LOCAL DEVELOPMENT Policies and projects of European Union, IBD, Prof. Guglielmo Wolleb, academic year 2014/2015

The cycle of local economic development project

Sources  Slides of these lectures have been drawn, with cuts and changes, from the following Manual, available on the web:  Making Local Economic Development Strategies: A Trainer ’ s Manual is a knowledge product of the World Bank and Cities of Change Initiative, and was produced in conjunction with the Bertelsmann Foundation.World BankCities of Change Initiative Bertelsmann Foundation

Sources  The Manual was written and produced by the Local Economic Development team based in the Urban Development Unit of the World Bank. The methodology was developed by Gwen Swinburn, Senior Urban Specialist, with assistance from Fergus Murphy, Consultant. Contributions and advice were gratefully received from Nikolas Beckmann, Bertelsmann Foundation, Bonnie Walter, Consultant, and André Herzog, Consultant. Information used in this guide was obtained with permission from the publication ‘ Local Economic Development: Good Practice from the European Union and Beyond ’, 2000, an unpublished paper prepared by Gwen Swinburn for the Urban Development Unit of the World Bank.

A process with different stages  Creating a local coalition  Analysing local economy and society  Elaborating a local development strategy  Implementing the development strategy  Monitoring and evaluating the strategy

Stage 1: creating a local coalition  To take note of the institutional context (powers’ system)  To take note of the top level system of rules- laid down by the Centre-within which the coalition must act  To identify possible promoters of the coalition  To build the driving nucleus of the coalition

Stage 1: creating a local coalition  To identify and involve all local stakeholders in development programmes  Why involve them: Because they are bearers of knowledge To build a wide political consensus on the local development strategy

Stage 1: creating a local coalition  Potential stakeholders: Local public institutions Higher than local public institutions Intermediate institutions Private firms Non profit organizations Universities and research centres Single persons with specific skills

Stage 1: creating a local coalition  To favour the emergence of a leaderships with characteristics of: Legitimacy (institutional and on the ground) Credibility (political power) (skills) (super partes) (engagement)

Stage 1: creating a local coalition  To start a process of consultation and discussion in a way shared and agreed  To give visibility to the whole process  To ensure inclusiveness and openness to the process  To give concrete outcomes to the process

Stage 1: creating a local coalition  To ensure temporal stability to the process  To formalize the process: steering group  Give effective power to the coalition  To maintain relationships with other tiers of government

Stage 2: Local economy assessment  To gather the necessary information to undertake an economic and social territorial analysis  Information are needed to identify the endogenous resources of the territory, its capabilities, its weaknesses and external opportunities  Information, properly processed, are the basis for elaborating scientifically founded development strategies and programmes

Stage 2: Local economy assessment  This work of gathering and analysing information is also instrumental for local actors to deep the knowledge of the territory  This work also represents an opportunity to strengthen the coalition and create consensus on the programme

Stage 2: Local economy assessment  Information can be drawn from a variety of sources: Statistical sources Questionnaires to specific stakeholders Interviews Focus groups

Stage 2: Local economy assessment  Needed information cover different dimensions: Demography Economy Infrastructure Institutions Civil society Policies

Stage 2: Local economy assessment  Demography Dimension and size of population Age structure Immigration Natural increase Net migration

Stage 2: Local economy assessment  Economy National, regional and local GDP Past growth performance Labour productivity Investment Value added and employment by sector Weight and localization in external markets Number and size of firms

Stage 2: Local economy assessment  Economy (follows) Linkages among firms (clusters?) Corporate governance Average earnings Research and development Human capital Weight of informal economy

Stage 2: Local economy assessment  Economy Employment rate by age and gender Unemployment rate by age and gender Long run unemployment

Stage 2: Local economy assessment  Society Income inequalities Share of poor people Share of immigrants Segments of people at disadvantage  Health  Education  Housing Security

Stage 2: Local economy assessment  Institutions Role and power of different institutions Institutional thickness Cooperation among institutions Relationships between public institutions, firms and civil society Efficiency in public administration Laws, regulations, enforcement, taxation, licenses, business enabling environment

Stage 2: Local economy assessment  Infrastructure Transportation links Telecommunications Public utilities Internet Environment Future planned infrastructure investments

Stage 2: Local economy assessment  Civil society Norms and agreed values Identity values Historical traditions of collective action Social capital Trust Security

Stage 2: Local economy assessment  Policies Survey of ongoing economic policies impacting on the territory Evaluation of past policies Consistency and integration of local policies with national and European policies Lessons learned

Stage 2: Local economy assessment  Swot analysis: useful conceptual tool to systematize and elaborate information gathered on a territory, sector o topic.  It is not a good substitute for more scientifically rigorous analysis  It is undertaken building a four entries matrix: strengths, weaknesses, opportunities, threats

Stage 2: Local economy assessment  Strengths and weaknesses refer to the endogenous resources of the local economy and society  Their identification is instrumental for elaborating programmes aimed at the enhancing of the territorial potentialities and at overcoming the elements of weakness

Stage 2: Local economy assessment  Threats and opportunities refer to external events, which are not under the control of local actors, but which can have an impact on the territory  Their consideration is instrumental for elaborating programmes which exploit the external opportunities and reduce the risks of external events

Stage 3: elaborating a strategy  Various steps in the process: To develop a strategic vision of the future of the territory To select the final goals of the programme consistent with the strategic vision To select intermediate objectives to achieving the final goals To elaborate and select programmes and projects to achieving the objectives

Stage 3: elaborating a strategy To verify consistency and complementarity between local strategy and higher level of government strategies: European, national and regional To take into-account learned lessons of past policies: correct errors and enhance successes and best practice.

