Over the past few decades, there have been a number of developments in the sphere of Local Economic Development. This has mainly been a result of an improved comprehension of the dynamics of the concept and tools related to the process. There has been an increased growth in research focusing in the particular field which has led to innovations.
Consequently, a number of different approaches regarding Local Economic Development have emerged both internationally, in Africa, and in South Africa. In terms of these new developments, the approach or approaches adopted by municipalities is solely directly dependent upon particular assumptions about local economies and the impact of local authorities therein. In this section the various approaches (Traditional, Entrepreneurial-
competitive, Urban and Rural efficiency, and Human Resource Development, Community- Based and Progressive Approaches) to Local Economic Development will be broadly discussed.
2.6.1. Traditional Approach
Blakely (2010) argues that traditional approaches to Local Economic Development have largely been entrenched in principles of silo planning and development, where an emphasis has been placed on attracting large manufacturing companies. Consequently, this has been done to the detriment of the local economic climate. It leads to poor working conditions, causing health problems to the local residents that work in such conditions while simultaneously compromising the quality of life in the area. Many factories release lethal pollutants as a by-product of their processing and in rural areas. The enforcement of regulations related to atmospheric, mineral, and ground and water resources is weak since their locality is outside the main stream of urban development where regulatory process are more stringently applied.
Blakely (2010) and DPLG (2006) further argue, that traditional approaches assert that the key to local economic prosperity and development is through attracting (primarily manufacturing) investment. This is achieved by offering incentives such as concessions in the form of tax breaks, cheaper land prices, reduced rates, and even direct financial rewards in return for locating in the area. Attracting business and trying to stimulate economic development through such means has of late proven inadequate in countries where labour unions and protection of labour rights is strong. The main proponents of traditional approaches argue that investment creates jobs and provides taxes, which can be used for service provision. However, the sustainability of Local Economic Development developed on the basis of this approach has in many instances failed and proven inadequate to eradicate challenges that it ought to solve.
2.6.2 Entrepreneurial-Competitive Approach
The entrepreneurial-competitive approach is characterised by principles that advocate for the identification of competitive opportunities and strengths that can be exploited to gain
comparative advantages in relation to other neighbouring areas. Local authorities are the main custodians of this approach as they perceived to be the main drivers of development within their area of jurisdiction. They play a proactive role in identifying actual or potential growth sectors and in directly supporting local businesses through research, loans, grants, consultancy, premises, technical infrastructure and so on (Blakely, 2010). In many municipalities, a SWOT analysis is carried out, in a quest to gain a comprehensive understanding of the factors that have the capacity to directly or indirectly impact positively or negatively on the achievement of sustainable Local Economic Development. DPLG (2006), argue in line with the latter, postulating that municipalities have engaged in research to identify the particular economic strengths of their locality. Some have even produced a local industrial strategy. Blakely (2010) argues that entrepreneurial-competitive approaches place emphasis on the importance of local comparative advantages, whereby small businesses have a crucial role to play in the creation of job opportunities.
2.5.3. Urban and Rural Efficiency Approach
The efficiency approach to LED places an emphasis on the need to create an investment climate which promotes both pro-poor and pro-growth development that yields sustainable and tangible benefits for the locals. The Department of Cooperative Governance formerly DPLG (2006) notes that the efficiency approach proponents argue for a strategy where local authorities should craft innovative ways that will raise productivity. This will be achieved through limiting inputs and maximising yields. Decreasing both the costs of living and of doing business in the area is viewed as one of the strategies that may have the potential to attract more investors. The department maintains that some proponents have argued that efficiency can be best achieved by minimising government intervention, through cutting taxes and service charges, and by privatising services where possible. Other advocates believe that strong government planning is the key to achieving efficiency. Consequently, this argument has particular relevance in South Africa, where the Apartheid’s government spatial planning has led to enduring inefficiencies (DPLG, 2006). The compaction and re- engineering of space is one of the innovative strategies that are being used in the post- apartheid era South Africa. It is a strategy which attempts to redress the past, bring people and jobs closer together while simultaneously reducing travelling times and costs.
