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Local economic development policies are part of the areas of intervention of local governments in Spain for three decades. However, the trajectory of these policies has been conditioned, among other factors, by a lack of legal powers and dependence on external resources and programs. Therefore the prevailing concept of local economic development is often limited to fostering entrepreneurship, business support and employment services in the exclusive setting of the capitalist market economy, and does not integrate a much broader and diverse perspective of both development and economy. A local economic development strategy that is able to integrate its three dimensions (attraction, projection and networking) according to local possibilities and aspirations provides a much better basis for governing the development model and its evolution in each territory. On the other side, the application of the term "resilience" to local economies, although controversial, provides a powerful framework
Citation preview
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POLÍTICAS PÚBLICAS PARA ECONOMÍAS LOCALES RESILIENTES PUBLIC POLICIES FOR RESILIENT LOCAL ECONOMIES
Autore Oriol Estela Barnet
e-mail: [email protected]
Website: https://estelabo.wordpress.com/
Key words
Local Development Resilience Economy Policy
Abstract (english)
Local economic development policies are part of the areas of intervention of local
governments in Spain for three decades. However, the trajectory of these policies
has been conditioned, among other factors, by a lack of legal powers and
dependence on external resources and programs. Therefore the prevailing concept
of local economic development is often limited to fostering entrepreneurship,
business support and employment services in the exclusive setting of the capitalist
market economy, and does not integrate a much broader and diverse perspective
of both development and economy.
A local economic development strategy that is able to integrate its three
dimensions (attraction, projection and networking) according to local possibilities
and aspirations provides a much better basis for governing the development
model and its evolution in each territory. On the other side, the application of the
term "resilience" to local economies, although controversial, provides a powerful
framework to build a renewed agenda for local economic development strategies
and policies.
Abstract (italiano)
Le politiche di sviluppo economico local sono parte delle aree di intervento dei
governi locali in Spagna per tre decenni. Tuttavia, la traiettoria di queste politiche è
stata condizionata, tra gli altri fattori, dalla mancanza di poteri formali e
dipendenza dalle risorse e programmi esterni. Quindi il concetto prevalente di
sviluppo economico locale è spesso limitato a promuovere l'imprenditorialità,
sostegno alle imprese e servizi per l'impiego in ambiente esclusivo dell'economia
di mercato capitalistica, e non integra una prospettiva molto più ampia e
diversificata di sia lo sviluppo e l'economia.
Una strategia locale di sviluppo economico che sia in grado di integrare le sue tre
dimensioni (attrazione, proiezione e networking) in base alle possibilità e
aspirazioni locali fornisce una base molto migliore per governare il modello di
sviluppo e la sua evoluzione in ciascun territorio. D'altra parte, l'applicazione del
termine "resilienza" alle economie locali, anche se controverso, fornisce un quadro
potente per costruire una rinnovata agenda per le strategie e le politiche di
sviluppo economico locale.
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1. Introduction
"Nuestra sociedad es extraordinaria en los
medios y en la eficencia, en todo aquello
relacionado con cómo conseguir algo. Pero a
menudo ignoramus el context y el sentido
ultimo de lo que hacemos, el por qué y el para
qué."1
Pigem (2013): 69
Local economic development policies in effect for past three decades in Spain
began during a period of deep economic crisis, industrial restructuring, and freshly
minted democratic councils that necessarily focused their political agenda on
providing infrastructure and basic services mostly neglected under the Franco
regime.
To regulate the foundations of local government, Act 7 was passed on April 2 1985
to enforce local authorities' competence framework and hence their scope for
action. Areas such as employment policies or industrial policies were outside that
framework, as well as more general or broad formulations as "economic
development" or "local economic development."
The National Employment Institute (INEM) had to support local governments
promoting employment programs to offer alternatives to people who daily came
knocking on the council’s door after losing their jobs. Supported by INEM, local
authorities allocated resources and programs without having yet established its
own set of policies in this area.
