3 PERU AND ECUADOR Peru: Good Macro-economic environment High levels of inequalityHigh social risksHigh diversityQuality of Life
4 Ecuador… Specific Province (Chimborazo) Strong Leadership Support from Central GovernmentLaw of Fiscal Responsibility: infrastructure investments
5 TERRITORIAL DEVELOPMENT AND DECENTRALIZATION Peru Decentralization Law of 2002 gave the Regions (departments) full responsibility for economic development.Pilot activities were designed to facilitate the implementation of the new law and test different models of economic development (PROCUENCA, FONCODES)Decentralization presented several challenges: fiscal issues, competencies at each level of government, assessment of local capacity, mechanisms for promoting economic development.Along with macro-level policies (e.g. a rigorous system of public investment monitoring), the “territorial approach” was introduced in selected regions as a mechanism to facilitate decentralization.In Bolivia and Ecuador, decentralization was already underway.Different approaches to respond to different circumstances.
6 INSTITUTIONAL CHALLENGES How to integrate existing sectoral programs with a new strategy?How to finance the new strategies? Fiscal IssuesWho should lead? The Central Government, Regional Government? Municipalities?What programmatic and project mechanisms should be used?How could it be implemented?How should it be monitored?
7 THE TERRITORIAL APPROACH OFFERED THE BEST OPTION –WHY … It provided a framework to establish investments priorities taking into account the economic, social, cultural and physical assets of a particular territory.It promoted multi-sectorial collaboration.- An effective use of public and private resources was best achieved when national programs supported a clear and well-defined strategy.It helped bring discipline to public investments based on a strategic economic plan and taking advantage of economies of scale.
8 THE TERRITORIAL APPROACH – WHY ? It helped promote social cohesion by involving local stakeholders and promoting local alliances, building a consensus on the future of the area.It helped strengthen local identity improving the possibility of retaining potential immigrants.It provided the basis for more effective decision making and greater institutional accountability.
9 WHAT PROCESS WAS FOLLOWED… Identifying territorial or regional typologies through territorial analysis: In Peru, the areas selected were those with the highest impact from the violence of the 80´s, in Ecuador, a province with a diverse geographic composition of : i) territories with dynamic agricultural and agro-industrial entrepreneurial activity; ii) micro-regions with dynamic small family-based productive units; iii) areas of extensive agriculture; iv) depressed rural areas. In Bolivia, areas with economic potentia (clusters of municipalities)Starting with Regional Strategic Planning – as the instrument for economic coordination and efficient investment plans.Finding the appropriate entry point – e.g., infrastructure (Ecuador); rural alliances (Peru and Bolivia); information technology (Extremadura); tourism (Calabria, Northern Spain).
10 WHAT PROCESS WAS FOLLOWED? Strengthening or building local and middle-level institutions (governance): e.g. Local Action Groups (Leader-EU); FUMACs (Brasil); Rural Development Councils (Mexico, Brasil); Mesas de Concertacion (Peru); Joined Municipalities (mancomunidades-Bolivia); Cluster Advisory Councils (Ecuador, Colombia), MOUsPromoting Partnerships- e.g., establishing incentives to form associations among the public, private and civil society sectors.Making use of local assets – natural, social, cultural, physical, economic, demographic.
11 KEY LESSONS LEARNED SO FAR….. A Multi-sectorial approach works best at the local level – the most successful cooperation across sectors was achieved at the local level, when there was a clear strategy for development and consensus a vision of the future.Clarification of roles at each level of government was central: multiple and sometimes overlapping responsibilities and competencies of different levels of government present a challenge:The Central Government role - responsible for regulating, coordinating, facilitating and monitoring program implementation.The Regional and Municipal Governments role - responsible for promoting and providing “public goods” type of services: e.g., facilitating the participatory process for economic strategies and economic alliances, providing intraregional infrastructure, information, environmental management and related services.
12 ….LESSONS LEARNED SO FAR…. Establishing a competitive financing mechanism with clear eligibility criteria for co-financing strategic investments (rules of the game)-The demographic and geographic diversity of a region may call for different eligibility criteria for different types of investment programs. For example: in Peru, the Territorial Development Fund would have three windows, each with its own selection criteria and targeted to different segments of the population.i) to promote agricultural diversification and reduce malnutrition;ii) for producer associations in alliance with the private sector, NGOs, academic institutions;iii) for regional level programs with alliances between local governments and other partners, e.g municipalities, local communities and local NGOs to establish appropriate environmental management interventions.
13 …. LESSONS LEARNED …Promoting partnerships and productive alliances – for implementation of key strategic economic activities that would enhance the quality of life and economic productivity of the area and would promote the development of a local market of services.Impact of the Territorial Approach depends on the level of political commitment of the actors involved. Developing consensus on key strategic areas of action, establishing clear “rules of the game,” providing timely information, allocating resources accordingly and showing early success are key for the overall impact of the regional strategy.Regional/Territorial Development is still evolving in Latin America. It is “work in progress.”