LED A-Z Glossary
- Added Value
Additional benefits gained as a by-product of a service/project, which would not have occurred had the service/project not gone ahead. Sometimes referred to as additionality.
Agglomerationi occurs when individuals and firms benefit from being near to each other. Physical proximity to other firms, workers and consumers, may help firms in the day to day business of producing goods and services. The theory is that productivity of firms will rise with the overall amount of activity in other nearby firms, or with the other nearby workers and consumers.
The subset of manufacturing that processes raw materials and intermediate products derived from the agricultural sector. Agro-processingi industry thus means transforming products originating from agriculture, forestry and fisheries. These industries range from simple preservation (such as sun drying) and operations closely related to harvesting to the production, by modern, capital-intensive methods, of such articles as textiles, pulp and paper. (Definition provided by FAO)
- Angel Investor
An investor who providers equity investment to start-up businesses. S/he usually does not substantially participate in the management of the business and typically demands a relatively small equity share.
LEDNA aims to offer the fullest possible number of local economic development approaches that are publicly available. Together with the network members we will refine and add to these. LED is universally seen as a locally driven, planned and partnership approach to improving either:
1. Entire local economies e.g. a small town and its rural surroundings or a city or even a metropolitan region - a location with a common local economy.
2. Specific parts of local economies - e.g. a market square, a port, commercial district, industrial estates, housing or slum improvement areas.
3. Targeted at businesses in the local area - e.g. Business sectors (agriculture, steel, commercial businesses, tourism etc) or business types e.g. new starts, small and medium sized businesses, informal businesses, new technology.
4. Targeted at specific population groups e.g. ethnic minorities, youth or women entrepreneurs.
5. Targeted at institutions that can enable or facilitate the environment for business and economic growth - e.g. educational institutions, business membership organisations and associations, local governments, libraries, safety, health or other basic infrastructure related institutions.
- Backward and forward linkages
Economic connections among companies; backward linkages involve the purchase of inputs by a given firm from another, and forward linkages involve the sale of the given firm's outputs to another company.
A description or statistical analysis of current local conditions and recent trends against which changes can be planned and performance measured.
- BDS Provider
A firm, institution or individual that provides BDS directly to small and medium enterprises. They may be private for-profit firms, private not-for-profit firms, NGOs, parastatals, national or sub-national government agencies, industry associations, etc. They may also be firms whose core business is not services but who provide them as part of a broader transaction or business-to-business relationship (Definition provided by the ILO).
Quantifiable measures of economic competitiveness and quality of life that can be collected on a regular basis. They are used to measure a region's economic status and progress against comparable regions.
An individual person who benefits directly from a project, programme or other intervention - that is, a person who is benefiting (or will benefit) from activities carried out, through the outputs, outcomes, or impacts generated.
This is a general term used for sites that have been developed in the past that may or may not be contaminated. Sustainable economic development strategies encourage the beneficial reuse of these sites, even though this may be more expensive than building or developing (new, to date undeveloped) Greenfield sites.
- Business Climate
Environment of a given community that is relevant to the operation of a business; usually includes tax rates, attitudes of government toward business, and availability of capital.
- Business Creation
Economic development strategy that focuses on encouraging the formation of new companies that are locally based and will remain in the community and grow.
- Business Development Services (BDS)
BDS are services that improve the performance of the enterprise, its access to markets, and its ability to compete. This includes a wide array of business services, both strategic and operational. BDS are designed to serve individual businesses, as opposed to the larger business community (Definition provided by the ILO).
- Business Improvement Districts (BIDs)
Legally defined entities formed by property and business owners, where an assessment or a tax is levied for capital or operating improvements, as a means of supplementing city funding. The district is created by the public law or ordinance but is administered by an entity responsible to the district's members or to the local governing body. Some states authorize non-governmental, non-profit corporations. Recent BID programs include economic and social development, transportation, parking management, and conversion of redeveloped commercial buildings for residential use.
- Business Retention
Systematic effort designed to keep local companies content at their present locations which includes helping companies cope with changing economic conditions and internal company problems.
Wealth in the form of money or assets, taken as a sign of the financial strength of an individual, organization, or nation, and assumed to be available for development or investment (Definition provided by Businessdictionary.com).
- Central Business District (CBD)
The central business district of a locality - an area usually having the highest concentration of businesses, including financial institutions, shops, offices, theatres, and restaurants.
- Chamber of Commerce
These are local, independent organisations funded by their members, who are predominantly from local businesses, which seek to enhance the competitiveness and growth, as well as represent the interests, of all businesses in their communities/areas.
- City Development Strategy
A city development strategy is defined as an action-oriented process, developed and sustained through participation, to promote equitable growth in cities and their surrounding regions to improve the quality of life for all citizens. A CDS helps cities integrate a strategic development approach and a long-term perspective into their urban planning. With a CDS, cities move beyond planning around the short-term political or donor-funding cycle to considering where they should be in 20 or 30 years, and the steps that need to be taken to achieve those goals. The idea behind a CDS is that well-positioned, well-timed public, private and civil society strategic interventions can significantly change a city’s development path and improve its performance. (Definition provided by Cities Alliance).
- City Region
A term used by urbanists, economists and planners to describe not only the administrative area of a recognisable city or conurbation but also its hinterland, which will often be far bigger.
