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Session Five and Six - Workbook 

Module: Local Economic Development

Local economic development: A five stage strategic planning model Stage 1: Organizing the effort Stage 2: The competitive assessment Stage 3: Strategy making Stage 4: Strategy implementation Stage 5: Strategy review

Stage 1: Organizing the effort
Establishing a sound organizational basis for LED planning is the first stage in the process.

Establish an internal group
The first stage in the process is to establish an internal group to oversee the process. This group should sit within the local authority and include people from across the various local authority departments that are likely to have an interest in LED and the local economy. Membership should be at both Elected Member and at officer levels. Develop terms of reference and a formal reporting system for the group.

Managing and engaging your stakeholders
Generate a list of potential stakeholders. These are organizations/individuals in the public/private and not-for-profit sectors that could be useful in the local economic development process. By involving stakeholders you are likely to develop a better LED strategy as there will be input from specialists, and special interest groups. You may also be able to persuade stakeholders to support you in your efforts, e.g. help in research and information gathering and project implementation.

Establish a plan for engaging all stakeholders in the local economic development process, both internal and external. There are many ways to ensure that stakeholders become involved and remain involved in the process. These usually cost more in time than in money. We shall revisit how to select and involve stakeholders later in this module.

Establish an ad hoc/steering committee
Establish an ad hoc/steering committee to include all key internal local authority and external stakeholders. The local authority will normally provide institutional support for this partnership, especially at the start of the work. This is mainly because other stakeholders are reluctant to contribute resources ahead of seeing some direct benefit. From a local authority perspective, providing the institutional support does give a degree of control that may well be needed in the early days of establishing LED strategies and partnerships. In the future there may be opportunities to formalize the working relationships through formal public/private sector partnerships.

Stage 2 The Competitive Assessment
This stage involves research and information gathering from internal (local authority wide) and external public, private and not-for-profit sources. Identify needs, gaps and sources together with associated data storage and analysis systems. Don't worry if you don't have much information to start with - use what you have and build from there. Share this information with stakeholders. This is an ongoing, never-ending activity.

Care is needed in local economic development strategic planning to undertake a very broad analysis at this stage as each of the four areas (strengths, weaknesses, opportunities and threats) matter equally for local economic development strategy making.

You will need information at a local level, including comparative information. Also you will need information about the competitive positions of towns and cities in your region, as you will be both competing and collaborating with them.

The following is a listing of the types of information you will find useful to collect. Don't be put off by its length, whatever you have will be a good start, and build from there. Some of the essential data you will to start with is some information on what formal and informal businesses operate in your area and the skills and availability of the local workforce. From this you can build more information into your planning processes.

Local Economic Development Information[2]
Human Resources	Population : By size, age breakdown, growth rate, projected growth rate, household size, population density. This could include a poverty mapping exercise to identify various demographic characteristics by wards in the city. Employment : Employees in employment by industrial activity, compare with region and nationally, changes over time if possible(temporally) Age structure of employed and occupation breakdown of employed and unemployed Structure of employment (full/part time/male/female) compare nationally/temporally Average gross weekly earnings by gender and full and part time. Unemployment figures, by numbers, age, duration Numbers and other information on people in the informal sector. Education: Numbers and types of schools, numbers of teachers (full time equivalent) and class sizes Further and Higher Education establishments by type and numbers attending. Educational attainment levels by numbers and types. Training: Numbers and types and age groups of technically qualified individuals, and those going through training programs. An assessment of skill/occupational shortages/oversupply.
Economy:	Numbers and sizes of firms, broken down by sector, numbers of full time equivalent employees, in time series if possible. Number and type of recent (say last 10 years) firm closures, by size, sector and date. Numbers of inward investments, foreign and domestic, both greenfield and portfolio investment by employee size, sector and date. Numbers of new business start ups, by size, sector/activity and longevity. Numbers of companies that export/to where/what by sector/company size. Top 50 (or so, this is a good number but may be hard to achieve on the ground) companies by size/ employment or turnover by sector and named. Business tax income Rental/purchase costs for vacant industrial and service sector units, by time series and size groupings. Vacancy rates of industrial and commercial space by size, location, absorption rates, Port/Airport/Rail cargo/passenger statistics.
Infrastructure	You will need to develop an understanding of the strengths and weaknesses your area offers in terms of hard and soft infrastructure provision. The soft infrastructure of the city will include its 'Business Welcome". Areas that need to be addressed here include: Taxation of businesses Amount of red tape Ease of getting through red tape Supporting business networks, such as Chambers of Commerce. Local authority economic development support Access to funding· Quality of life factors
Beyond your City:	In developing your city's economic development strategy you will need to look at what neighboring cities are doing in terms of their local economies, how they are competing with you and how they are or could collaborate with you. You need to select your strategies with as much knowledge as you can on what these cities are doing and planning to do. The national government and even the regional government may also be providing both opportunities and threats too, so look there too to identify issues.