The reason why local Spanish authorities originally intervened in local economic
development was the pressuring from the growing unemployment rate caused by
the crisis, while the what for was to enable people access to enough resources to
find a new job and, failing that, a minimal income.
This approach, originally reactive and based on external resources of local
economic development, has been present ever since in the background of current
policies. Moreover, we can see that the coherent sequence "Vision > Strategies >
Policies > Programs" in practice was not only altered but fully reversed. This legacy
continues to haunt today's local economic development policies in our country,
still weak in terms of vision and strategic capacity, so that the what for and why of
such policies still does not provide entirely satisfactory answers.
In this context, the crisis has provided evidence of certain problems, from the poor
control public administrations exert on the market economy, especially in the
financial sector, to the apparent helplessness of localities and regions against the
ravages of globalization. This image has been transmitted and amplified by the lack
1 “Our society is extraordinary in technical resources and efficiency, in everything related to how to get
something. But we often ignore the context and the ultimate meaning of what we do, the what for and
why.”
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of answers, as well as by the inability shown by certain local governments under
pressure from rising unemployment rates which have themselves embraced
speculative projects, becoming active players of the model that caused the crisis.
We assert, however, that this is only an illusion, since local economic development
is a valid alternative to allow localities better control over their economic drift,
focusing their policies on a new what for and why.
In the first part of this article we review local economic development approaches
and ascertain the intended intervention of local governments: the why. In the
second part we introduce the concept of "resilient local economy" as a possible
reference point, providing local development policies with a more consistent what
for. In the third part we propose a local economic development policy agenda
derived from the above considerations. In conclusion, we target specific challenges
requiring further analysis.
2. Local economic development and local governments
Local economic development policies must overcome their biases of origin and
subsequent evolution and consider a much broader approach, not only with regard to
existing economic alternatives – as we shall see later – but also in terms of the
intervention areas they should cover. Some authors defend the notion of territorial
development to relativize localities’ economic weight and propose a greater policy
scope in terms of improvement of living conditions (Albuquerque 2014): something
consistent with the limited means of some local governments, many of which are not
always equipped with a wide range of competencies, and better fitted on paper for
territorial (and, therefore, integral) interventions than for sectorial.
In any case, from the most strictly economic point of view, a local economic
development strategy must provide three properly articulated dimensions (Estela
2011: 38-39):
• the dimension called local participation in global economic development, which
means understanding the land and its resources as a platform serving the
global economy. It is the most classic dimension of economic promotion:
attracting investment from multinational companies, in large infrastructure and
equipment, etc.
• the global projection dimension – currently the dominant dimension – which is
based on mobilization of the territory’s resources, whereby promotion of
entrepreneurship and innovation leverages local production’s access to global
markets. This dimension, however, is strongly influenced by access to external
financing; European funds have thus far proven crucial.
• the self-centered local economic development dimension, which seeks to
mobilize local resources to meet the needs and aspirations of the locality itself,
neither concerned with nor directly connected to global economic cycles. The
fundamental mission of such policies is to increase social capital and joint
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networking which recognizes, encourages, enhances, and interconnects civil
society economic initiatives of all kinds.
This articulation of local economic development in three dimensions calls for better
coordination between the various levels of intervention: in the first dimension, the
municipal level is clearly insufficient, but the regional – or metropolitan, if appropriate
– may be most effective for planning, ordinance, and management. The
supramunicipal level is most suitable for policies related to the second dimension, as it
can reach the critical mass necessary to optimize resources and generate significant
impacts. The third dimension is the one best fitted to local capabilities, manageable
within community structures, from small neighborhood or village to regions and
beyond (Estela 2011: 39).
Paradoxically, this third dimension of self-centered local development is the most
neglected in the implemented policies of local economic development. As an example:
“Too many of the strategies we examined focused on ‘hard’ economics – small
business start-ups, inward investment, availability of land and premises for
business – rather than ‘softer’ aspects of place, such as neighborhood renewal,
environmental sustainability, and levels of community empowerment and
participation” (McInroy & Longlands 2010: 10) and that “despite all that is known
about the importance of the big society, in terms of community assets, social
enterprise, and quality of life, economic development is still overly concerned with
variables that it thinks can be controlled, such as employment, investment, and
business support” (McInroy & Longlands 2010: 23).