- Civil Society
Civil society refers to the arena of un-coerced collective action around shared interests, purposes and values. In theory, its institutional forms are distinct from those of the state, and market, though in practice, the boundaries between state, civil society, and market are often complex, blurred and negotiated. Civil society commonly embraces a diversity of spaces, actors and institutional forms, varying in their degree of formality, autonomy and power. Civil societies are often populated by organizations such as registered charities, development non-governmental organizations, community groups, women's organizations, faith-based organizations, professional associations, trade unions, self-help groups, social movements, business associations, coalitions and advocacy groups.
Concentrations of interconnected businesses and suppliers in a particular field, considered to increase productivity. Collocation of firms in the same or similar industries to foster interaction as a means of strengthening each other and enhancing the community's competitive advantage.
- Community Based Organisation (CBO)
Community based organizations are those organized at a local level, within a community, as close as possible to the individuals they serve. They are civil society non-profits that operate within a single local community. Like other nonprofits they are often run on a voluntary basis and are self funding. Within community organizations there are many variations in terms of size and organizational structure. Some are formally incorporated, with a written constitution and a board of directors (also known as a committee), while others are much smaller and are more informal.
- Community of Practice
An LED Community of Practicei is a group of people who share an interest in LED. It is an informal network or forum where tips are exchanged and ideas generated. Such groups frequently use the internet to facilitate their activities, including forums, libraries, chat rooms, calendars and such. This contributes to sharing of knowledge, best practices and innovation towards better LED practice. LEDNA is a Community of Practice.
- Comparative Advantage
Term used when comparing economies of regions. It is the economic advantage gained by one area over another due to the fact that it can produce a particular product more efficiently. More efficient production of one good means there is a higher opportunity cost to produce another. This is the concept that drives trade between economies. Inter-regional and international trade exploits the comparative advantages of economies.
- Competitive Advantage
Porter (1990)'s seminal work, The Competitive Advantagei of Nations explained the concept as competing over quality rather than price (comparing with the comparative advantage explanation of trade, which depends on competing on price). Porter explained that continuous innovation is required to make more productive use of inputs and become more competitive. His research also showed that competitive firms tend to be geographically clustered to take advantage of the productivity gains that come with proximity to each other and to local markets and labour pools.
Numerous definitions exist for place based competitiveness. For example it has been defined as the “ability to continually upgrade the business environment, skill base and physical, social and cultural infrastructure to attract...high growth, innovative and profitable firms and an educated workforce...to achieve high rates of growth, productivity, high employment, wages, GDP per capita and low levels of inequality and social exclusion” (Simmie and Martin 2008).
Co-operatives are trading enterprises, providing goods and services and generating profits, but these profits are not taken by shareholders as with many investor owned businesses: they are under the control of the members, who decide democratically how they should be used. Co-operatives often use their profits for social purposes, investing in the education of members, in the sustainable development of the community or the environment, or for the welfare of the wider community.
- Corporate Social Responsibility (CSR)
Businesses are often keen to promote a more ethical approach, with demonstrations of their contributions to the local communities that they operate in. In the wider sense, CSR relates to a more sustainable economic approach to business and has been defined as ‘operating a business in a manner that meets or exceeds the ethical, legal, commercial and public expectations that society has of business.
- Cost Benefit Analysis
A method for evaluating the profitability of alternative uses of resources.
- Cost Effective Analysis
Compares alternative projects or plans to determine the least costly way to achieve desired goals. Usually, some index or point system is developed to measure the effectiveness of the proposal in meeting the goals and objectives.
- Creative Cities
Creative cities is a concept developed by Charles Landry in the late 1980s, encouraging a culture of creativity in urban planning and solutions to urban problems. It has become a global movement that inspires a new planning paradigm for cities and it is related to the concept of learning cities. Creative cities are ones that cultivate creative art & culture and foster an innovative economic base.
- Credit Union
These are financial co-operatives owned and controlled by their members. They mostly offer savings and loans at competitive rates, often to people unable to access mainstream banking services.
Limited transfer of authority or resources to regional government offices to undertake a task that had been previously performed by a central authority.
Expenditure and activity associated with a particular project that would have occurred anyway, without assistance from that programme.
Extensive transfer of autonomy to regional governments to be able to raise their own funds and make investment decisions according to local priorities.
The extent to which a programme just moves problems elsewhere, with the result that overall activity and impact are offset by reduced activity and impact in the neighbouring area.
The delivery of government services and information via electronic means such as the internet, digital television and other digital technologies.
- Eco-Industrial Park
Industrial park designed to encourage business interaction in ways that foster the reuse of waste streams, the recycling of inputs, and other mechanisms.
Tourist activity that is ecologically sensitive, the focus is on human interaction with the eco-system being visited, with an emphasis on educating people about the eco-system's value and importance, thereby fostering appreciation for its preservation.
Eco-towns are new towns that are exemplar green developments. They are usually designed to meet the highest standards of sustainability, including low and zero carbon technologies and good public transport.
- Economic Development
Economic development is about the economics of place and encouraging prosperity and equality within a locality. Approachesi are undertaken at national, regional and local levels and aim to assist the generation of wealth through business growth and start ups, inward investment, skills development and employment opportunities. Increasingly, economic development is perceived as not simply being about growth but needs to encompass balancing growth with environmental and social considerations.
- Economies Locales (ECOLOC) Methodology
This LED methodology was developed and adopted in West and Central Africa and focuses on planning an LED strategy through dialogue. The process starts from validating and prioritising the local economy assessment and proceeds stepwise to develop an LED strategy with vision, goals, programmes and projects. The focus is on dialogue, informed and transparent decision making.
