ISSN1613-298X

ParticipatoryAppraisalofCompetitiveAdvantage(PACA):

EffectivelyLaunchingLocalEconomicDevelopmentInitiatives

DrJörgMeyer-Stamer

MesopartnerWorkingPaper 01

MesopartnerWorkingPaperNo01

MesopartnerWorkingPaperNo.01

Title:ParticipatoryAppraisalofCompetitiveAdvantage(PACA):EffectivelyLaunchingEco-

nomicDevelopmentInitiatives

Author:DrJörgMeyer-Stamer(Deceased1May2009)

Version:Thirdrevisedversion,DuisburgOctober2006

Mesopartner–ISSN1613-298X

MesopartnerPartnergesellschaft,Stresemannstrasse12,47051Duisburg

Contact:info@mesopartner.com,www.mesopartner.com

ThisworkislicensedunderaCreativeCommonsAttribution-NonCommercial4.0Interna-

tionalLicense.

Mesopartnerisaknowledgefirmthatspecialisesineconomicdevelopment,competitivenessandinnovation.Ourstrategicintentistobegloballyacknowledgedasaninnovatorineco-nomicdevelopmentpractice.Combiningtheory,practiceandreflection,weenableclientstoexploreoptionsandsupportdecision-makingprocesses.Wecollaboratewithstrategicpart-nerstocreateknowledgeoncontextuallysoundeconomicdevelopment.

We operate as adviser and service provider to development organisations (developmentagencies,ODA(OfficialDevelopmentAssistance)donors,developmentbanks,NGOs,clusternetworksandothers),todecisionmakersinprivateandpublicsectorandtoconsultantsandconsultingfirms.Since2003,theknowledgethatwehaveshared,andthetoolsthatwehavedeveloped,havehelpeddevelopmentorganisationsandstakeholdersinmanydevelopingandtransformationcountriestoconductterritorialandsectoraldevelopmentinamoreeffectiveandefficientway.

Mesopartnerofferstheknowledgethatlocalactorsneedtoaddressthechallengeofinnova-tionand change in a systemicand complexity-sensitiveway.Wedevelop innovative toolsbasedonlocalandregionaleconomicdevelopment,clusterandvaluechainpromotion,mar-ketsystemsdevelopment,strengtheningoflocalinnovationsystemsandrelatedtopics.Wecoachandequippractitioners,andconductleadingedgelearningeventsforpractitioners.

MesopartnerWorkingPaperNo01

TableofContents

1 Whystimulatingbusinessatthelocallevel?................................................................4

2 PointsofdepartureofthePACAapproach..................................................................5

3 Why“ParticipatoryAppraisalofCompetitiveAdvantage”?.........................................5

4 WhatdoesaPACAExerciselooklike?..........................................................................6

5 Whydidtheconceptcomeabout?..............................................................................7

6 WhywouldyoudoPACA?............................................................................................8

7 WhyusePACAinsteadofanotherapproach?............................................................10

8 WhatareresultsfavouredbyPACA?..........................................................................11

9 WhatistheimpactofaPACA?...................................................................................12

10 HowhasPACAevolvedovertime?.............................................................................14

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1 Whystimulatingbusinessatthelocallevel?

Indevelopingcountries,thereisanincreasingawarenessofthenecessitytoformulateandimplementeconomicdevelopmentstrategiesatthelocallevel(localeconomicdevelopment,LED).The1990shaveseenthedemiseoftraditionalapproachestoindustrial,structural,andregionalpolicy.Withinthetraditionalapproaches,economicdevelopmentprogramswere

• formulated(butquiteoftenactuallyneverimplemented)bycentralgovernment,

• formulatedandimplementedinatop-downmanner,withoutconsultationandinvolve-mentofthetargetgroup,

• basedonanexternalevaluationofpotentialsandproblems,ratherthanaprocessoflocalawarenessbuildingandlearning,

• oftenbasedonhugedevelopmentprojects,likelargedams,andhugeinvestments,likepetrochemical,steelorotherbasicindustries,

• creatingperverseincentivesduetotheavailabilityofgovernmentsubsidiesforregionswithlowperformance.

Thisapproachisnolongerpursuedforavarietyofreasons.Oneofthemostimportantonesistheinabilityandunwillingnessofcentralgovernmentstoconductsuchactivities–inabilityduetolackoffunds,unwillingnessduetothepredominanceoftheneoliberaldoctrinewhich,inthesimplistic/fundamentalistvariety,isopposedtoactivedevelopment-orientedpolicies.Anotherimportantreasonistheobservationthat,inleadingindustrializedcountries,devel-opmentpoliciesarequitesuccessfullyformulatedandimplementedatthelocalandregionallevel,somethingthatisperceivedasamodelinlatecomercountries.

