Traditionally, development strategies generally follow the top-down approach with national government determining what and where intervention is required without involving local actors or considering their input. In contrast, the LED approach focuses on development from below (local actors) and stresses the need for promoting economic development in all areas. LED strategies seek to assess the development potential of each area and to stimulate the adjustment of local economic systems to the changing economic environment. It aims at developing the local strength by creating new jobs, helping the communities to retain existing jobs, helping owners of the businesses to access capital so that they can take advantage of new business opportunities and eventually LED should contribute to a larger geographical environment to allow local people to successfully access economic opportunities.
Furthermore, LED supports a participatory process that encourages partnership between the various stakeholders (public, private, community, civic and business leaders) within a regional economy and is designed to create a strategic vision and feasible action plans that when implemented will result in job creation or job retention.Ferrante (2012) asserts that the sociological approach to understanding important social economic issues and events involves two interdependent and essential parts, and those are theory and research.
98 Having pointed out the above, good practice indicates that local economic development should always begin with the formulation of a strategic plan (World Bank, 2005; Nel, 2007; Rogerson, 2010). The World Bank recommends that poverty alleviation initiatives through LED should be integrated to provide poor communities with the necessary basic services such as water, electricity, education, healthcare, roads and sewerage. Active participation of the beneficiary communities on LED initiatives needs to be identified to provide meaningful economic growth.
The World Bank (2003) further views LED as a process by means of which public, business and non-governmental sector partners work collectively to create better conditions for economic growth and employment generation. This research study is underpinned by the World Bank Local Economic Model (2005), which comprises of a five-stage approach to Local Economic Development namely: Stage 1: Organizing, Stage 2: Local Economy Assessment, Stage 3: Developing the Local Economic Development strategy, Stage 4: Implementing the Local Economic Development strategy, and Stage 5:
Reviewing the Local Economic Development strategy (also refer to figure 3.2 below).
Development strategy is crucial and it is indicated by Meyer (2014) that LED should be everybody’s business, including local residents, local business people and government.
The fact that LED strategies are primarily developed by local government and a wide range of local stakeholders means that LED strategies can help empower local communities and effectively use local resources. Figure 3.2 below illustrates that Stage 4 of strategic planning is to implement and sustain LED strategies. Nel and Rogerson (2005) note that the main constraints in delivering results in “pro-poor” implementation are a poor analysis of local economies, unsustainable community projects, lack of capacity and lack of resources ─ will that be the case in the King Cetshwayo District municipality? These are some of the investigations this study is intending to explore.
Therefore, this research study is based on the following theoretical understanding:
The LED process begins with identifying the people, public institution and other stakeholders (Organising).
Conducting the local economic assessment is critical in order to achieve a realistic, practical and achievable LED strategy.
Developing the Local Economic Development and a commitment of the vision, goals and objectives of the project.
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The Implementation Plan is critical for budgetary and human resource requirements.
Strategy review is critical and it includes input, output, outcome, impacts, implementation process and the level of participation.
Figure 3.2: Five stage sequence of the LED strategic planning
Source: World Bank (2005)
Rodriguez-Pose (2005) stipulates that LED provides a more flexible and effective approach to enhance economic growth and reduce poverty. However, this may not occur without the implementation of policies or if policies are badly designed. Furthermore, Rodriguez-Pose (2005) states that LED only refers to those development strategies that are territorially-based, locally owned and managed and aimed primarily at increasing employment and economic growth. LED strategies approach development as a local rather than a sectoral problem. The LED approach presents a number of social and economic benefits for the local people. It is inclusive of an economic and social aspect that is often hard to find in traditional development strategies. It seeks to join together objectives for generating sustainable growth and addressing the needs of the poor in the
World Bank Local Economic Development Model (2005)
Organizing
Conducting LED assessment
Developing LED strategy
Implementing and sustaining LED strategy
Reviewing LED strategy
100 areas in which it operates. Government cannot work alone in the implementation and sustainability of LED strategies but it is essential to involve other stakeholders for the success of the LED initiative. It is also confirmed by Akudugu and Laube (2013) that LED becomes more effective when local stakeholders and authorities form a partnership with national planning agencies and international donors, and jointly design and implement initiatives aimed at improving the local economy.
Furthermore, Ruecker and Trah (2007) highlight that LED involves various key stakeholders and institutions from all levels of society; the public and private sectors, as well as civic society, work jointly to create a unique advantage for the locality and its businesses. It is further noted that these key stakeholders are expected to utilize LED as a strategy to tackle market failures, remove bureaucratic obstacles for local businesses and improve the competitiveness of local businesses. The World Bank Group (2011) states that LED offers local government, the private and non-profit sectors, and local communities the opportunity to work together to improve the local economy.It is noted by Rogerson (2013) that identifying cooperative opportunities and strategic planning provides a way to clarify competitive advantages and generate strategies that better address the needs of local communities.