Stage 3 Strategy making
There are several steps in strategy making:

Creating a vision
Based on the information available, a vision should be agreed by all stakeholders. The vision should be a description of the stakeholder's preferred economic future of the city. It is not always fully achievable but it does give your city a clear sense of what it is aiming to achieve. It is on the basis of this that goals, objectives, programs and project plans will be developed.

Developing goals
Goals point more specifically to where you want to be. Goals are much more descriptive and concrete than a vision statement. They should be based on the competitive assessment undertaken to date.

Developing specific objectives
Objectives are even more specific. They should be time bound and measurable.

The aim is to leverage strengths, overcome weaknesses, exploit opportunities and deal with threats.

Developing programs and projects to achieve the objective
Programs and projects are the specific actions your city will take to achieve the vision, goals and objectives. Attention should be given to identifying a broad base of projects, some of which should provide 'quick-wins' for the strategy. These projects should include agreed actions for all stakeholders (not just the local authority) in so far as they contribute to the economic vision of the city.

The example on the following page shows one part of an LED strategy and demonstrates the links between goals, strategies, programs and projects.

 

Example of a LED Plan Vision " That this city will become globally competitive by 2020". Goals: To diversify the economic base of the city To become a tourism center To improve the built environment of the city To become the most attractive city in the region for foreign direct investment o become a more equal society through improved access to work for all the community. For each goal a series of objectives is formulated. Consider Goal 3 as an example: Goal 3: To improve the built environment of the city Objective 1: To utilize and develop all brown-field sites over one quarter of an acre by 2010 Objective 2: To adopt, within the next six months, planning policy guidelines to ensure that historic buildings more than 100 years old may not be altered or demolished without prior local authority consent. Objective 3: To ensure that all new applications to build industrial and commercial office space meet local, national and international standards for safety, environment and so on. These objectives should be time bound and quantifiable, some should be short term (for early wins), some longer term. Then, for each objective there should be a program of projects and activities. These need to be selected carefully using selection criteria, which we will discuss in the cluster workshop.The result could look like this, For example: And then if we look at one objective only as an example: Objective 1: To eliminate all brown-field sites over one quarter of an acre by 2010 Program: Brownfield Remediation Program Project 1.1: To develop a register of derelict brown-field sites in the city and establish ownership. Project 1.2: To initiate a lobbying effort for national government and other funding to remediate the sites. Project 1.3: To prioritize the sites according to the severity of their pollution and prominence in the city. Project 1.4: To review local and national legislation to ensure "polluter pays' legislation is in place Project 1.6: To develop and implement an approach strategy to ensure landowners remediate their sites and that they be encouraged to bring them into beneficial use. Once the projects have been identified, prioritized, financed and a responsible person/group identified, detailed action planning and implementation can take place. Project 1.1 : To develop a register of derelict brown-field sites in the city and establish ownership. Action Plan: ideally these will be produced on a standard pro-forma including the following information: Name of Project Short Description of Project Itemized actions/by date Cost and budget profile Responsible project manager, and responsible person for the whole objective/program Expected outputs Monitoring progress

Stage 4 Strategy Implementation
Program and project implementation methods and processes should be put into place. Key issues to consider here are:

• who takes responsibility for each project?
• what are the targets in terms of outputs, time and funding?
• what will be the reporting structures (including to stakeholders)?
• what are the performance measure, monitoring and evaluation systems?

Program monitoring methods and processes need to be put in place to ensure progress occurs with each project. Individuals should be allocated responsibility for this task. The ad hoc steering committee has a key role to play here.

Stage 5 Strategy Review
Reviewing an economic development strategy is normally done on an annual basis and usually in conjunction with the local authority's financial planning cycle.

Questions that might be considered include:

• Is the SWOT analysis still valid or have circumstances changed? Do we have more information to hand that changes our view of the issues?
• Are changes required in the vision, goals or objectives to reflect changing circumstances?
• Are projects achieving what we hoped they would achieve? If not, what should be done?
• Are we meeting the performance indicators we established? If not, why not? What do we need to do? Do we change the indicators? Seek more action on projects? Change the nature of projects?

Your LED strategy should be an evolving plan that changes continuously to respond to your ever changing competitive environment.

3.2 How to involve stakeholders - why bother?

Local economic development is a perfect example of how involving stakeholders can bring enormous benefits. It can also bring a few problems!

3.2.1 Stakeholders

The following table list potential stakeholders of LED in a city. Stakeholder management implies a recognition that all stakeholders are important and that some will require more attention than others. It must determined who the key stakeholders are, what their interests are likely to be and the best way to involve them in the LED activities.

Local Economic Development: Possible Stakeholders
Public sector	Private Sector	Community sector
Local government State government Health Authority Transportation Authority Institutions of Higher Learning Education Board/Authority Utilities	Chamber of Commerce Board of Trade§ Business Associations Large Corporations SME representatives Private developers News media Professional associations Higher learning establishments Utilities Town center improvement groups etc.	Individuals Neighborhood groups Church groups Youth groups Environmental groups Voluntary service groups Historic societies Cultural and arts groups Educational groups Groups representing minorities

3.2.2 Benefits of stakeholder participation

First, the negatives. Involving stakeholders isn't always easy:

• It costs time and effort to involve stakeholders in planning strategies
• It costs money
• It can cause arguments between different stakeholder interests, but also between various stakeholders and the local authority.
• There is a constant risk of stakeholders serving self-interest only.