On the other hand, involvement in local economic development has moved from the
first dimension (policies to attract investments in the 1980s and 1990s) to the second
one (policies to support entrepreneurs and innovation from late 1990s to the present
day) and only very recently approached the third dimension, i.e. with policies
promoting social economy. The logic has been to attract rather than enhance value
even if social capital and an appropriate governance system have not yet been built.
Again, this is the exact opposite of the reasonable sequence: first articulate territorial
networks in order to identify the needs and capacities for valorization of endogenous
resources, thereby attracting investments to fill gaps between local needs and
available resources. In this sense, “local economies aren’t simply an isolated silo of
private sector activity that can be encouraged and shaped. They are made up of a
network of social, public, and commercial economic activity. These aspects are
interconnected and dependent on one another” (McInroy & Longlands 2010: 11)
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Fig. 1 – Three dimensions of Local Economic Development strategies
Economic development strategies that local administrations should adopt should
be reorganized in order to increase their impact in the third dimension and
simultaneously equip themselves with more integral and solid policies, especially
in global times of crisis.
Considering instead the values that should guide public actions in economic
matters points us in the same direction. As shown by Pike et al. (2007: 1260)
“What are considered ‘appropriate,’ ‘bad,’ ‘good,’ ‘failed,’ or ‘successful’ forms of
local and regional development are shaped by principles and values socially and
politically determined in different places and time periods”, in such a way that “[…]
answers to the question of what kind of local and regional development and for
whom require one to annunciate explicitly the principles and values that should
underpin local and regional development” (2007: 1262). These principles and
values are forged in the community, in its everyday practices and relationships,
institutions, and forms of governance and therefore arise mainly from the third of
the aforementioned dimensions.
In short, strategies and local economic development policies must be built from a
holistic (beyond the economy), progressive (incorporating values and
transformational readiness) and sustainable approach, also in terms of equity
(Pike, Rodriguez-Pose & Tomaney 2007). It is the reason why governments
intervene in economic development: the need to control development in
accordance with community aspirations, counteracting the homogenizing trends of
globalization.
3. Resilient local economies "Resilience" has emerged as one of the recurring concepts when outlining exits
from the economic crisis. The concept was borrowed from the fields of physics and
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material science, found its way through psychology, landing successfully from
ecosystem ecology into the social sciences.
According to the Dictionary of the Royal Spanish Academy of Language, resilience
is in an engineering sense the ability of an elastic material to absorb and store strain
energy, i.e. its ability to recover its initial form after facing external pressure. From
a psychological perspective, the same dictionary defines it as the human ability to
properly face and adapt to extreme situations and overcome them. Applied to social-
ecological systems, it is defined as “the ability of a system to absorb disturbance
and still retain its basic function and structure” (Walker & Salt 2006: 1).
Resilience’s translation into socioeconomic spheres has not come without
controversy. Thus, Diprose (2015) denounces the concept’s appropriation by
economic institutions in covering austerity and structural adjustment
programmes. This interpretation is defined by the OECD and deals with resilience
in macroeconomic terms (Caldera, Rasmussen & Rohn 2015), pitted against those
who believe that “If the recent recession has taught us anything, it is […] that many
aspects of resilience are best built at the local level where economic relations are
founded on direct interaction and the ‘real economy’” (Broadbridge & Raikes 2015:
1).
Other authors sharing this interpretive approach primarily link resilience to
economic growth capacity recovery (Aiginger 2009; Martin & Sunley 2014; Martin,
Sunley & Tyler 2015). Therefore, they do not question the functioning of today’s
dominant economic model – the globalized capitalist market economy – but look
for recipes to allow localities to adapt to any occurring turbulences.