Decentralizationisnottheonlydifferencetotraditionalapproachesofindustrialpolicy.Twomainaspectsoftraditional industrialpolicyareabsent inthenewapproach.First,there isusuallynocreationofpublicenterprises.Quitethecontrary,notonlyarestateenterprisesinindustryandinfrastructurebeingprivatizedbutalsotraditionalgovernmentactivitieslikeeco-nomicpromotion.Second,thereisnoinfantindustryprotection.Instead,thereisavarietyof(mostlysupply-side)instrumentswhichaimatimprovingtheenvironmentforfirmssothattheycancreateacompetitiveadvantage.

Inthispaper,Iwillpresentamethodologywhichhasbeenemployedinanumberofcoun-tries1tokick-startlocaleconomicdevelopmentactivities.“ParticipatoryAppraisalofCompet-itiveAdvantage” (PACA)combinescompetitivenessconceptswith theprinciplesof rapid/participatoryappraisalinordertoidentifyquicklyimplementableactivitiestostimulatealocal

1 UntilDecember2004,PACAexerciseshavebeenconductedinBrazil,Bolivia,Chile,Colombia,theDomin-

icanRepublic,Ecuador,Nicaragua,Peru,Namibia,SouthAfrica,Armenia,Indonesia,SriLanka,Thailand,Vietnam,andSerbia.

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economy. It is not aiming at grand strategies andbig projects, but rather at practical ap-proachestoremedyinglocalmarketfailures,statefailureandnetworkfailurethatsofarstandinthewayofbusinessgrowth.

2 PointsofdepartureofthePACAapproach

Localeconomicdevelopment(LED)isatthesametimeasimpleandadifficulttask.Itissimplebecausethenecessaryconceptsandinstrumentsareavailableandwidelydocumentedintheliterature.2Thereisnothingparticularlymagicorintrinsicallycomplicatedaboutit.Itisdiffi-cultbecauseitssuccessisbasedontheactiveinvolvementofmanyactors,andthesuccessfulcommunicationandcoordinationamongthem.Localeconomicdevelopmentcanonlytoalimitedextentbedelegatedtosalariedprofessionals.Therefore,motivationisacrucialissue.ThisisthefirstpointofdepartureofPACA.

Asuccessfullocaleconomicdevelopmentinitiativereliestoasubstantialextentonvoluntarywork–businesspeople,governmentexecutives,andrepresentativesofcivicassociationsandotherorganizationsspendingtimeinmeetingsanddoingworkwhichoftenisunpaid.AnyLEDinitiativeisthereforeinneedofvisible,tangibleresults,andpreferablyquickresults.Quickandtangibleresultsmotivatelocalactorstodedicatemoreoftheirtime,andtheypullinmoreactors.Therefore,comingupwithviable,practical,quicklyimplementableproposalsisacru-cialgoalatthebeginningofanyLEDinitiative.ThisisthesecondpointofdepartureofPACA,anditiswhyPACAincludesamethodtodoaquickappraisalofalocaleconomy,whichshouldtakenomorethantwoweeks.

Asuccessfullocaleconomicdevelopmentinitiativebuildsonthemotivationofindividualstopursuesomeprojectaswellasthewillingnessandabilityofmanyindividualstoformulateasharedvisionwhichisguidingtheprojects.Also,manyprojectswillonlyworkifseveralindi-vidualsworktogether.Itdoesnotmakesensetosuggestprojectswhichlocalactorsdonotfindplausible,anditdoesnotmakesensetosuggestprojectswhichinvolvethecollaborationofactorswhocannotimaginetoworkwitheachother.Thus,theaimtocomeupwithadiag-nosticnotonlyofeconomicpotentialsandchallengesbutalsoofaclearideaofthecapacity,motivation,andcooperativespiritofkeyactorsisthethirdpointofdepartureofPACA.

3 Why“ParticipatoryAppraisalofCompetitiveAdvantage”?

ThenamePACAintroducesthreeterms:

1. Participatory:PACAisaparticipatoryapproach,butnotinthewayparticipationissome-timesconceptualized.PACAisnotaboutinvitingeverybodytoahugeroundtable,onlytohaveeverybodystaringateverybodyelseandnobodyhavingaclearideawhatthewholemeetingisabout.PACAalsodoesnotsuggestendlesscommunitymobilizationprocesses.ThePACAconceptofparticipationratherrevolvesaroundtwomainpoints:

2 See,forinstance,EdwardJ.BlakelyandTedK.&Bradshaw,PlanningLocalEconomicDevelopment.The-

oryandPractice.ThousandOaksetc.:Sage,2002,andjournalsliketheEconomicDevelopmentQuarterly.

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– Successful localeconomicdevelopmentmustbebasedontheactiveinvolvementofthosestakeholderswhoarerelevantforeconomicdevelopment,i.e.haverelevantre-sourcesattheirdisposal(know-how,money,time,deliverycapacity,etc.)orcouldcre-ateobstacles.Also, an LEDprocessmust beorganised in a transparentway, and itshouldbemanagedinawaywhichencouragesadditionalactorstojumpinalongtheway.