Stage 3: elaborating a strategy  Strategic vision Final goals  Specific objectives Programmes  Projects

Stage 3: elaborating a strategy  Agreed strategic vision of the future of the territory  The vision represents the desired future by the community. It reflects the community’s preferences  It contains elements of realism but also of imagination

Stage 3: elaborating a strategy  It is important to involve all relevant stakeholders in the making of strategic vision : To reduce conflicts in the implementation stage To mobilise local actors and widen the human basis of development To increase knowledge and socialise skills

Stage 3: elaborating a strategy  Creating a vision (an example)  “By 2010, this city will have a dynamic business-oriented government and be characterized by an attractive business enabling environment that provides the basis for a wide range of entrepreneurial and employment opportunities. This city will be home to a diverse and growing range of business that provide a broad range of employment opportunities in the service, agricultural and manufacturing sectors”

Stage 3: elaborating a strategy  Final goals of the programme/project Final goals are more descriptive and concrete than a vision statement but still quite general They should be based on the local economy assessment undertaken to date

Stage 3: elaborating a strategy Typical goals of a regional programme  To improve living standard and reduce social exclusion  To foster economic growth and increase the rate of employment  To increase competitiveness of the economic system

Stage 3: elaborating a strategy  Typical goals of sub-regional or local programmes Integrated enhancement of historical, cultural, artistic and human resources of the territory to promote tourism development Reviving the local manufacturing system in order to compete with more advanced local systems Leveraging on religious tourism and exploiting its power as the driving force to enhance the local immobile resources

Stage 3: elaborating a strategy Specific objectives  Intermediate objectives must be Consistent with the final goals More specific than final goals Suitable for a quantitative assessment Realistically achievable Financially sustainable With precise deadlines

Stage 3: elaborating a strategy  Typical specific objectives To give incentives to biological agriculture To launch marketing campaign to promote tourism To favour the start up of new firms and to promote new skills Implementation of measures of recovery of farm properties to support agri-tourism To promote the use of renewable energies

Stage 3: elaborating a strategy  The programs are made by a set of projects that contribute to achieving the same specific objectives

Stage 3: elaborating a strategy  The following criteria should be followed in selecting the projects: Projects should be clearly linked to the achievement of specific objectives Bundles of integrated and complementary projects should be chosen to enhance the final impact To avoid fragmentation choosing too many and too small projects To ensure technical and procedural feasibility To ensure financial sustainability even beyond the end of public financing

Stage 3: elaborating a strategy  It is also important To evaluate the temporal dimension of the various projects and the diverse degree of risk To compare effectiveness and efficiency of alternative projects

Stage 3: elaborating a strategy  Transparency of the whole process of strategy elaboration should be ensured  All local actors must be enabled to know the strategy  Comments and criticisms should be solicited and carefully evaluated.

Stage 4: implementing a strategy  The different steps To prepare an Implementation Plan To prepare an Action Plan for each project Build institutional frameworks Ensure relevant inputs are available Carry out project tasks

Stage 4: implementing a strategy  Prepare an Implementation Plan An Implementation Plan lays out budgetary, human resource, institutional and procedural implications in implementing the LED strategy It is based on the Single Action Plans related to the single projects It ensures the coherence and complementarities of single projects and the overall feasibility of the programme

Stage 4: implementing a strategy  The Implementation Plan must contain for each project information about: Distribution of tasks and responsibilities Targets Financial resources Human resources Legal and procedural requirements The time table of each project The monitoring and evaluation systems

Stage 4: implementing a strategy  Prepare the Action Plan of each project  The Action Plan describes in more detail all tasks which must be carried out for the implementation of the project

Stage 4: implementing a strategy  The Action Plan must include: The specific objectives and their consistency with the final goals The list of all resources required for the implementation of the project The list of all tasks to be accomplished The expected output and the indicator The expected result and the indicator The expected impact and the indicator The distribution of competences in the management of the project The procedures to be followed

Stage 4: implementing a strategy  For each project it is useful to fill synthetic cards with the following information Name of the programme and of the project with a brief description Tasks to be accomplished Human and financial resources Time schedule and pluri-annual financial plan with indication of the sources Expected output, results and impact Performance indicators and monitoring and evaluation systems

Stage 4: implementing a strategy  To build the institutional framework To establish the competencies of different bodies To establish the forms of cooperation among different bodies To establish the rules of the decision making process To formalize the relationships among different institutional levels To formalize the arrangement and the role of partnership and stakeholders

Stage 4: implementing a strategy  To ensure the availability of necessary inputs for the implementation of the project for its entire duration  Inputs can be:  Financial (financial resources to pay for the cost of the project)  Human (people ready to work in the project with the necessary skills)  Political (political forces and lobbies available to support and give priority to the project)

Stage 4: implementing a strategy  To implement the projects…..