The ECOLOC LED methodology is being applied in countries that have very severe development challenges, and is adapted to this context. In the ECOLOC approach, the predominance of the informal economy is seen as a positive entry point to address the challenges of population growth and concentration in the cities. The informal economy enables wealth to be shared by a greater number of city and rural dwellers. The demographic transition, envisaged to last for at least thirty more years means that African LED strategies will have to address the economic reality of large informal and smaller formal economies. Supporting the development of the informal sector as well as the transition of actors from the informal to the formal sector is neither well understood, nor is there significant practice upon which to build. This is a special challenge for ECOLOC and African development.
- Economies of Scale
The phenomenon of production where the average cost of production declines as more of the product is produced.
- Employment Service
Beneficial activities provided to assist individuals in securing employment or acquiring learning skills that promote opportunities for employment.
- Enterprise Development
Assistance to entrepreneurs in support of the creation, growth, and survival of their businesses.
Production innovator who perceives the opportunity to provide a new product or implement a new production method, organises the needed production inputs, and assumes financial risk.
The practice of starting new organisations and revitalising existing organisations. Entrepreneurshipi is undertaken by individuals who are willing to take risks, have good business acumen and are willing to commercialise ideas.
- Environmental Impact Assessment (EIA)
A procedure to identify the likely environmental outcomes of certain types of development.
- Export Development Services
Export assistance programs can help businesses to diversify their customer base, expand operations and become more profitable. Export services include: assessing company capacity for exporting; market research; information services (on exporting, trade regulations, transportation, etc.); international lead generation and trade shows/exhibitions or promotional marketing trips.
An effect of decision-making or purchases by one set of parties on another. Externalitiesi can be positive or negative. For example, the impacts of pollution by a certain enterprise on other enterprises and the community as a whole is a negative externality. While knowledge spill-overs of information and new inventions between proximate firms is a positive externality.
- Fiscal Decentralisation
Fiscal decentralisation means that the authority of tax collection or expenditure is transferred from national offices to sub national offices. The aim is improved tax collection and decision making on local priorities.
- Foreign Direct Investment (FDI)
FDI is investment that is attracted from abroad. Inward investment, on the other hand, can include investment from within your country as well as from abroad.
- Gendered Value Chain
Value Chain analysis that takes into account gender relation along the chain of production. The numbers of men and women at each production stage are calculated and the relationships between them researched. Constraints affecting women along the production chain are analysed in order to design interventions that will improve their economic position and thereby the efficiency of the whole chain.
- GENESIS Methodology
Genesis is a robust and innovative methodology to define strategic priorities and launch or accelerate a process of transformation in local or regional economic development.
With Genesis, you get:
• a better understanding of the sectors that are crucial for the prosperity of your locality or region,
• mobilisation and active involvement of relevant stakeholders, alignment of perspectives of stakeholders,
• identification and prioritisation of strategic interventions to stimulate the competitiveness, growth and prosperity of your location.
Genesis is a methodology to define strategic intent, and the specific development activities needed to realise it,
• in a locality or region,
• in a cluster or value chain,
• in a government planning cycle to inform development planning and resource prioritisation.
The process of renewal and rebuilding of previously run down areas, accompanying the influx of middle class or affluent people and that often displaces earlier, usually poorer residents.
LED governance describes the manner in which capacities and resources are used for economic development. This includes the use of institutional resources for LED programmes, building effective stakeholder networks, improving local government and building capacity and competency to deliver on LED strategies and projects.
- Green Belt
A local area restricted from building use and allowed to remain in a natural state, or retained for agricultural use, to contain development, preserve the character of the countryside and provide open space.
- Growth Node / Corridor
A physical location where industry and/or commercial development is deliberately directed; done either to reduce growth pressures elsewhere or to redistribute growth. This is based on the belief that growth depends on propulsion industries that are fast growing, large, innovative, and linked to suppliers as well as to markets.
- Guarantee Schemes
Credit guarantee schemes are interventions designed to fill the gap in small and medium enterprise access to the financing they need. The schemes are intended to help banks learn about lending to SMEs, while being cushioned from the risks involved. A certain body (donor, local government, NGO, etc), therefore, guarantees a certain percentage of a bank's risk when lending to SMEs. This way it is hoped that banks will be encouraged to lend SMEs and increase their funding to them over time, especially if they experience favourable returns.
- Hard Infrastructure
Hard infrastructure includes all the tangible physical assets that contribute to the economy of a locality. For example, transport infrastructure (roads, railways, ports, airports), industrial and commercial buildings, water, waste disposal, energy, telecommunications etc.
- High Tech
Reference to products or businesses that produce products that require substantial intellectual capital in their creation (e.g. computer chips, biomedical products, and computer software).
- Human Capital
The knowledge, skills and competences and other attributes embodied in individuals that are relevant to economic activity.
