in International Context:
Background to a Study and
Preliminary Findings[1]
Associate Professor Andrew Beer
School of Geography, Population and Environmental Management
Flinders University, Adelaide
GPO Box 2100
Adelaide, SA, 5001
Australia
andrew.beer@flinders.edu.au
30 January 2002
Many advanced
economies have programs and initiatives aimed at promoting local economic
development or community economic development.
Programs and strategies that attempt to encourage the economic growth of
specific regions, towns, rural communities or sub-groups of the population
(such as the Indigenous peoples of Australia or the USA) are found across a
spectrum of nations, including those covered in this study. In part, the popularity of locality based
economic development approaches is a reflection of the deficiencies of previous
policies. The highly centralised
regional planning that dominated from the end of the Second World War through
to the 1970s were predicated on the assumption of on-going economic
growth. They aimed to redistribute
economic opportunities from assumed abundance[1]. This could not be sustained after the mid
1970s when the on-going industrial growth of the advanced economies was checked[2]. The adoption of local, regional or community
economic development also reflects the changing nature of economic activity and
the relationships between businesses and governments. Globalisation has meant that a town or region’s role within the
national economic system may no longer be as important as its place within
international production systems. The
development of international agreements (such as the North American Free Trade
Agreement) and the emergence of supra-national bodies, such as the European
Union, have hastened this process[3]. This has meant that communities, towns and
regions increasingly have to compete on a global stage for economic
opportunities, through marketing the products of their regions, competing for
international investment or further developing the capacity of existing
producers[4].
There is sufficient
commonality of intention and purpose across nations that some programs and
strategies have crossed national boundaries and there is certainly scope for a
meaningful exchange of information between practitioners from different
countries. Economic development
practitioners from the United States, for example, could discuss the
implementation and effectiveness of Mainstreet Programs with their Australian
counterparts. However most English or
Irish practitioners would have limited experience or resources to draw upon in
that conversation. Economic development
practitioners in England, Australia, Ireland and England would be familiar with
business incubators but very few Australian practitioners would be aware of
Local Exchange and Trading Schemes (LETS) and many would question the role of
‘community’ in economic development.
Importantly, while there are common elements in the application theory
and practice of economic development at the local scale across nations, there
are significant divergences also. There
are differences of language, differences of structure, differences of
function.
The differences in
language or terminology within economic development appear small but they exert
a powerful influence. If you review
American or British publications much of the discussion is concerned with local
economic development, that is, a town or city or rural community working to
achieve economic growth. In Australia a
practitioner would describe that work as regional economic
development. Further, professional
economic development practitioners in Australia do not recognise their work as
part of community development or community economic development[5]. Within the Australian experience, community
development relates to the voluntary sector and is often associated with the
efforts of dying country towns to revitalise themselves through community
participation and community agitation[6].
How should we define
and distinguish between community economic development, local economic
development and regional economic development?
In part the task is made easier by the fact that the differences between
local and regional economic development are relatively unimportant. They are most accurately separated by scale:
geographic scale and the size of programs and expenditure. Local and regional economic development
embraces strategies and actions designed to advance the economy or well-being
of a locality. Inter alia, individual local or regional economic development
initiatives aspire to:
·
Reduce unemployment
·
Increase regional
income levels
·
Raise Gross Regional
Product (or Gross State Product)
·
Improve the
competitiveness and profitability of businesses within the region
·
Stimulate business
start ups
·
Improve average
quality of life
·
Reduce income
differentials within the region/locality or across regions
·
Attract inward
investment
·
Find new markets for
the businesses of the region/locality
·
Enhance the
infrastructure of the region
Community economic
development is a more complex intervention within the social fabric of a
locality. Haughton (1999) points out that community economic development is a
holistic strategy to advance the well being of all members of the community and
is best thought of as a three stage action agenda, comprised of
1. At the level of the subsistence economy attention is given
to the non-market and informal sector activity. The intention is to help individuals with basic survival and to
build up local kinship and friendship networks;
2. The local market economy is addressed by promoting self-employment, small business development and community initiatives, such as co-operatives. Here the objective is to develop an integrated economy where businesses trade amongst themselves thereby reducing the leakage of expenditure and increasing the range of economic activities within the community;
3. At the level of the global economy, community development
can provide training and work experience to help people overcome social
exclusion and assist individuals move into jobs with globally active
firms. Community development also
serves a role in lobbying to ensure the provision, and maintenance, of
services.