Other interpretations closer to the socioecological concept question the
functioning of the economic system and aim for its transformation: “La résilience
est un levier majeur des démarches de transition vers un nouveau modèle de
développement” (RNPC 2013: 16)2.
In this way, if we consider that “[A] resilient social-ecological system has a greater
capacity to avoid unwelcome surprises […] in the face of external disturbances, and
so has a greater capacity to continue to provide us with the goods and services that
support our quality of life” (Walker & Salt 2006: 37), we can sense here an
invitation to create local economies which are less dependent on the global
economy. Such is the case in the French region of Nord-Pas de Calais: “Une
approche en termes de resilience permet de mettre en évidence les leviers d’action
dont disposent les acteurs locaux, pour combattre le sentiment d’impuissance qui
peut être ressenti face à des phénomènes globaux dépassant les capacités de
chacun” (RNPC 2013: 10).3
Other authors, for instance Canadian economist Gilles Paquet, go even further,
denying any possibility of resilience in the current economic system: “Pour Paquet,
la résilience socio-économique s’appuie prioritairement sur les deux valeurs que
2 Resilience is a major lever of the transitions towards a new development model.
3 An approach in terms of relisience higlights the levers at the disposal of local stakeholders to stand
against the feeling of powerlessness in front of global phenomena exceedeing their capacities.
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sont la confiance et l’entraide, qui font particulièrement défaut dans le système
économique libéral” (CGDD 2014: 5).4
Thus, considering all the above, we identify the following primary goals of resilient
local economies (the what for) for their local economic development policies:
• Resilient local economies should be able to absorb disturbances and still
maintain their basic functions and structure (as we saw in the Walker et al.
2006 definition) – that is, to maintain at all times a minimum capacity to
meet basic community needs.
From this perspective the generic definition of economics becomes important,
understood as the different ways in which societies organize themselves to meet
their needs by allocating resources at their disposal. In terms of local economic
development policies, this will require greater policy attention to promotion of
social economy and, in general, alternative economic practices that contribute to
meeting those needs, eventually bypassing the market (Conill & Cardenas et al.
2012) and moving forward toward an economic model integrating various
economic understandings and practices in order to balance the clearly hegemonic
market capitalist practices in our society with an essential diversity: “A resilient
world would promote and sustain diversity in all forms (biological, landscape,
social, and economic)” (Walker & Salt, 2006: 145).
• Furthermore, they should do so while smartly managing their endogenous
resources.
We must incorporate a concept of sustainability that not only stands for more
efficiency in resource consumption or more consistency in natural processes
(organic farming, renewable energy, etc.), but also rethinks global resource
consumption in the middle and long term (Linz, Riechmann & Sempere 2007),
establishing parameters of proficiency.
• And finally, they must focus on prioritizing strategies and policies
consistent with local needs, as they are the administration they are closest
to and can attend them at their best.
As such, this means supporting the idea of economic subsidiarity requiring greater
localization of needs fulfillment. Such is the case of locally-sourced food production
and consumption (km0), energy (changing the energy model), services to
individuals, or even the financial sector; reinterpreting Keynes: “I sympathize with
those who would minimize, rather than those who would maximize economic
entanglements among nations. Ideas, knowledge, science, hospitality, travel – these
are things that of their nature should be international. But let goods be homespun
wherever it is reasonable and conveniently possible, and above all, let finance be
primarily national” (Keynes 1993: 757).
4 For Paquet, socio-economic resilience is primarly based on the values of trust and mutual support,
particularly lacking in the liberal economic system
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Fig. 2 – Elements for a resilient local economy
4. Agenda proposal for local policies
First, this new agenda must be built on the recovery of society as the main player in
the economy as a whole, in the same way that the main role of society in politics is
increasingly being considered, understanding that both economics and politics are
instruments to serve society and not vice versa (Sunyer 2015). In this regard, the role
of local governments changes significantly: “[… a] leadership role can take many forms
but the most common is where the local authority plays a facilitating role, working to
broker relationships between different parts of the private, public, and social
economies” (McInroy & Longlands 2010: 23).