- ILO Employment Centred Approach to LED
The ILO approach to LED focuses on the importance of an employment-centred approach, drawing attention toward employment as a means out of poverty via income generation. Through ILO's advocacy, capacity building and programme work, the organisation promotes an LED approach that:
• Focuses on Local Territory: identifying comparative advantages, endogenous human, economic and natural resources
• Works with Productive Social Organisations: cooperatives, business associations, microfinance organisations, women’s groups, informal economy
• Improves Data Bases and Analysis of Local/Regional Economy: to identify trends, opportunities, components for designing the local/regional strategy
• Focus on Microenterprises, which have the potential for improved efficiency and competitiveness, utilising relevant enterprise development tools (clustering, value chain analysis, etc)
• Focuses on the Role of Institutions: the need for strong local institutions - LED Forumi, Agency or other Entity, complementing, not duplicating, existing institutional frameworks
• Recognises that a successful LED effort is not a ”quick fix” approach
There are 6 steps to the ILO methodology:
1. Territorial diagnosis, institutional and poverty mapping
2. Sensitising, advocacy and awareness raising
3. Organisation for LED
4. Designing of the LED Strategy and developing specific programmes and action plans
5. Stabilising and strengthening local structures
6. Review, feedback and disengagement (exit strategy)
The ILO's Training Centre in Geneva undertakes regular LED training and sensitisation courses for a variety of stakeholders.
Benefits offered to firms as part of an industrial attraction strategy. A few incentives are tax abatements and credits, low interest loans, infrastructure improvements, job training, and land grants.
Entity that nurtures and supports young companies until they become viable, providing them with affordable space, technical and management support, equity and long-term debt financing, and employment. The three basic objectives in creating an incubator are (1) to spur technology-based development; (2) to diversify the local economy; and (3) to assist in community revitalization.
Measures that help assess performance, often over time (e.g. a change in crime rates).
- Indigenous Businesses
Local businesses, usually those that have developed in the community. Increasingly, the term refers to all businesses in an area whether they are ‘locally grown’ or not.
- Indigenous Businesses
Local businesses, usually those that have developed in the community. Increasingly, the term refers to all businesses in an area whether they are ‘locally grown’ or not.
- Industrial Competitiveness
Various definitions exist. For example, one definition explains it as “the ability of a company or industry to meet challenges posed by foreign competitors” (US Department of Energy quoted in INCC 1998).
- Informal Cross Border Trade (ICBT)
ICBT is the main mode of intra-African trade and evidence suggests that its levels dwarf formal trade levels between African countries. ICBT refers to registered or unregistered business activities, undertaken across borders, generally conducted by small scale quasi professional traders, including women, who use a variety of means to move small quantities of goods across national frontiers, most often not filing official documentation.
ICBT therefore remains unrecorded for official trade statistics and GDP purposes. Although the share of informal trade in total African trade is hence so far unknown due to the lack of data, estimates suggest that African countries may be overlooking the major proportion of their trade by ignoring ICBT.
- Informal Employment
Jobs that are not in the formal sector. Excluding South Africa, most employed persons in Africa are informally employed. The ILO suggests that almost three quarters of non agricultural employment in Africa is in the informal sector.
- Informal Sector
Can be strictly defined as being not within the formal or legal sector and therefore not raised and not provided with services. While there are considerable difficulties in collecting data and statistics on this sector, studies suggest that the informal economy is huge in Sub Saharan Africa, and is a major contributor to GDP, employment and trade.
While informal sector workers are often portrayed as those engaging in illegal activities or evading taxes, the majority of workers enter the sector due to the high entry barriers in the formal sector. Particularly for the poor, the requirements for entry into the formal sector are largely unattainable e.g. high educational requirements, onerous regulatory procedures to open a business, etc.
The informal sector generates a variety of benefits for African economies. Informal sector activities generate employment and provide a way out of poverty for many people and their families, especially at times of economic adjustment. Informal workers not only support their own families but also create employment for and support others. Also, the informal economy has positive multiplier effects on other sectors, particularly the transport, manufacturing and agricultural sectors through higher demand and expanded markets for their products. The sector also contributes to food security through the distribution of goods to remote areas, often not serviced by the formal sector.
The informal economy is also important to gender equality in economic opportunities, as women dominate the sector, which provides them with flexible opportunities for employment, increased income and poverty reduction.
- Information Communication Technologies (ICT)
ICT is an umbrella term that includes any communication device or application, encompassing: radio, television, cellular phones, computer and network hardware and software, satellite systems and so on, as well as the various services and applications associated with them, such as videoconferencing and distance learning. ICTs are often spoken of in a particular context, such as ICTs in education, health care, or libraries.
The importance of ICTs for development lies less in the technology itself than in its ability to create greater access to information and communication in underserved populations. Many countries around the world have established organizations for the promotion of ICTs, because it is feared that unless less technologically advanced areas have a chance to catch up, the increasing technological advances in developed nations will only serve to exacerbate the already-existing economic gap between technological "have" and "have not" areas.
The term infrastructure describes the basic physical and organisational structures needed for the operation of a community or company or the services and facilities necessary for an economy to function. The term typically refers to the technical structures that support a society, such as roads, water supply, electricity, telecommunication, ICT and others. Infrastructurei is needed for a business environment that facilitates the production of goods and services, e.g. roads enable the transport of goods from the producers to the markets.
In some contexts, the term may also refer to other factors like basic social services such as schools and hospitals. The poor state of infrastructure in many Sub-Saharan countries affects economic growth and productivity. Many countries face challenges in financing infrastructure and its maintenance. Functioning infrastructure is part of a business environment which is conducive to economic growth.
Joseph Schumpeter (1934) defined economic innovation as:
1.The introduction of a new good — that is one with which consumers are not yet familiar — or of a new quality of a good.
2.The introduction of an improved or better method of production, which need by no means be founded upon a discovery scientifically new, and can also exist in a better way of handling a commodity commercially.