– Successfullocaleconomicdevelopmentinvolvesaconstructiverelationshipbetweenthepublicandtheprivatesector,withouteitherofthemhavinga-prioriaclearguidingrole.LEDcannotbeataskof localgovernmentalone.But it isalsonotadvisabletoleaveittotheprivatesectoralone.Aconstructiverelationshipoftendoesnotexistattheoutset.Onthecontrary,weoftenfindthatbothsidesfeeldistrustandcontemptfortheotherside.Improvingtherelationship,andlearningtocooperate,isoneofthepurposesofapplyingthePACAprinciples.

2. Appraisal:ThecoreofPACAisamethodologywhichpermitsarapidappraisalofalocaleconomy–notonlyofitseconomicpotentials,butalsoofthepoliticalfactorswhichmayormaynotbepropitiousforanLEDinitiative.

3. CompetitiveAdvantage:ThemainthrustofPACAisnottoelaborateendlesslistsofprob-lems,deficienciesandbottlenecks,buttolookforopportunitieswhichimprovethelocalbusinessenvironmentwithinashortperiodoftime.PACArelatestoMichaelPorter’scon-ceptoflocation-basedcompetitiveadvantageandtheanalyticalconceptofsystemiccom-petitiveness.3

Infact,PACAhastwomeanings:

• Inthenarrowsense,itisamethodtoconductaquick,action-orientedappraisalofalocaleconomy,lookingnotonlyateconomicpotentialsbutalso,andinparticular,atthemoti-vationandcapacityforactionoflocalstakeholders.ThisiswhatthePACAExercise,whichisdescribeinthenextsection,isabout.

• In thewider sense, PACA is an alternative approach to Local Economic Development,basedonacritiqueoforthodoxapproaches.IwillelaboratethispointinSection7.

4 WhatdoesaPACAExerciselooklike?

APACAExerciseinvolvesateamofbetweenfourandeightpersons,mostofthemfromtherespectivelocation,whoconductarapidappraisalofthelocaleconomy:ThePACATeam.Thesequenceoftheiractivitiesisasfollows.Itstartswithapreparatoryphasewhereavailabledataandinformationareassessed.Thenthereisaphaseofintenseresearch,involvingthefollowingactivities: 3 MichaelPorter,TheCompetitiveAdvantageofNations.NewYork:TheFreePress,1990;idem,Location,

Competition,andEconomicDevelopment:LocalClustersinaGlobalEconomy.EconomicDevelopmentQuarterly,Vol.14,2000,No.1,pp.15-34;KlausEsser,WolfgangHillebrand,DirkMessner&JörgMeyer-Stamer,SystemicCompetitiveness.NewGovernancePatternsforIndustrialDevelopment.London:FrankCass,1995.

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• ahypothesesworkshop,where thePACATeamclarifiesitsexpectations,

• a kick-offworkshop,where additional in-formationisgatheredfromkeystakehold-ers who are at the same time informedaboutthePACAExercise,

• Mini-workshops,whereanumberofspe-cificformatsareappliedtogathersector-specificinformationinaveryefficientway,

• interviews with key companies, institu-tionsandinformers,

• aResultsWorkshopofthePACATeamtoelaboratefindingsandproposals,

• a Presentation Event to present and dis-cuss diagnostic and proposals with localstakeholders,

• a series of Way Forward Workshops toplanthedetailsofthe implementationofproposals.

A PACA Exercise lasts no more than twoweeks.Afterthat,implementationofpracticalactivitiestostimulatelocaleconomicdevelop-mentbegins.A first seriesofPACAAppraisalWorkshops should be organized after sixmonths,toassesstheprogressandtodefineanewroundofactivities.

5 Whydidtheconceptcomeabout?

Theconceptpresentedinthispaperinitiallywasanad-hocresponsetoanarticulateddemandforsupportoflocaleconomicdevelopmentefforts.Thedemandcamefrommunicipal-levelChambersofIndustryandCommerce(AssociaçõesComerciaiseIndustriais,ACIs)inthestateofSantaCatarinaintheSouthofBrazil.Around1997/98,someACIdirectorsandexecutivesperceivedthatitwasnecessarytopromoteeconomicdevelopmentatthelocallevel–unem-ploymentandasenseofcrisiswereincreasing,andfederalandstategovernmentswhichhadtraditionallyplayedaleadingroleinstimulatingeconomicdevelopmentwerelessandlessactiveinthisfield.However,itwasnotatallclearhowtopromoteeconomicdevelopmentatthelocallevel.Theprevailingideawastoattractexternalinvestors–fromotherpartsofthecountryorfromabroad.Butiswasanopenquestionhowtodothis,andwhetherotherac-tivitiesmightbepossibleaswell.