Second, a thorough knowledge of the functioning of the local economy is required,
especially the links between public, commercial, and social economy and how income
enters and circulates in and out of the territory (Boyle & Simms 2009). Resilience
demands diversity and therefore requires accurate identification and management of
interdependencies between various actors in the local economy.
Thirdly, resilience requires the ability to anticipate. This anticipation is related to a
deeply rooted practice in the French tradition known as the prospective analysis: “La
resilience oblige à se projecter dans l’avenir et dans les événements qui pourraient
arriver. Elle encourage à anticiper. […] C’est dans le cadre d’une démarche de
prospective prenant en compte tendances et ruptures, phénomènes émergents et
analyse systémique, que la résilience territoriale prend tout son sens” (RNPC 2013: 9)5.
In the following section, we briefly propose a set of policies that should be part of
the basic agenda of any local economic development strategy to strengthen the
5 Resilience requires projection into the future and the events to come. It encourages anticipation. […]
Resilience makes the most sense in a prospective context taking trends and disruptions, emergint
phenomena and System analysis into account.
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third of the aforementioned dimensions and thus supplement existing local
economic development and employment promotion policies driven by local
governments.
Furthermore, we want to highlight their importance, as many of them should be
co-produced with the community (rather than being delivered for the community),
regarding the aforementioned subsidiarity, with social fabric as a key factor (Boyle
& Simms 2009).
Housing policies
Access to (rather than the mere construction of) housing should become the
mainstay of local economic development. Needless to say that having a roof over
one’s head and the security of being able to maintain this status is a must in order
to achieve the minimum welfare of and integration into society, which in turn is
essential to any employment or business project. At the same time, local labor
market function is deeply related to existing housing options, especially in the case
of young people. Moreover, if we consider the high percentage of income dedicated
to ensuring housing and its maintenance, it is not hard to imagine the opportunity
cost in terms of consumption of goods and services that not having more
affordable housing means.
The difficulties currently faced by local governments in implementing policies
promoting public housing are large, and it is therefore more necessary than ever to
take into account proposals and experiences arising from citizens: leasing
cooperatives, urban sharecropping, leaseholding, condominiums, cloud housing,
etc.
Food policies
In recent years, due to environmental and health issues, there is growing interest
in everything related to food in general and food production in particular that has
led to a boom of different practices in urban and peripheral agriculture.
Agriculture and livestock products have long led green consumer markets. A
growing part of the population is opting for self-production or getting involved in
ecological consumption cooperatives.
Besides health and environmental benefits, consumption of local agricultural
products accrues significant advantages from a local economy perspective,
primarily in terms of income circulating within a region, lower transportation or
generation costs, and waste treatment.
Food policies must aim to achieve greater control of food sovereignty in cities,
adopting a holistic approach that considers both production spaces and processes
and distribution and food consumption, bestowing proximity a more significant
role.
10
Fig. 3 – Food Policy in Milan
Energy self-sufficiency policy
The shift to an energy model free of fossil fuels impacts the three primary
environmental challenges: climate change, non-renewable resource depletion, and
ecological footprint. Continuous advances in renewables technology have opened
the door to local self-production of "clean" energy. Additionally, investment in
technologies for the reuse of renewable energies should significantly contribute to
economic recovery efforts and the creation of new jobs, whereby the framework of
the so-called green economy may contribute to an end to the crisis in the mid- to
long-term.
Local governments should consider energy supply one of their key strategic local
economic development priorities, clearly encouraging progressive tendencies
toward self-sufficiency.
Financial relocation policy
As a matter of rationality and security, finances should move primarily short
distances: a locality, like any other business agent – including families – should be
able to operate essentially with the savings it generates, as foreign debt implies a
huge risk of dependence. Further, from the point of view of economic activity, what
if 30% of a territory’s savings were invested in local production activities within a
100 km range?