3.The opening of a new market, that is a market into which the particular branch of manufacture of the country in question has not previously entered, whether or not this market has existed before.
4.The conquest of a new source of supply of raw materials or half-manufactured goods, again irrespective of whether this source already exists or whether it has first to be created.
5.The carrying out of the better organization of any industry
Innovationi is studied by a variety of economists for its value in wealth creation. In LED, there is an increasing focus of LED strategies on encouraging innovation in a locality to bring economic benefits. Interventions include supporting incubators, offering tax incentives and increasing access to finance and other services for innovating enterprises.
The resources that contribute to delivering activities and producing outputs, in terms of financial, physical and human (time and skills) resources.
The purchase of a financial product or other item of value with an expectation of favorable future returns. In general terms, investment means the use money in the hope of making more money.
- Job Matching Services
A service that matches job seekers resume's to open vacancies announced by employers in a locality. This is often provided by national or local governments with the aim of reducing unemployment as well as meeting the skill needs of local firms.
- Just-in-time Production (JIT)
JIT is a production strategy that strives to improve a business' return on investment by reducing in-process inventory and associated carrying costs. Just In Time production method is also called the Toyota Production System. To meet JIT objectives, the process relies on signals between different points in the process, which tell production when to make the next part. Such signals can be visual such as the presence or absence of a part on a shelf. Implemented correctly, JIT focuses on continuous improvement and can improve a manufacturing organization's return on investment, quality, and efficiency. To achieve continuous improvement key areas of focus could be flow, employee involvement and quality. Quick notice that stock depletion requires personnel to order new stock is critical to the inventory reduction at the center of JIT. This saves warehouse space and costs.
- Knowledge Economy
This is an economy based around high technology industries, such as computing and telecommunications, and sectors, which have a highly skilled workforce such as the finance and higher education sectors.
- Knowledge Hub
A hub is a centre of activity or interest or a focal point. A knowledge hub, therefore, is a centre or focal point for the exchange of knowledge, support, development and ideas. LEDNA is a knowledge hub for disseminating and exchanging ideas on LED.
- Knowledge Hub
A hub is a centre of activity or interest or a focal point. A knowledge hub, therefore, is a centre or focal point for the exchange of knowledge, support, development and ideas. LEDNA is a knowledge hub for disseminating and exchanging ideas on LED.
- Labour Market
The market in which workers find paying work, employers find willing workers, and wage rates are determined. Labour markets may be local or national (even international) in their scope and are made up of smaller, interacting labour markets for different qualifications, skills, and geographical locations. They depend on exchange of information between employers and job seekers about wage rates, conditions of employment, level of competition, and job location (definition provided by businessdictionary.com).
Economic activity that is lost to an area/project. For example, jobs taken by residents from outside an area. Also used to describe the money departing from an economy through the supply chain. The new economics foundation has advocated that this can be reduced by re-generating local economies from within and taking advantage of the resources a community already possesses.
- Learning Cities
The term learning cities refers to a new approach to urban development where learning is a key tool for social inclusion and urban generation. Learning refers both to individuals (usually life-long learning) and institutions (awareness to innovation), and strategies are developed through active partnerships and networking between cities, towns and communities.
- LED Forum
A coordinating mechanism set up to achieve the streamlining and improvement of local economic service delivery. LED Forums typically include representatives of government, private sector and civil society entities with an interest in the given locality.
The process of using initial funding to secure further funds, usually from the private sector, in order to complete a programme or project.
An American derived term used to describe public space and underpin the drive to improve it. Liveabilityi focuses on the local environment.
- Local Economic Assessment (LEA)
Effective LED strategies must be closely tailored to fit the specific local economic conditions and potential sources of competitive advantage in the local area. This can be achieved by making a thorough assessment of the area's competitiveness the starting point of any economic strategy. Only with a strong understanding of the locality's current economic structure, capacity, strengths, and weaknesses is it possible for areas to put opportunities and challenges into context, develop a clear development vision, and prioritise strategic activities for growth. The effective local economy assessment that follows will help to ensure a better LED strategy that creates jobs, spurs economic growth, and fosters social development (provided by Cities Alliance).
- Local Economic Development (LED)
The purpose of LED 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 (Definition provided by the World Bank).
- Local Economic Development Agency (LEDA)
An agency whose goal is to help develop and support economic growth within a specified city, region or state by providing necessary resources and assistance.
They are public, private or most often a public/private partnership, and their purpose is to promote economic growth and development in the areas they serve. They accomplish that by encouraging new businesses to locate in their area, and to do that, they've gathered all the statistics and information needed for firms to make a decision.They also often provide services to firms locating in the region including local information, market information, training, business development services, financing or linking to other service providers.
- Local Economic Development Network
An LED Network, such as LEDNA, is a social network for LED policy makers and practitioners to work together and learn from each other. It is a forum for the sharing of LED knowledge, resources, learning and contacts, which can help improve LED policy and practice.
- Local Government
Local governments are the closest sphere of government to the community and play a key role in meeting their social, economic and material needs. They assure stability and are expected to “structure and manage” the LED process. Local governments play a critical role in supporting other local stakeholders to promote economic development by building partnerships between the public sector, communities and businesses.