Table1:SequenceofaPACAExercise

PreparationRecruitmentofPACATeam

Organizationofworkshopsandinterviews

ê

Kick-offWorkshop(3hours)• Informlocalstakeholdersabout

thepurposeofthePACA• Gatherinformationonlocaleconomy

ê

PACAFieldwork(1–2weeks)• Mini-workshopstogatherinformationabout

specificsectorsofthelocaleconomy• Interviewstogetin-depthinformation

ê

ResultsWorkshopofthePACATeam(1Day)• Elaboratediagnosis

• Elaboratepracticalproposals

ê

PACAPresentationEvent(3hours)• Presentdiagnosisandproposalstolocal

stakeholders• Getfeedbackandsuggestionsforimplemen-

tation

ê

WayForwardWorkshopsImplementation

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ThiswaswhereFundaçãoEmpreender(FE)camein.FEisanorganizationmaintainedbysev-eralACIsintheNorth-easternpartofSantaCatarina;itemergedfromatechnicalcooperationprojectbetweenACIsandtheChamberofArtsandCraftsforMunichandUpperBavariainGermany.ItsmaintasksaretrainingofACIprofessionals,otherkindsofsupportforACIs(e.g.moderationofannualplanningexercises),anddisseminationofmethodologiestostimulateorganizationdevelopmentinbusinessassociationsinotherregionsofSantaCatarinaandBra-zil.

FE’sbrandlabelforPACAwas“ProjetoMarketingMunicipal”.Thislabelreflectedthepara-digmwhichusuallyprevailedintheplaceswherepracticalworkwasconducted–localeco-nomicdevelopmentmeantprojectingtheplaceelsewheretoattractfirms.Thelabelfacili-tatedaneasyconnotationforlocalactors,unlikeotherpossiblelabelslike“Promotinglocaleconomicdevelopment”whichhadanunclearconnotationwithlocalactors.However,itisessentialtoemphasizeonepoint:OneofthemainpurposesofPACAistostimulatealearningprocessamong localactors thateconomicpromotion involvesmore than trying toattractfirms,andmaybeeventhatattractingexternalinvestorsatthemomentisaremotepossibil-ity.

TheserootsexplainwhyPACAisdifferentfromotherapproachestoLED.Itemergedinapri-vatesectorsetting,notingovernment.Itrelatestotheprofoundconceptualandmethodo-logicalknow-howonprivatesectordevelopmentFEhasaccumulated.Itisbasedonasoundunderstandingofthethinkingandbehaviourofbusinessactors.Ultimately,PACAtriestoin-troduceasenseofbusinessintoLED.

6 WhywouldyoudoPACA?

ThepurposeofPACAistocomeupwithadiagnosisofcompetitiveadvantagesanddisad-vantagesofagivenlocalityandproposalsforpracticalactivities.APACAexercise lastsbe-tweenoneandtwoweeks.ItisbasedontheworkofthePACATeam,consistingofoneortwoexternalconsultantsandthreetosix,possiblymore,localmembers(typicallyfromlocalgov-ernment,thebusinesschamberorabusinessassociation,thelocaluniversity,andotherlocalorganizations).Theproposaltoconductsuchaswiftexerciseismuchlessaudaciousthanitmayappear.Ourexperiencesofarhasshownthatitisperfectlypossibletocomeupwithareasonablyreliableanalysisoflocalconditionsinsuchashorttime,providedthatmethodol-ogiesbasedontheparticipatoryappraisalandtheparticipatoryplanningschoolsofthought,combinedwith concepts to analysedeterminantsof competitiveness and theModerationMethodasacorecommunicationtool,arecompetentlyandconsistentlyused.

PACAismorethanjustarecipeforhowtohavetwoexitingweeks.Underlyingisavisiononhowtodolocaleconomicdevelopment,includingsupportofsmallandmedium-sizedenter-prises(SME)andemploymentpromotion.Thekeypropositionsofthisvisionare:

• Successfullocaleconomicdevelopmentisbasedoncollectiveaction,andinvolvesapart-nershipbetweenthepublicsector,theprivatesector,andinterestedpartsofcivilsociety.Itisnotanactivitytobepursuedexclusivelybythepublicsector.

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• It is importanttocombinebottom-upandtop-downapproaches.PACAavoidsfocusingoneoftheseapproachesexclusively.Butithasaclearbias.Itisbasedontheconvictionthatbottom-upisextremelyimportant,andwilloftenhavetobetheprevalentpattern.Thetop-downelementoftencomesinthroughsomeexternalagentwhoispersuadinglocalactorstoconductaPACA,andwhoissupportingandcoachingtheentireprocess.Often,thesearedonoragencies;sometimes,higherlevelgovernmentbodies.

• Itisanapproachwhichcombinessupply-anddemand-drivenactivities.TheperiodwhenwedevelopedPACAwasalsoaperiodwhentheinternationaldonorcommitteeformu-latedtheBusinessDevelopmentServices(BDS)approach,whichtendstooveremphasisethedemandside.LikeBDS,PACAputsalotofemphasisoneffectiveness,significance,andfinancialsustainabilityofdevelopmentinterventions,andemphasisestheimportanceofcreatingfunctioningmarkets.OnekeyobjectiveofPACAistounderstandmarketfailure(barrierstoentry,informationfailure)andgovernment-createdbarrierstobusinessinor-dertoproposepracticalactivitieswhichmakemarketsworkbetterandthusremovebar-rierstobusinessgrowth.