Financial resilience is only possible from a wide and close network of entities and
financial instruments of various kinds (Cortese 2011). Proximity banking has won
wide acceptance among citizens as a result of the crisis. Personal savings
management tools following ethical and sustainability criteria as well as
fundraising for social solidarity economy projects have attracted an increasing
number of supporters and amount of resources, showing great strength in an era
of distrust in traditional banking. Renewed interest in local or social currencies is
part of this trend, but there is still much to be done in this area.
Development of maker culture policy
Promoting reuse and recycling as well as specific areas of the sharing economy as
opportunities to exchange and share resources and durable goods contributes to
the transformation of consumer habits and would increase options to satisfy the
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needs of a significant portion of the population, especially the lower-income
segment.
We must consider, however, that increasingly societal knowledge and technology
is tied to the loss of the ability to do certain things with our own hands, the very
essence of human nature (Sennett 2009). Local economic development policy must
actively promote the recovery of these skills for all citizens so that we would all be
able to repair, recycle, and reuse what we already have. More autonomy in this
respect means increased resilience.
Today this does not conflict with technology. The so-called maker culture and
progress in the field of 3D printing can spell revolution in the industrial field,
renewing the productive capabilities of many localities, for now bound to the
experiences of Fab Labs.
5. Conclusions
Throughout this article we have tried to show how resilience as applied to local
economies can be an interesting guideline for local governments when considering
their local economic development strategies and policies while acknowledging the
weaknesses of policies implemented to-date.
Its practical application depends on many and varied challenges, starting with the
construction of the transition process both in terms of redesigning both the policy
and function of local administrations too used to work focused on particular
sectors.
Another issue clashing with established procedures and their mindset is the
relationship between resilience and efficiency. The diversity required by resilience
implies the existence of redundancies, i.e. alternatives ensuring the normal
operation of the system (in our analysis, the local economy) in case of the failure of
any single component. On the contrary, “a drive for an efficient optimal state
outcome has the effect of making the total system more vulnerable to shocks and
disturbances” (Walker & Salt 2006: 9). The question is how far we can take
efficiency (which in economics is linked to aspects such as productivity) without
endangering the economy as a whole.
Given the central role of the concept of "threshold” in the context of resilience,
another major challenge is the ability to identify existing critical points in local
economies: at what point a local economy reaches a certain degree of self-
sustainability, or which factors can lead into a downward spiral (Walker & Salt
2006: 53-73).
A real sense of local economic development provides a much more solid why such
strategies should be adopted over the status quo. It shows that relationships are
woven in the local sphere. Such relationships make possible every kind of
economic process and, therefore, local governments together with their
communities can act and influence them.
12
Interpretation of a resilient local economy offers us the imperative what for
intervention in local economic development, which primarily consists of widening
and diversifying the options for the community to meet their needs and achieve
higher levels of individual and collective welfare.
Finally, it is time to rethink local economic policies in depth. Broadening the vision of
what constitutes an economy allows us to use all the instruments at our disposal while
allowing all social initiatives to cater to the needs of people. We may adapt
intervention levels to the challenges that arise. Local governments may be more
receptive to alternative citizens’ proposals. True innovation and experimentation with
participation-based local economic development policies will enhance the value of
diversity, proximity, and the extent of heterodoxy that being the closest administration
citizens and their interests and capabilities grants.
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IMAGES SOURCES
Figure n. 1, 2: Oriol Estela
Figura 3: http://www.foodpolicymilano.org/
Oriol Estela Barnet
[email protected]; https://estelabo.wordpress.com/
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Oriol Estela Barnet is Graduated in Economy (University of Barcelona) and Geography
(Autonomous University of Barcelona). He has worked as a consultant for a private firm
and since 2005 he works for Diputació (Provincial Council) of Barcelona. In 2012 he was
named Head of Economic Development Strategies. He also is a lecturer in local
governance, strategic planning and local economic development for Polytechnic University
of Catalonia and collaborates with the Iberoamerican Centre for Urban Strategic
Development.