- Local Urban Knowledge Arenas (LUKAs)
Emerging concept introduced by the Swedish International Development Agency during the World Urban Forum in 2007. It argues that cities can be breeding places for innovative solutions in addressing challenges such as urban development and poverty as well as adapting to fast track changes constantly unfolding in a an ever urbanising world. Urban knowledge generation and dissemination is viewed as key to the realisation of this potential. But there is a concern that conventional methods, such as academic research or classroom training, may not be appropriate. In this context, the concept of Local Urban Knowledge Arenas (LUKAs)i is being explored as a form of knowledge management that provides a flexible way of generating, accessing, sharing and applying demand-based knowledge for local development.
- Market Economy
In a market economy, the market forces of supply and demand constitute what is produced, the quantity in which it is produced, and the price set. Trading of goods and services takes place in a free market. The opposite to this is a planned economy, where state intervention decides on what is produced, the quantity of production, and decides the prices.
- Market Failure
Market failure exists when the production or use of goods and services by the market is not efficient. Market failures are often associated with non-competitive markets, externalities or public goods and services. The existence of the market failure is often used as justification for government intervention.
- Master Plan
A document that describes, in narrative and with maps, an overall development concept including both present land use as well as future development plans.
A Mayori can either be the elected head of a city, town, or other municipality or a titular head of a municipality that is administered by a city manager.
- Microfinance Institution (MFI)
MFIs provide financial services to low-income clients who usually lack access to banking and related services. It is an opportunity for the “unbankable” to become active in the local economy.
- Monitoring and Evaluation (M&E)
Monitoring and evaluation are project cycle management stages, applicable to any LED project. Monitoring is the continuous assessment of project results throughout its life. While evaluation is a one off assessment of the project's impact at a specific point in time.
- Mixed Use Development
This is a development that combines residential or transient accommodation uses with commercial and/or office uses as well as recreational uses and which contains an element of open space in order to ensure a sustainable community.
- Municipal Enterprise
Municipal enterprises are businesses owned by local public authorities that provide services to local populations and often revenue for the local authority.
The LED process is jointly driven by stakeholders of the private sector, government and the community. It is therefore a key principles of LED to encourage and support networking and collaboration between businesses and the public sector as well as civil society.
In many developed countries, successful local or regional development is based on policy networks that consist of various government agencies, the private sector, trade unions, NGOs, and other players. Functioning networks in general have been seen as a success factor of development in general, since they seem to be the best organisational form to unleash creativity, innovation and the social coherence. They do require a certain amount of social trust though that is missing in many communities. Networks are also the best organisational form for collaboration and problem solving in cases where government cannot enforce compliance, as is the case of LED, which has to rely heavily on the voluntary initiative of the private sector. The functioning of networks is highly dependent on good governance.
- Non Governmental Organisation (NGO)
An NGO is any non-profit, voluntary citizens' group which is organized on a local, national or international level. Task-oriented and driven by people with a common interest, NGOs perform a variety of service and humanitarian functions, bring citizen concerns to Governments, advocate and monitor policies and encourage political participation through provision of information. Some are organized around specific issues, such as human rights, environment or health. They provide analysis and expertise, serve as early warning mechanisms and help monitor and implement international agreements.
Objectives are statements of attainable, quantitative and qualitative achievements that help accomplish aims.
- One Stop Shop
One-stop business service centers are facilities where business persons can go to obtain the licenses and permits needed to start-up, operate, and expand their facilities. These centers improve the local business environment while reducing the number of separate agencies and offices a business must apply to for various licenses and permits, saving public and private time and financial resources.
- Opportunity Cost
The revenue forgone by choosing one use of money and resources over another. The opportunity cost of investing in the stock market is the interest that the money could have earned while sitting in the bank.
The wider effects or impact of a project within a target community e.g. increase in employment aspirations among local people.
The measurable or quantifiable results of a project.
Outsourcingi in the public sector is when a public, private or third sector organisation is contracted to provide a service previously run by a public sector body. Outsourcing in the private sector is when a company contracts another to provide a service or produce a good previously produced by the company.
- Participatory Appraisal of Competitive Advantage (PACA)
The PACA methodology was developed by Jörg Meyer-Stamer of the international Consultancy Firm Mesopartner and has been successfully applied in a number of developing and transition countries. The methodology combines competitiveness concepts with the principles of rapid / participatory appraisal in order to identify quickly implementable activities to stimulate a local economy. It is not aiming at grand strategies and big projects, but rather at practical approaches to remedying local market failures which stand in the way of business growth. The process should take no more than two weeks, involving a team of 4-8 local stakeholders and a series of consultations with public, private and civil society sector actors.
PACA differs from other LED process approaches in that it does not start by producing an LED strategic plan. Strategic planning is seen as a comprehensive effort which demands enormous resources and takes a lot of time. It also does not give much latitude for learning-by-doing in implementation. If a community is doing local economic development, it may after some time decide that it would be useful to think more strategically, and to have a strategic plan. So in the case of PACA, strategic planning is an outcome of a LED initiative, not the start.
Manuals and materials on implementing PACA have been produced by Mesopartner, who undertakes training and sensitising on the methodology.
- Participatory Development
Participatory Developmenti seeks to engage local populations in development projects. The approach has taken a variety of forms since it emerged in the 1970s, when it was introduced as an important part of the "basic needs approach" to development.
Different organisations and individuals working together with a common aim and objective.
- Private Sector
LED is about bringing the right actors together in the right pattern of roles, which is based on the specific skills and capabilities of the different actor groups. Local businesses and entrepreneurs represent the "economic brain and engine" of the area. The private sector (businesses, chambers and business membership/trade/professional organisations) can articulate their interests and commit to the creation of income and employment.
