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Local economic development - State, economy and civil society acting in concert

Poverty reduction and an improvement in the living conditions of the entire population of a region, based on a strategy for economic and social development: These are the aims of local economic development (LED), a broad-based approach in which the state, the private sector and civil society act in concert to formulate and implement a regional development strategy.

Key facts

• Empowering the poor is a key prerequisite for broad-based growth.
• Between 1981 and 2001 the proportion of the world's population living in absolute poverty dropped from 40.4% to 20.7%.
• Only 2% of the direct investments made by the private sector are injected in the poorest countries.

In a globalised world, competitive relationships exist not only between companies but increasingly also between entire regions. Their attractiveness as a centre of business depends on a variety of factors such as the level of education and health of the population, the infrastructure and the quality of public governance. These factors are instrumental in determining whether the companies in a region operate productively, deliver competitive products and services and hence are able to create and sustain income opportunities for the local population.

Local Economic Development aims to sustainably strengthen a region's economic performance and competitiveness. This done by means of structured, integrated approaches that accord equal consideration to the economic, social-cultural and political-institutional aspects.

Current challenges
The development and implementation of a comprehensive regional structural policy requires dedicated efforts on the part of all involved actors: the public sector, the economy and civil society. A successful process calls for institutions and platforms that allow all affected parties to participate.

Building and expanding such institutions, strengthening state and civil governance structures, promoting institutional capacities in local and regional administration or achieving a shift in decision-making competences from the national to the local level (decentralisation) are therefore just as important a part of Local Economic Development programmes as moves to abolish regulatory barriers or create appropriate legal frameworks. This approach is particularly suitable for situations where the rapid pace of urbanisation processes necessitates an integrated view of town-country dynamics.

The SDC focus

SDC supports participative strategies for local economic development in its partner countries, with the aim of promoting economic growth geared to local conditions and resources, creating income and employment opportunities for all segments of the population, and enhancing good governance at the local and regional level. The emphasis is on:

  • Project-based initiatives: SDC supports project-based initiatives if they contribute to local economic development in the widest sense or can be used as a nucleus and catalyser for the formulation of comprehensive regional development strategies.
  • Strategically planned initiatives: In its partner countries SDC promotes initiatives which are strategically planned and directed at the region as a whole.

Theme contact: Alexandra Sagarra

Additional themes in this area:

Approaches and methods
 Economic growth is a prerequisite for poverty reduction, but no guarantee in itself..

Private sector development
 An efficient private sector is the main driving force behind the creation of income and employment opportunities and hence the reduction of poverty.

Value chains and cluster development
Value chains help to boost the participation of producers in developing and transition countries in local, regional and global markets.

The governance aspect of local economic development
The governance aspect forms the cooperative relationship between the state, private business and civil society, which strengthens good governance.

Additional Information and Documents

Documents
  • Comparative Approaches to Private Sector Development - a M4P perspective
    Download (PDF, 270 KB) :  [en]   [fr]   [es]  
  • Capitalisation des expériences
    et résultats des Fonds de Soutien à l’Investissement Local et des Programmes d’Appui à la Gouvernance Locale au Niger 2000 – 2011
    Download (PDF, 1446 KB) :  [fr]  
  • Local Economic Development (LED) - Argumentation Paper
    Download (PDF, 145 KB) :  [en]  
  • How does LED contribute to Poverty Reduction? Information note
    Download (PDF, 58 KB) :  [en]  
  • LED Executive Summary of documentation of SDC experiences
    Download (PDF, 28 KB) :  [en]  
  • LED Quick Reference Guide (World Bank)
    Download (PDF, 273 KB) :  [en]  

External Links