Implicit inPACAisadistancingbothfromthetraditionalandthecurrentlyfashionableap-proachtodevelopment, inparticularpromotionofeconomicdevelopment.Thetraditionalapproach–notjustindevelopmentcooperation,butalso,interestingly,infieldssuchascor-porateR&D–wassupplydriven.InR&D,theideawasthatyouneededbrilliantsciencewhichwould automatically spill-over into brilliant technology which would lay the grounds forhugelysuccessfulproducts.Indevelopmentcooperation,theideawasthatyouhadtobuildupthenecessarystructuresandthatdevelopmentwouldstart,hopefully,oncethebuildingblocks–humanresourcesandinstitutions–wereinplace.Today,theperspectivetendstobetheotherwayaround:thingshavetobedemand-driven.Approacheswhichtrytoanticipateortocreatedemandtendtobefrownedupon.

PACAsuggeststhattheremaybeavirtuouscirclebetweendemandandsupply.TheinitialPACAExercisewill indicateavarietyofmarketfailuresandobviousopportunitiesforbusi-nessesandbusinesspromotion.Withthecompletionofthefirstdiagnostic,variouslocalac-torswillstarttoimplement,sometimesjointly,practicalactivitiestoaddressmarketfailureandtoexploitopportunities.Indoingso,theywillprobablynoticemissingelements,suchasinadequatesupplyoftrainingoffersoramismatchbetweenavailablefinancialresourcesanddemand.Theymaydecidetocreatethatsupply,andwhentheydoso,itmayappearprettymuchlikeconventionalcapacitybuildingactivities–exceptthatthistimeitistheoutcomeoftheclearlydefineddemand(asopposedto“needs”),andthosewhoconducttheactivityknowexactlywhatthepurposeis.Supply-drivencapacitybuildingisaslow,cumbersomeprocess–fewpeoplevoluntarilydoitifthereisnocleargoalexcepttheabstractnotionthatthisspecificcapacitymayfitintosomethingsomewheresometimeandmaybecrucialfordevelopment.Demand-drivencapacitybuildingcanbuildonastrongmotivation,sincethatcapacityisnec-essarytosolveaproblemrighthere,rightnow.

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7 WhyusePACAinsteadofanotherapproach?

PACAisdifferentfromotherapproachestoLED.Amainstreamapproachisstrategicplanningatthelocallevel.4Wehaveoftenseencaseswherealocalteamofexpertsgatheredanenor-mousamountofdata,cameupwithanobjectiveanalysisofthelocalsituation,andsuggestedaseriesofinitiativesbasedoninternationalbestpractice–onlytofindthatlocalactorsdidnotbelieveinthepossibilityofaction,orhadnoexperienceinevensimpleLEDactivities,orthatlocalorganizationswereweakorfragmented.Strategicplanningusuallyisconceivedasacomprehensiveeffortwhichdemandsenormousresourcesandtakesalotoftime.Italsodoesnotgivemuchlatitudeforlearning-by-doinginimplementation.Ifacommunityisdoinglocaleconomicdevelopment,itmayaftersometimedecidethatitwouldbeusefultothinkmorestrategically,andtohaveastrategicplan.Butinthiscase,strategicplanningisanout-comeofaLEDinitiative,notthestart.

PACAtriesnotonlytoanalysetheeconomicpotential,butalsothepotentialforcollectiveaction.Itwasdevelopedinasettingwhereorganizationalweaknessandlackofinteractionbetweeninstitutionsarecommonplace.TheexplicitaimofconcreteapplicationsofPACAwasthereforetoidentifypossiblepointsofentrytocollaborationandcollectiveactioninordertocreatepositive,encouragingexperiencesandthus initiateaparadigmchangeamong localactors.Therefore,theemphasisonshort-termeffects–thisis,inourview,themostpromis-ingwaytogivecredibilitytosuchaneffortamonglocalactors,especiallyfirmswhichoftenhaveaveryshort-termorientation(like,forinstance,sixmonthsasthemaximumperiodal-lowedasapayback-periodininvestments).Asfirmsandtheirassociationsarekeyactorsinthiswork,takingtheirusualtime-frameintoaccountiscrucial.Anotherconsiderationhastodowiththeobservationthatitisexperience-basedlearningwhichtendstorenderthemostsustainedeffects–preachingthebestpracticeoflocaleconomicpromotionseemsmuchlesspromisingthanpromotingprojectswhichinitiallymayappeartimidandnotambitiousbutwhichinitiatealearningprocess,andovertimeaparadigmchange.