- Public Private Partnership
These are partnerships between the public and private sectors for the purpose of delivering a project or service traditionally provided by the public sector. The term can cover anything from the building of a Private Finance Initiative hospital to a contract for a business to collect domestic rubbish.
- Public Procurement Decentralisation
It is the transfer of authority for public sector procurement of goods and services from national to sub national levels of government. The key arguments put forward in support of centralised procurement include:
• Better value-for-money (price and quality) of procured supplies, services and works through increased purchasing power of the centralised agency, including through reduced government overheads;
• Increased concentration of procurement expertise, better delivery of training and more focused performance management of procurement staff; and
• Greater standardisation of technical requirements, procurement contracts and transactions, management controls and reporting to support greater transparency of government operations.
The key arguments put forward in support of decentralised procurement include:
• Reduced scope for large scale corruption and mistakes through affecting large volume purchases that result in overspending;
• Closer matching of supplies, services and works delivered to the requirements of end-users (both government agencies and citizens); and
• Greater possibility for small and medium enterprises to successfully compete for government tenders.
(Provided by OECD)
Qualitativei methods produce information on the views and perceptions of individuals, stakeholders or communities. These include focus group discussions,semi-structured interviews, participant observation, etc.
- Quality Upgrading
Relates to the concept of competitive advantage where localities compete on quality and not just price. LED strategies are increasingly focusing on helping local businesses to upgrade the quality of their products towards greater productivity, exports and revenue for the firms as well as the economy as a whole. Interventions include providing firms with market information, quality standards information and services to improve product quality.
Quantitativei methods tend to be based on statistical data and produces numerical results. These include surveys and econometric studies.
- Red Tape
“Red Tape” are all unnecessary bureaucratic hassles and excessive regulations that impede the development of businesses. Improving the Business Climatei is a crucial element of successful private sector promotion at the local and regional level. Only in the context of a favourable business climate can the local economy reach its full potential. LED initiatives will only show very limited and isolated effect on the local economy if they are designed within a disadvantageous or even hostile local business climate.
One of the most important elements of a favourable Business Climate is the absence of ineffective and time-consuming regulations and rules, administrative processes and procedures. These rules, regulations and procedures, which produce unnecessary costs for doing business, - the so-called “Red Tape” -, characterize public-private sector interaction in many localities in Developing Countries. The reduction of Red Tape on the local level is a main approach to LED.
Regenerationi is used to describe the process of improving the economic, physical, social, cultural and environmental look and prospects of an area. It often describes activities that reverse economic, social and physical decline in areas where market forces will not do this without support from government.
- Revolving Loan Fund
Collection of funds from which repayments of outstanding loans are continuously recycled and used to make loans to other businesses.
- Small and Medium Enterprises (SME)
There is no definitive delineation between a small and medium sized business. As a general reference, small is often from 5 to 20 employees, medium from 20 up to 200. Businesses with fewer than 5 employees are usually called micro-enterprises. This is only a guide, however.
- Social Capital
The features of social organisation - between firms, organisations or other members of society - such as networks, norms and trust that facilitate coordination and cooperation for mutual benefit.
- Social Entrepreneurship
Businesses with primarily social objectives whose surpluses are reinvested for that purpose in the business or the community. Social entrepreneurs engage with a wide range of business and organisational models both not and for-profit, but the successes of their activities are measured first and foremost by their social impact.
- Soft Infrastructure
Soft infrastructure relates to the less tangible aspects of LED such as education and training provision, quality of life infrastructure such as park, leisure and library services, housing, business support, business networking and financing services etc.
- Spatial Planning
Spatial planning refers to the methods used by the public sector to influence the distribution of people and activities in spaces of various scales. Discrete professional disciplines which involve spatial planning include land use planning, urban planning, regional planning, transport planning and environmental planning. Other related areas are also important, including economic planning and community planning. Spatial planning takes place on local, regional, national and inter-national levels and often result in the creation of a spatial plan.
- Special Economic Zone (SEZ)
An SEZ is a geographical region that has economic and other laws that are more free-market-oriented than a country's typical or national laws. "Nationwide" laws may be suspended inside a special economic zone. The category 'SEZ' covers a broad range of more specific zone types, including Free Trade Zones (FTZ), Export Processing Zones (EPZ), Free Zones (FZ), Industrial parks or Industrial Estates (IE), Free Ports, Urban Enterprise Zones and others.
Usually the goal of such a structure is to increase foreign direct investment and generate employment creation and revenue generation for the locality.
The term sprawl, as used by land developers, planners and governmental institutions, refers to the change in trends of land usage, and the change in demographics across given geographies. Sprawli is generally defined as the increased development of land in suburban and rural areas outside of their respective urban centers. This increased development of real estate in the outskirts of towns, villages and metropolitan areas is quite often accompanied by a lack of development, redevelopment or reuse of land within the urban centers themselves.
A group or individual that has an interest in an initiative, project or activity and its outcomes.
- Start-Up Capital
Funds that help nascent enterprises acquire space, equipment, supplies, and other inputs needed to launch a business.
LED strategies present an alternative to traditional top-down and sectoral policies for economic development and allow cities and their wider economic regions to take greater control of their economic development processes. LED strategies place a strong emphasis on:
• Integrated territorial approaches. The point of departure for LED strategies is a thorough understanding of all sectors of the local economy and a focus on how the business-enabling environment can be improved in order to retain current economic activity and attract new investment. LED strategies encourage economic activity by addressing specific economic conditions and sources of competitive advantage, supporting firms and employment opportunities to make them more resilient in the global economy.