2.6.4. Human Resource Development Approach
Human capital, empowerment and skills development are the main pillars of this approach that is viewed as a critical element to the sustenance of Local Economic Development. The challenge of low or mediocre skills, especially among the poor, is arguable one of the key constraint facing potential investors and act as a barrier to the realisation of sustained development especially in the countryside. Furthermore, Blakely (2010) argues that poor people are unlikely to benefit from whatever new jobs there are unless they have appropriate skills. The human resource development approach can be achieved through encouraging local authorities to either support the establishment of local training bodies to uplift local skills or focus the activities of national training agencies in the local area to reach a similar outcome (DPLG, 2006). Additionally conditions can be imposed on companies doing business within the municipal or local area boundaries requiring that investors provide a minimum amount of training for their employees. This would form part of their community responsibility or skills development contribution.
2.6.5. Community-Based Approaches
The community-based approach places an emphasis on the empowerment of destitute groups and targets mainly the marginalised people. The Department of Cooperative Governance formerly DPLG (2006) writes that community-based approaches emphasise the importance of working directly with low-income communities and their organisations. This approach is closely aligned to the principles and framework of pro-poor growth development, as its primary mandate is to uplift the socio-economic standards of the poor.
Despite the good intentions set to be achieved by this approach, experience has shown very modest results, unless there are stringent gate-keeping measures in place. Blakely (2010) confirms this point, arguing that investment is all very well, but the benefits are unlikely to accrue to the most needy unless they are active participants in new development, with the capacity to plan, monitor and enforce wider benefits. Government departments argue that for such approaches to yield the desired results there need to be sufficient support for institutions such as Community Development Trusts (CDT's) and Community-Controlled Enterprises (CCE's). (DPLG 2006) Local credit unions or development corporations also need to be supported since they are the key intuitions for the success of this approach.
2.6.6 Progressive Approaches
The rationale behind progressive approaches is to try and eradicate inequalities. This can be achieved through adopting planning gain principles, where planning permission in profitable areas is linked to investment in more impoverished neighbourhoods, such as rural areas and in townships (DPLG, 2006). Progressive approaches are even more relevant in the case of South Africa, where a reverse principle was used and engineered through discriminatory policies of Apartheid, leading to a number of development discrepancies. Blakely (2010) argues that such approaches are rooted on principles that promote mutual benefits.
Investors need to invest a portion of their profit in the local area, in a quest to stimulate development and improve infrastructure. Both DCOG formerly DPLG (2006) and Blakely (2010) confirm that progressive approaches explicitly aim to link profitable growth and redistributive development.
Blakely (2010), highlights a number of examples of a progressive approach, such as that in cases where financial institutions open a branch in an area, it is a requirement that they must invest a certain proportion of their turnover in local small businesses. However, he argues that in situations where banks are reluctant to even open branches in low-income areas (for instance in rural areas and in townships), municipalities have introduced strategies to pseudo attract investors, through making such branch openings a condition of accessing municipal funds and accounts.
In summary Blakely (2010), notes that it is the onus of the development practitioner and that the municipality's vision and goals will dictate which approach or combination of approaches they will employ to achieve the desired result. They are all looking for a method to provide a more sustainable path to achieving Local Economic Development.
Consequently, to achieve the right balance between these approaches is based upon the set priorities and a circumstance, whereby having clear objectives against which to prioritise plans is crucial to the successful of Local Economic Development. There is no single approach to Local Economic Development. Each locality may adopt or develop an approach that is best suited to its local context.
Having provided a brief synopsis of the different approaches to LED in this section, it is important to note that the list of approaches detailed above is not exhaustive. It is an overview and thus has only discussed the most comprehensive and most relevant approaches that have been utilised in this research.