PACAisalsodifferentfromtheusualapproachpursuedbymanagementconsultancyfirms.Theirprimaryobjectiveisnottohelptheclienthelphimself,buttocreatemoredemandfortheirconsultancyservices.5PACAemphasizestheneedtousethePACAExercisetotransferskillstolocalactorsandtoreducetheirdependencyonexternalsupportasmuchaspossible.TheonlysimilaritybetweenPACAandtheusualconsultant’sapproachistheuseofPower-Pointforthefinalpresentation,butevenherethecontentisquitedifferent:PACAdeliber-atelytriesnottobefancy,butrathertouseconceptsandalanguagewhichiseasilycompre-hensiblefortheaveragestakeholder.

4 See,forinstance,TheWorldBank,UrbanDevelopmentDivision:LocalEconomicDevelopment.LEDQuick

Reference,Washington,October2001:“Goodpracticeindicatesthatlocaleconomicdevelopmentshouldalwaysbeginwiththeformulationofastrategy”(p.3).ItisalsoinstructiveoftheorthodoxapproachtoLEDthatthestandardtextbookonLEDiscalled“PlanningLocalEconomicDevelopment.TheoryandPrac-tice”(Blakely,E.J.,&Bradshaw,T.K.,2002.ThousandOaksetc.:Sage[ThirdEdition]).

5 CF.LewisPinault,ConsultingDemons. InsidetheUnscrupulousWorldofGlobalCorporateConsulting.HarperBusiness,NewYork2000.

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PACAisalsoclearlydistinctfromapproachestoLEDthatfocusatthecreationofLocalEco-nomicDevelopmentAgencies(LEDAs).6ThereislittleuseinproposingthecreationofaLEDAasthemaingoalforLED.ALEDAisameans,notanendinitself.LEDAsexistinsomeplaces,buttheyusuallyaretheoutcomeofalongevolutionofLEDactivities.

PACAisalsodifferentfromapproacheswhichputalotofeffortintomotivationandconsen-sus-buildingbeforedoinganypracticalLEDactivities.7PACAisbasedonthereasoningthatsuccessbreedssuccess.Itissufficienttostartworkingwithalimitednumberoflocalstake-holders.Iftheysucceedinimplementingpracticalactivitieswhichmakeadifferencetolocalbusinesses,thiswillhavethestrongestpossiblemotivationeffect.

Consensus-buildingisanotherstory.WhydoyouneedconsensustodoLED?Successfulbusi-nessisbuiltondiversity,notonconsensus.Likewise,successfulLEDisdiverseandstimulatesdiversity. It iscrucial tohaveabasicconsensusonthenecessityofLEDassuch.Butmoreoftenthannot,tryingtoformabroadconsensusonspecificLEDprojectsisarecipefordisas-ter,asstakeholdersgetstuckinendlessdisagreement.ThisisevenworseattheoutsetofLED,whenstakeholdersdonotyetknowLEDfromtheirownexperienceandthereforedon’treallyknowwhattheyaretalkingabout–andthuspileconceptualandinstrumentalconfusionontopofstrategydisagreements.

8 WhatareresultsfavouredbyPACA?

ThepurposeofaPACAExerciseistoformulateproposalsforpracticalLEDactivities.InthecourseofMini-workshopsandinterviews,localstakeholdersusuallycomeupwithallsortsofsuggestions,andthePACATeamshouldadditsownideastothis.Themainpoint,however,isnottooverwhelmlocalstakeholderswithamultitudeofproposalsbutrathertolimitthenumberofproposals,andtocuttheproposalsdowntothosewhofitwiththreecriteria:Canitbedonewithlocalresources?Canitbeimplementedquickly?Canitachieveavisibleresultwithin,say,threemonths?Giventhetypicalmind-setandtime-frameofbusinesses,onlypro-posalswhichfitwiththesecriteriahaveagoodchanceofsuccessfulimplementation.

PACAisparticularlyappropriateforlocationswherelocalstakeholdershavelittleexperiencewithLED.Insuchlocations,thereareoftenopportunitiesforspectacularLEDinitiatives,forinstanceactivatingapassivecluster,creatinganewbusinessestate,startingatraining&tech-nologycenterforanimportantlocalindustry,orconvertinganabandonedindustrialsiteintoabusinessincubator.Alltheseexamples,however,requireawell-developedcompetenceinplanningandimplementation,ahighlycompetentpublicadministration,awell-organizedpri-vatesectorandclosetiesbetweenpublicandprivatesector.YouwillfrequentlyfindthatinaplacewhereyoudoaPACAneitheroftheseelementsispresent.ThisiswhyPACAemphasizespractical, down-to-earth proposals, rather than fancy ideas. Essentially, such proposals fitwithoneofthefollowingcriteria: 6 See,forinstance,ILO,UNOPS,EURADA&CooperazioneItaliana,Localeconomicdevelopmentagencies.

Internationalco-operationforhumandevelopment,democraticeconomiesandpovertyreduction,nodateandlocationgiven.

7 See, for instance,ClubduSahel&OECD,Managingtheeconomy locally inAfrica.ECOLOChandbook.Assessinglocaleconomiesandtheirprospects.Volume1.Summary.Paris:ClubduSahel/OECD,2001.