• Strong governance and policy coordination. It is critical that LED strategies are locally initiated, owned, and managed. This entails a great degree of policy coordination at the horizontal and vertical levels and requires new practices for transparent and accountable governance across a range of development partnerships and coalitions.
• Participatory policy development. Local-level policy development enables opportunities for fuller participation by partners such as the private sector, institutions, and civic groups. When stakeholders participate, their contributions to strategy design increase ownership, improve long-term impacts, and facilitate partnership building (provided by Cities Alliance).
- Supply Chains
The products and processes essential to the production of a good or service. For example, to produce frozen fish, the supply chain inputs will extend from fish catching, handling, processing, and freezing to packaging, storing and distribution. These are all elements of a supply chain. Integrated LED strategies will try and capture as much as possible of the higher value end of the value chain in their area. In this case fish processing, packaging, storing and distribution will be adding value and therefore be seen at the higher end of the value chain.
A process which ensures the long-term survival of an organisation, programme or geographic area.
A tool often used in the LED planning process to assess a locality's Strengths and Weaknesses, factors from within a community that can be changed, as well as its Opportunities and Threats, factors from outside that cannot be changed.
- Systemic Competitiveness
The concept of systemic competitiveness was developed by several LED practitioners (Esser et al 1996) and provides a heuristic framework to analyze the factors that stimulate or hinder dynamic industrial development. It can be applied to both industrialized and developing countries. The key assumption is that competitive advantages emerge only in part due to the invisible hand of the market, i.e. the activities of atomized economic agents, and are to a significant extent created by deliberate collective action.
There are two elements which distinguish the concept of "systemic competitiveness" from other analytical frameworks concerning the factors that determine industrial competitiveness:
It entails four different levels of analysis (the meta, macro, meso and microlevels). In addition to the micro level of firm activities and the macro level of national economic policy, the meta level addresses such factors as the capacity of a society for social integration and its ability to formulate and implement strategies. The meso level concerns the supporting structures, including sector-specific policies which encourage, supplement, and increase the efforts at the company level. It brings together elements of industrial and innovation economics and industrial sociology with the discussion in political science on governance based on policy networks.
The international consultancy firm Mesopartner has various materials on how to analyse systemic competitiveness for different purposes.
- Tax Incentives
The use of various tax relief measures such as tax exemptions, tax credits or tax abatements to recruit and attract businesses to a community or help local businesses expand.
Toolsi for LED can make the life of development practitioners easier and improve the quality of development work. Specialised tools and instruments help to structure processes and reduce the uncertainty for development practitioners. They provide a framework for specific work tasks, such as running a workshop with stakeholders that has a specific focus and purpose. The practitioner can adapt and change the tool to his or her needs in a specific situation. But the availability of a tool saves a lot of time in conceptualising a given task and it reduces the risk of failure.
It is a principle of LED to make use of local resources. Many communities are proud of their beautiful landscapes, mountains, waterfalls or heritage sites. But can a pretty landscape alone attract tourists to a location? Tourists have various needs which have to be considered when developing tourism potentials e.g. good quality accommodation, restaurants and entertainment. Tourismi development and LED follow the same objective for creating income and job opportunities and can become complementing principles.
- Under Employment
Includes all persons whose skills, education or training qualified them for a higher skilled or better paying job than they presently hold. It also includes persons only able to find part-time rather than full-time work in their fields.
- Urban Development
Urban, city, and town planning and development integrates land use planning and transportation planning to improve the built, economic and social environments of communities. Regional planning and development deals with a still larger environment, at a less detailed level. Urban development can include urban renewal, by adapting urban planning methods to existing cities suffering from decay and lack of investment.
- Urban Regeneration
The resolution of urban problems, which seeks to bring about a lasting improvement in the economic, physical, social and environmental conditions of an area.
The shift of a country’s population from rural to urban areas.
- Value Added
Revenue created by the processing of resources; the amount of revenue is greater because those resources have been processed.
- Value Chain Development
The value chain describes the full range of activities which are required to bring a
product or service from conception, through the different phases of production
(involving a combination of physical transformation and the input of various producer
services), delivery to final consumers, and final disposal after use.
Value Chain Developmenti efforts aim to create wealth in poor communities and to promote equitable economic growth by linking micro and small enterprises into global, regional and local value chains. Value chain development programmes usually target sectors where the poor are concentrated agriculture, natural products, and labour-intensive industries. The approach then works to improve the competitiveness of industries (or value chains) in which significant numbers of small firms participate while addressing the constraints that hinder their potential contributions to and benefit from value chain growth.
- Venture Capital
An investment made where there is a possibility of very substantial returns on the investment, as much as 40 percent, within a short period. It is usually invested in dynamic, growing, and developing enterprises, not in start-ups.
- Workforce Development
Workforce development concentrates on the skills, knowledge and behaviours that are needed by the workforce to deliver services both now and in the future and how these will be resourced. Learning and development opportunities are detailed in workforce development plans which meet identified needs for new or different skills, trainee opportunities, talent management schemes, professional development, career pathways, etc.
Workforce development interventions are often a key cornerstone of LED strategies due to the positive effect on skill improvements on the local economy as a whole.
- Working Capital
Funds or goods used to meet day-to-day operating needs of a business.