Stage 5: revising the strategy  Local development programmes and projects have the character of processes: it is physiological that they be monitored, revised and modified continuously during implementation  This requires that the strategic design of projects includes monitoring and evaluation systems and specifies the operating mode

Stage 5: revising the strategy  Monitoring and valuation perform different tasks: They ensure transparency in the use of public resources They allow adaptation to changes in external environment They provide a continuous flows of information to help make changes and correction of errors in a short time They promote the strengthening of the strategy through a learning process “trial and error”: you learn from successes and failures

Stage 5: revising the strategy They favour a process of empowerment of the local actors and of institutional building They make possible the benchmarking of interventions They increase external actors’ trust They justify the call for further financing

Stage 5: revising the strategy  Monitoring It consists in the systematic and continuous collection of information on all aspects of the programme and its use in the implementation of the projects It aims to analyse the current situation, identify problems and find solutions, to monitor compliance with the provisions in the project, to measure progress in achieving these objectives and make corrections

Stage 5: revising the strategy  Monitoring It is carried out on a continuous basis in order to allow intervention in a short time It does not challenge the strategic design but it focuses on its correct and efficient implementation It is undertaken by the same actors which implement the strategy (or by actors which work side by side with the implementers of the project)

Stage 5: revising the strategy  Evaluation It consists in the periodical verification of the validity of a strategy and of its programmes and projects in relation to the objectives set Evaluation can challenge the overall design strategy, verifies the validity of the final goals, makes judgements, focuses on the effectiveness of programmes and projects It can be realized either by external evaluators or by the same subjects who implement the programmes.

Stage 5: revising the strategy  External evaluation has the following positive features: It is more transparent (because it is made by non-interested people) It is more objective (the appraiser is different from who those evaluated) It is technically more valid (because it is undertaken by specialized bodies)

Stage 5: revising the strategy  Internal evaluation has the following positive features: It favours the empowerment of local actors engaged in the implementation of the strategy (self reflective processes) It is more easily translated in changes in strategy, programmes and projects

Stage 5: revising the strategy  Evaluation focuses on changes produced by the policy. It is based on four parameters Output produced compared to the expected output Efficacy in achieving the objectives (extent to which the objectives have been achieved) Efficiency in achieving the objectives (what has been done, has it been done at minimum cost?) Overall impact of programmes and projects (how and what the implementation of the programme has changed the initial situation of the territory)

Stage 5: revising the strategy  A system of indicators suitable for valuation must be embodied from the beginning in the design of the strategy  An indicator is a unit of measurement  The value of an indicator before the launching of the programme is the baseline value  The value of the indicator which the programme aims at achieving is the target.  Indicators refer to objectives, general or specific

Stage 5: revising the strategy  Indicators must be Easily and clearly understandable Good proxies for the objectives to which they relate Based on statistics easily and regularly available

Stage 5: revising the strategy  Examples of indicators: Percentage increase of agriculture employment Percentage increase of textiles exports Reduction of CO2 emissions

Stage 5: revising the strategy  Examples of targets 5% increase in agricultural employment to be implemented in three years 8% increase in textiles exports to be implemented in 5 years Reducing by 30% CO2 emissions by 2020

Stage 5: revising the strategy  Three main types of indicators Output indicators Result indicators Impact indicators

Stage 5: revising the strategy  Example 1: policies aimed at providing incentives to business investments Output indicator: number of firms benefiting incentives Result indicator: volume of investment by supported firms Impact indicator: new jobs created

Stage 5: revising the strategy  Example 2: building a road junction between an industrial area and a motorway Output indicator: km of road built Result indicator: reduction in travel time Impact indicator: reducing transport cost for firms located in the area

Stage 5: revising the strategy  Evaluation must be able to separate changes in circumstances that are attributable to the action of the programme from changes that are attributable to other causes  This is possible only with counterfactual analysis (that are extremely difficult to be carried out)

Stage 5: revising the strategy  The design of systems for monitoring and evaluation is done early in the drafting of the strategy. It is part of the overall strategy  The design of these systems-who does what-is discussed and decided together with stakeholders in the first construction phase of the strategy  The data needed for monitoring and evaluation are identified in the analysis phase of the local system

Stage 5: revising the strategy  The system of indicators and targets will be formulated during the development of programs and projects  The evaluation results are presented and discussed in public  The evaluation results are used for the preparation of future strategies