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• Theymakelocalmarketswork

- byremovingbarrierstoentry(e.g.bymakingexistingdemandmorevisibleforpo-tentialentrepreneurs)

- byresolvinginformationproblems(e.g.bycreatingopportunitiesforbusinesspeopletomeet)

- byamplifyingsupplyordemand(e.g.byorganizinglocalmarketsorproduct-relatedevents)

• Theyremovebureaucraticobstaclestodoingbusiness(e.g.persuadinglocalgovernmenttobetterexplainregistrationandpermitrequirementsandprocesses)

• Theymakeimproveduseoflocallyavailableresources(e.g.byhighlightingtheeconomicvalueofthesawdustthelocalsawmillsdumpedintothenearbyriver)

Finally,itisimportanttomentionyetanothersetofcriteria:Goodproposalsarethosewhichencouragelearningamonglocalstakeholders,whichencouragethemtodoLEDandwhichstimulatenetworkingandcollaborationbetweenlocalactors.ThepurposeofPACAisnottopreventfancyLEDprojectsforever,butrathertopreventLEDeffortsfromcollapsingearlybecauselocalstakeholdersareoverwhelmedbythechallengesofoverlysophisticatedpro-jects.ThereisnoreasonwhyPACAshouldnotlead,inthemediumterm,totheformulationofambitiousprojectstodevelopalocaleconomy.Butwhywouldyoustartwiththis,inpar-ticulariftherearesomanystupidandsillyobstaclesstandinginthewayofbusinesses,ob-stacleswhichyoucanremoverathereasily?

9 WhatistheimpactofaPACA?

PACAdoesnotcomewithabuilt-inguaranteeofhigh-impactLED.Infact,exactlytheoppositemayhappen.InoneoftheearlyPACAsinSantaCatarina,theconclusionofthediagnosticwasthattheprobabilityofanysuccessfulLEDinitiativeinthatlocationwasverylow,astheprivatesectorwasnoteffectivelyorganizedand the localBusinessChamberwasparalyzedby in-fighting,sothatthegoodintentionsoflocalgovernmentdidnotmeetwithmuchresponsefromtheprivatesector.TheadvantageofPACAwasthatittookjustoneweektoidentifythisblockadesituation.

Moreover,PACAexplicitlydoesnotfocusathugeandfancyprojectswhicharehighlyvisiblebecausethousandsoftonsofconcretehavebeenconsumedinbuildingthem.LEDisoftenlinkedtomajorurbanredevelopmentprojects,suchasLondonDocklandsortheBarcelonawaterfront.Thiskindofprojectundoubtedlyhasamajoreconomic impact.But it isurbandevelopment,andnotthekindofLEDwhichPACAaimsat:concrete,practicalprojectswhichquicklyimprovetheenvironmentforbusinessandmakebusinessopportunitiesvisible.Urbandevelopmentisthinkinginperiodsofdecades,whereasPACAisthinkinginmonths.

AgoodexampleofthekindofimpactPACAcanhaveisoneoftheoutcomesoftheveryfirstPACAeverconducted,inMafra,Brazil,inSeptember1998.Whatwedetectedinthisexercise

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wasasmallbutverycompetentNGOworkingwithsmallholderfamilies,teachingthemtoraisenewproductsandmanagingtheentirevaluechain.Thestrikingobservationwasthattheproducts–atthattimemostlytomatoes,tosomeextentorganic,whichweregrowninsimpletunnels–weresoldatawholesalemarketinamajorcityseveralhoursaway,ratherthantolocalsupermarkets.Thereasonforthiswasalackoftrustoflocalsupermarketsintothereliabilityofsmalllocalproducers.Thankstothemediationofthelocalbusinesschamber(whichwaschampioningthePACA),adirectcontactbetweenNGOandsupermarketswasestablished.Thebenefitswereshared:theproducersreceivedahigherprice,thesupermar-kets increased theirprofit,and theconsumerpricedropped.As the transactions ranwell,trustwasbuiltbetweenNGOandsomeof thesupermarketowners,whothendecidedtodepositpartoftheirliquidfundsatthecreditcooperativewhichwascollaboratingwiththeNGO.HalfayearafterthePACA,thisamountedtoabouthalfamilliondollars,thankstowhichtheNGOcouldexpanditsscheme,involvingmorefamiliesandintroducingadditionalvarie-ties.Fiveyearslater,theinitiativewasstillthriving,constantlyidentifyingnewopportunitiesandcreatingamassiveincomeincreaseforhundredsofpoorfamilies.

