A Summary of Jörg Meyer-Stamer

What is Participatory Appraisal of Competitive Advantage (PACA)? A methodology to prepare an action-oriented diagnostic of the local economy –to initiate a local economic development initiative –to assess and refocus ongoing local economic development activities A methodology to motivate local stakeholders to take an active role in an LED initiative

What is a local economy? For instance, it may be like this: An integrated furniture cluster A garment cluster A large metal- working company Regional service providers: Health care University Wholesale trade Farmers and small food processors Local producer services: IT, transport, construction,... Local consumer services: Retail, beauty,... Government Wood value chain Textile + garments value chain National / foreign buyers Training institutions Business promotion Finance institutions

What is Local Economic Development? Activities by local government local business associations local companies other stakeholders –alone or jointly which remove bureaucratic obstacles and transaction costs for local firms strengthen the competitiveness of local firms create a unique advantage for the locality and its firms

Why think about local and regional economic development? Empirical observations: fizzling-out of traditional, centralized industrial / technology / SME policy increasing problem-pressure felt at the local and regional level (unemployment, income generation) Conceptual observations, based on recent research on successful cities and regions): localized rivalry stimulates competitiveness and innovation competitive advantage is localized: highly specialized supporting industries and institutions create competitive advantage localized learning -- positive externalities through intensive interaction between companies and institutions

Principles of LED (1) Pursue a demand- and opportunity-driven approach –LED is intrinsically opportunistic Focus on opportunities rather than barriers, bottlenecks –don’t compile endless lists of problems Prefer rapid interventions with a sustainable impact Start with low cost activities Pursue a market-driven approach –remedy market failure, make markets work Target organic growth

Principles of LED (2) Reduce complexity –of organisational patterns –of planning methodologies Use what is there – don’t build parallel structures Pursue a bottom-up approach Apply the subsidiarity principle Build trust, seek collaboration and synergies Emphasise empowering and learning

How to launch local and regional economic development initiatives? The PACA view Look at strengths instead of weaknesses –identify potential for unique advantage –Porter perspective: how to turn disadvantage into unique advantage? Porter argument: strategy = a unique advantage that cannot easily be replicated Go for activities with a quick, visible impact –don’t get stuck in endless strategizing –don’t start by addressing the biggest of all challenges

Key insights underlying PACA Development work is process management There is no linear sequence: capacity building – creation of institutions – implementation/delivery Development is rather an iterative process –The most relevant element of learning is learning- by-doing –A key challenge for development work is to set the stage and to shape learning-by-doing –Institution development: form follows function Development is a lengthy, painful process –You need quick wins to get motivation.

What is the objective of PACA? Identify, with a rapid appraisal, the main strengths and weaknesses of the local economy and its main sectors (duration: weeks) Identify options for practical activities to strengthen the competitiveness of firms -- Criteria: –feasible with local resources –quickly implementable (starting next week) –quick, visible results (with 3 months)

Who is involved in a PACA? A “Champion” who suggests and coordinates the PACA –provincial or local government agency, Chamber, NGO, somebody else Other local organizations who take an active role –financing –making staff available for the PACA Team The PACA Team Various local stakeholders who participate in the kick- off workshop, interviews, mini-workshops and the presentation

What is the PACA Team? external consultants who are familiar with the PACA method and LED –to introduce a fresh view at the local reality –to transfer their know-how to local members of the team local members –for instance: professionals from the local business promotion agency, the local Chamber, the local university –not too young, too junior –with experience in economic promotion and in dealing with private business

What is the sequence of activities in a PACA? Prepa- ration: * Orga * Ad- vance info Kick- off Wks Results- Workshop: Diagnosis + Proposals Interviews Mini-workshops Pre- sen- tation event Imple- mentation PACA-Project PACA-Exercise (2-3 weeks) Fieldwork (1-2 weeks) Hy- po- the- sis Wks Way for- ward Wks

What about the fieldwork? Formats: Qualitative interviews (“conversation”) Mini-workshops Tools: Guideline Five forces Interaction matrix Diamond Five Forces Interaction Matrix SWOT Mesocard to define possible action –if participants are strongly motivated

What is the immediate result of a PACA? A diagnostic of the local economy A set of proposals for practical activities –to strengthen the local economy –to improve the business-friendly environment –to stimulate the competitiveness of companies –to create new business opportunities Numerous local stakeholders who have a clearer idea about Local Economic Development Buy-in of the private sector into LED –Communication channel established between public and private sector on LED

What about the follow-up? Implementation of activities done by local project champions –monthly to bi-monthly visits of external PACA Team members to facilitate and troubleshoot After months: workshops for evaluation and definition of further activities, possibly facilitated by external consultants –option: More focused PACA Exercise, looking at one sector, cluster or value chain

PACA has a strong emphasis on Facilitation Efficient facilitation of LED –Mobilise local knowledge –Connect local knowledge and players –Connect and contrast local and external knowledge –Contrast perceptions and facts Make local players learn that they can do things they never thought of Permits local government to project commitment to business, to establish communication channels with business

What are the resources necessary for a PACA? Time of the members of the PACA Team Remuneration for PACA consultants (possibly covered by external agency) –depending to number of consultants and duration of exercise Time of the participants in interviews and workshops

Why would you do a PACA? Local stakeholders have little or no experience with LED –no use to run a strategic LED planning exercise: how can you plan something you cannot imagine? Communication breakdown between public and private sector A strategic planning exercise has become stuck –PACA is a useful tool to get into practical action quickly

What again was the basic idea of Local Economic Development? Create a business-friendly environment Improve the quality of the location for firms Stimulate upgrading in companies –through inter-firm learning –through support in fields like training, management, technology refocus and strengthen supporting institutions stimulate closer interaction between companies and supporting institutions Attract new companies, stimulate entrepreneurship

Thank you for your attention!