But the benefits far outweigh the costs. Benefits include:

• Stakeholders bring specialist knowledge and different perspectives making the planning process more robust
• They bring professional, financial and physical resources to the table
• They legitimize the process by being involved
• They forestall problems by being engaged in the process
• Business partners are likely to know much more than local government representatives about the true state of the competitive position of the community.
• By involving higher tiers of government, strategies are likely to benefit from their support (including financial)
• Local community representatives are likely to be well informed about local problems and opportunities that could be addressed by the LED strategy.
• By involving communities, it is likely that a volunteer effort could be established to support LED implementation programs.

The list could be longer. Involving stakeholders appropriately will normally bring dividends at multiple levels, including politically

Activity 5 Consider your city. Who are your key stakeholders in LED?List them in the table below. My city: Local Economic Development: Possible Stakeholders Public sector Private Sector Community sector

3.2.3 Tactics for managing stakeholders

In order to sustain the interest of stakeholders and to maximize their utility to the LED effort careful thought should be given to how to engage stakeholders. This needs to be done on multiple levels, both formal and informal. It is good if elected officials are aware of key LED stakeholders so that they can be approached when undertaking day to day city activities.

Some tactics include:

• Including stakeholders on relevant committees and sub-committees
• Phoning or meeting stakeholders on a regular basis
• Surveying stakeholders
• Calling focus group meetings (i.e. holding discussions around a certain topic)
• Holding scheduled stakeholder meetings, at least 4 times a year and sending out minutes
• Sending out newsletters
• Developing a web page, perhaps with a stakeholder intranet
• Introducing a telephone hotline.
• More sophisticated partnerships could also review the input of different partners into the strategy and implementation plan.

At some point discussion should occur over whether targeted stakeholders only should be invited to meetings or whether meetings should be open to everyone in the city (this is the most open way of conducting business).

3.3 What are the delivery mechanisms/options?

Three different organizational models normally deliver local economic development strategies: public sector, public/private sector or private sector (or a combination of these). As communities start LED activities, most broad-based, city wide, comprehensive LED strategies are delivered through public/private sector partnerships that are strongly driven or led by the local authority.

It is more common to see the private sector take the lead when specific targeted programs are being initiated. For example, the private sector may be keen to manage initiatives aimed at improving the vitality and viability of town centers or specific neighborhoods, or initiatives targeted at groups that are disadvantaged or specialist business development initiatives. For example, shop owners and restaurateurs are often active in developing town center improvement initiatives. Community groups may well lead initiatives to improve the health or housing conditions of a target group of disadvantaged individuals. Export clubs are often initiated by businesses, although they can also be initiated by the public sector.

For communities establishing LED strategies for the first time, there are many organizational issues to consider and it is important not to waste too much time on these. Developing public private partnerships is discussed in detail in another module in this program.

Whichever model is chosen, public, public/private or private, it is clear that the most successful approaches are those that include a broad range of active stakeholders and a strong and respected leader. The likelihood will be that early comprehensive, city-wide LED strategies will be influenced the most by the groups that have the most resources available for funding. This is usually perceived to be the local authority.

3.4 Funding a local economic development strategy

Funding LED strategies is often very difficult, one of the reasons for this is that local authorities often do not have a statutory responsibility to deliver LED services. So when it comes to budget making time LED is competing for scarce resources with departments such as housing, health and education. Sometimes, it is difficult for elected officials to justify spending scarce resources on LED efforts because short time horizon responses (such as improving access to piped water) are often perceived as more important than the LED initiatives that often have longer time horizon, and whose benefits may not be immediately apparent.

When developing the LED strategy, the local authority and the stakeholders should ensure that they take into account their respective skills and competencies when deciding whether to provide services directly or to enable others to provide them on their behalf. Good practice clearly indicates that specialist advice to businesses should not be provided by the public sector, nor should micro and small business grants and loans. The public sector has a strategic role to play in these areas, but good practice indicates that they should encourage the provision of these services rather than provide them directly.

It is incumbent on Mayors, elected members and city managers to ensure the LED agenda and the likely medium and longer term benefits for all in the community are recognized. This is further justification for stakeholder participation in the LED strategy making process.

All LED strategies should have a budget attached to them. Costs of all initiatives need to be factored into these budgets. In selecting particular programs and projects, care needs to be taken to ensure that funds are available for the entire length of each project as they are likely to span several financial years. This adds further to the complexity of budgeting. Forward or exit strategies should always be in place.

There are normally several sources of funding for LED initiatives.

• local authority revenue raised from usual sources including property taxes and user fees
• sale or renting of local authority owned industrial or commercial buildings and land
• national and state government intergovernmental transfers
• international donor grants and loans
• private sector funding such as corporate donations
• foundations, especially for environmental improvements, human resource initiatives and poverty alleviation.

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