OtherexamplesofpracticaloutcomesofPACAexercisesarethefollowing:

• theestablishmentofaworkinggroupbetweentrainingprovidingandsoftwarefirmsinBlumenau,Brazil,which led to thecreationof trainingproductswhich fitwith thede-mandsoffirms,

• thedesignofastrategytoovercometheresistanceagainstanewzoninglawinBrusque,Brazil,whichhadbeenblockedbythecitycouncil fortwoyearsandwaspassedafewweeksafteraPACAhadbeenconducted,

• asuccessfuleffortofceramicsfirmsfromLampang,Thailand,tojointlyentertheregionalmarketofsouthwesternChina,

• inthesamecity,acooperationprojectbetweenthelocalceramicsindustryandthetour-ismsectorwholaunchedaspecialawardforhotel/restaurantswhichuseLampangce-ramics,aswellasaprojecttoorganizevisitstoceramicsplantsfortourists,

• aninitiativeofgarmentsfirmsinChiangMai,Thailand,tostartjointsourcingofrawma-terials,

• there-launchofalocaltourismassociationinQueenstown,EasternCape,SouthAfrica,wherebeforethePACAExercisenobodybelievedthattherewasmuchtourisminthefirstplace,

• thecreationofajointbrandandlabelforbricksproducedinKundasale,SriLanka,

• aninitiativetocheckandstandardizetheweightsusedbymiddlemenwhobuythecatchofthefishermeninElOro,Ecuador.

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10 HowhasPACAevolvedovertime?

PACAstarted inSeptember1998asanad-hocresponsetoan immediateproblemof localpolicymakersinsomemunicipalitiesinSantaCatarina,Brazil.In1998/1999,fivePACAexer-ciseswereexecutedthere.In2000,anexperimentalPACAexercisewasconductedinSouthAfrica,whichestablishedthattheapproachwastransferabletoothercountriesandeconomicstructures.In2001,avariationofPACAwasdevelopedandsuccessfullyapplied:theRapidAppraisalofLocalInnovationSystem,RALIS–againapragmaticresponsetotheneedtocon-ductanappraisalof technology transferand localized technologicalcapabilityaspartofalargerassessmentofthescienceandtechnologysysteminIndonesia.Thisincludedthetrain-ingoflocalconsultantswhothenconductedthefieldwork,anexperiencewhichconfirmedthatamethodlikePACA/RALIScanbecodifiedandtrained.Inearly2002,thefirstsystematicPACAtrainingworkshopstookplaceinThailand,whichhassincebeenfollowedbytrainingworkshopsinSerbia,Bolivia,SouthAfrica,SriLanka,theDominicanRepublic,Ecuador,Indo-nesiaandNicaragua.InThailand,sixPACAexerciseswereconductedin2002andmorehavefollowedin2003.InSerbia,fivePACAexerciseswereconductedearlyin2003.TwofurtherPACAexerciseswereconductedinSouthAfricainNovember2002andMarch2003,andinSriLankainDecember2002.Bytheendof2003,morethan40PACAExerciseshadbeencon-ductedintencountriesonfourcontinents.Bytheendof2004,thenumberofcountrieshadgrownto16,andthenumberofExerciseshadalmostdoubled.

ThreepointsshouldbementionedregardingtheevolutionofPACA.First,ithasevolvedfromanad-hocapproachtoadocumentedandcodifiedmethodology,withmanualswhichatver-sion5.3(2006)amounttomorethan300pages.

Second,thestructureofaPACAexercisehaschanged.IntheearlyPACAs,wereliedmostlyoninterviewsandonlytoalimitedextentonworkshops.Today,ittendstobetheotherwayaround.WehavedevelopedanumberofMini-workshopformatsforexerciseswhich,inthecourseofnomorethantwohours,extractaverysubstantialamountof informationfromlocalstakeholders.RelyingmoreonMini-workshopsandlessoninterviewseconomizesonthetimeofbothlocalactorsandthePACAteam.

Third,thefocushaschanged.Thiswasduetooneofthe lessonswelearntfromtheearlyPACAexercises,wherewetendedtothrowtoomanyandtoofancyproposalsatthelocalactors. Inplaceswhere localactorshave littleornoexperiencewithLED, this isboundtodefeatthepurposeofthewholeexercise.Todayweinsistonalimitingthenumberofpro-posals,andmakingonlyproposalswhichcanbeimplementedquicklybylocalactors.Admit-tedly,thisgivesrisetoanewproblem,namelythatsomelocalactorsfindtheproposalsnotsufficientlyexciting.However,giventheobservationthatevenrathersimpleproposalsprovetobequitechallengingtoratherinexperiencedlocalactors,wetendtosticktoourcurrentapproach–atleastinthosecaseswhereaPACAmarksthestartofLEDactivities.Moreover,weputmuchmoreeffortnowintothebuild-up,especiallygettingthebuy-inbyrelevantlocalstakeholders.OneofthegoalsistomakesurethatinfluentiallocalpersonsbecomemembersofthePACATeam.ThebetterlocalrepresentationandparticipationinthePACATeamis,themoredynamictheimplementationofactivitiesafterthePACAExercisewillbe,andthemorelikelyitisthatasustainedLEDprocesswillemerge.Localeconomicdevelopmentdependson

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theenergyandmotivationoflocalplayers.ExternalskilledPACAFacilitatorscanguidethem,buttheycannotsubstitutetheinvolvementoflocalactors.