including environmental planning, business development, infrastructure provision, real estate and development. 

In order for Local Economic Development to be effective, we need to identify and consider the community’s economic strengths, weaknesses, opportunities and threats, and agree a shared strategy. Local Economic Development strategic planning offers communities the opportunity to work together to improve the local economy and enhance competitiveness, thereby encouraging sustainable and inclusive growth. The training focused on the improvement of local staff capacity on how to analyze the opportunities on improving local economic in their respective cities/regencies.

Purpose and context

The purpose of local economic development (Local Economic Development) is to build up the economic capacity of a local area to improve its economic future and the quality of life for all. It is a process by which public, business and non governmental sector partners work collectively to create better conditions for economic growth and employment generation. 

While “economic development” is often confused with economic growth or industrial development, it is generally accepted to be a proactive collaborative process within which there are a multiplicity of efforts that collectively serve to improve economic progress and quality of life as such, economic development can and often does involve a number of stakeholders, government, nonUgovernment, community and private sector organizations, focused on a variety of outcomes such as new business startUups, greater sectoral diversification, job creation, increased productivity, sustainable growth, improved quality of life and so forth. 

Local Economic Development refers to the process in which the local government, or some agency, authority or organization on behalf of the local government, engages to enhance a community’s capacity to effect economic progress in both a quantitative and qualitative manner.

The success of a community today depends upon its ability to adapt to the dynamic local, national and international market economy. Strategically planned Local Economic Development is increasingly used by communities to strengthen the local economic capacity of an area, improve the investment climate, and increase the productivity and competitiveness of local businesses, entrepreneurs and workers. The ability of communities to improve the quality of life, create new economic opportunities depends upon them being able to understand the processes of Local Economic Development, and act strategically in the changing and increasingly competitive market economy. 

Each community has a unique set of local conditions that either enhance or reduce the potential for local economic development, and it is these conditions that determine the relative advantage of an area in its ability to attract generate and retain investment. A community’s economic, social and physical attributes will guide the design of, and approach to, the implementation of a local economic development strategy. To build a strong local economy, good practice proves that each community should undertake a collaborative process to understand the nature and structure of the local economy, and conduct an analysis of the area’s strengths, weaknesses, opportunities and threats. This will serve to highlight the key issues and opportunities facing the local economy.

TICGL provides technical assistance focus on the efforts of local economic development.

TICGL Mission Focus on the following:

1. To enhance inclusive Local Economic Development

2. To build green and sustainable business and local government capacity in promoting SME

3. Strengthening entrepreneurship

TICGL has the objectives:

1. To encourage good governance

2. To reduce the gender inequality gap in Local Economic Development

3. To facilitate municipal governments Small and Medium Enterprises (SMEs), and civil 

society to build networks and partnerships 

4. To create ecosystems for SMEs and inclusive Local Economic Development development 

5. To facilitate and mentor the new and existing entrepreneurs to encourage Local Economic Development

6. To adapt informal rules and regulations to accommodate informal sector, minimizing its negatives while boosting its positive contributions

Local Economic Development Enabling Policies

Local economic development is arguably affected by all local government activities. 

However, local economic development policy is usually more narrowly as special activities, undertaken by public or private groups, to promote economic development. 

The activities labelled “economic development programs” fall into two categories:

1. Providing customized assistance targeted at individual businesses that are thought to provide greater economic development benefits; and

2. Strategic initiatives in which more general tax, spending, and regulatory policies of government are changed to promote local economic development.

Even without these government efforts, local economic development will often occur. 

However, local economic development programs are argued to increase the quantity or quality of local economic development.

Local economic development is increasingly regarded as a major local government reUsponsibility. Many believed that “bringing about economic development” is a major responsibility of local governments. The “First priority goal” for local economic development is “increasing jobs located in the city”, increasing the local tax base, and diversifying the local economy.

Key Elements in Local Economic Development 

Various Local Economic Development Approaches

• Public-privateSpartnershipSapproach: to assess/seize economic comparative advantage

• Small business approach: for innovation, private investment and job creation

• Regional approach: leveraging the resources of surrounding areas

• Sector-cluster approach:supporting the most promising sectors by bringing together business, educational institutions, NGOs and government.

Good practice tells us that Local Economic Development should always be guided by a strategy. A Local Economic Development strategic planning process has Five stages:

Stage 1 :Organize the Effort

Stage 2 :Conduct a Local Economic Assessment

Stage 3 :Develop the Local Economic Development Strategy (includes vision, goals, objectives, and programs, projects and action plans)

Stage 4 :Implement the Local Economic Development Strategy

Stage 5 :Review the Local Economic Development Strategy

The strategy areas of economic opportunity and obstacles to overcome information that will guide the direction of the Local Economic Development initiative and potential interventions.

Summary of Key Messages

Local Economic Development is best achieved through a partnership of governmental authorities and agencies, private sector businesses, not for profit organizations, and citizen engagement; each partner has an important role to play. The most successful Local Economic Development organizations take a collaborative approach and supplement their activities through close relationships with other representative groups that can aid or even take on part of the Local Economic Development effort. Local Economic Development can be a heavy burden requiring immense dedication and commitment, substantive resources and unique expertise. Pursuing avenues in which that burden can be shared and where synergies can be achieved is critical.

Local Economic Development is a highly competitive and complex process. Success is not about waiting for some thing to happen; rather it is about going out and making things happen. To do this effectively requires significant dedication and commitment, a broad and diverse range of experience and expertise, and significant human and Financial resources. These characteristics are seldom in a single organization; therefore, broad community collaborations and partnerships are essential prerequisites to successful Local Economic Development.

Gender equality can drive economic growth and increase productivity. Transparency and accountability contribute significantly to the effectiveness of Local Economic Development efforts. When individual citizens and stakeholders know what is happening they are more likely to get involved and support the process. 

The greater the community commitment to the process, the more effective the effort will be. Transparency requires inclusiveness, open communication and ready access by individual citizens to information on Local Economic Development efforts. With transparency, accountability is implied. 

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