Both community economic development and local economic development present challenges of policy and challenges of implementation. Stimulating economic growth in a region is a demanding task and agencies – for a host of reasons - are as likely to fail as succeed. Community economic development presents even greater challenges because it requires an integrated and far reaching approach to the problems of deprived places. Importantly, successful community development strategies must pay attention to, and resource, the subsistence needs and social networks of the poorest members of the community, as well as attracting inward investment, boosting productivity and marketing the community internationally. Local economic development/community economic development raises practical challenges because the two fields of operation often merge into each other. Many agencies would claim both to be local economic development agencies and actors in community development. This raises substantial questions of definition and measurement for a study of this nature.
Governmental
structures exert a profound influence on the practice of economic
development. There is significant
variation within Australia with each State and Territory running its own
framework for local economic development (Beer and Maude 1997), but the
differences are far greater when we begin to consider international comparisons. Within the context of this study we can make
a useful division between the Federal systems of Australia and the United
States on the one hand, and those of England and Northern Ireland on the other. As the data to be presented at this
conference will show, local economic development in Australia and the United
States is, in large measure, driven and funded by local government and the
fiscal imperatives that come from local government cannot be ignored. Importantly, it is not the role of local
government in economic development per se
that is important, the key feature is the distance between the economic
development function and the apparatus of central government[7]. Australian and US national governments find
it easier to deny responsibility for place-based economic development than in a
unitary jurisdiction such as in England.
Northern Ireland presents special challenges to our understanding of the
structures of economic development. The
range of functions available to local government-based economic development is
also affected by their position within the structure of government. They are either forced, or are able, to
perform a different range of tasks in the pursuit of economic development than
in systems more closely aligned with central government agencies.
This work arose out
of a conversation I and my colleague Alaric Maude had with the Local Government
Association of South Australia in 1994.
That conversation resulted in funding for a study of the economic development
frameworks in each of the Australian States and Territories. That work resulted in a number of
publications[8] and an
interest in taking the research further through international comparisons. In 1999 we secured further funding from the
Local Government Association of South Australia and obtained the collaboration
of Terry Clower at the University of North Texas and Graham Haughton at the
University of Hull. In 2001 I was
fortunate to be awarded a Leverhulme Fellowship at the Magee Campus of the University
of Ulster and was therefore able to extend this work to Northern Ireland
through my colleagues Dr Terry Robson and Dr Rachel Naylor. It is anticipated that the data collection
exercise will be completed soon through the collection of data for the Republic
of Ireland.
While there is a
burgeoning academic literature and industry on local or community economic
development, relatively few studies have attempted to make compare national
systems. Notable exceptions have
included Regional Development Agencies in
Europe edited by Halkier, Danson and Dambourg (1998) and Governance, Institutional Change and
Regional Development, edited by Danson, Halkier and Cameron (2000). However, these books have focussed on Europe
and do not use a common evaluative data set.
This absence within the body of work on economic development agencies
and practice is understandable, as no individual is fully conversant with the
economic development system or practices in more than one nation. This is why a collaborative approach, with
local expert researchers from each jurisdiction, has been fundamental to this
project. Our methodology was to develop
a common questionnaire and then apply it, with modification for local
circumstances, to economic development organisations in each of the nations
included in the study. Economic
development organisations were targetted for inclusion in the postal survey
through the use of extant databases.
Response rates, and numbers, varied.
At one extreme we had an almost 50 per cent response rate in Australia
with over 500 returns, while 120 responses were received in England at a
response rate of approximately 30 per cent.
It is important to note, therefore, that our data relate to the respondents
to our survey and it is possible that the data is not truly indicative of local
or regional economic development organisations because of unknown biases.
If we are able to
compare approaches or philosophies of economic development what are the
fundamental questions we should ask?
There are probably four fundamental questions and these will be the
focus of the remainder of this paper.
The questions are:
1. What does the system of economic development and economic
development agencies look like in other countries?
2. How does the funding of economic development in one nation
compare with funding elsewhere? To put
that another way, are economic development agencies in my country better off or
worse off than those in the US or England?
3. What functions do economic development agencies perform, and
how does that set of functions or operations compare with other nations?
4. How effective are economic development agencies, and are
agencies in some countries more effective than agencies elsewhere?
Who are the economic
development agencies in each of the nations covered in this study? Which branch of government dominates – if at
all – and how do these institutional arrangements vary on a country by country
basis?
Table 1. presents
data on the type of organisation that responded to our survey on a national
basis. In the USA regional or local
development boards were the dominant type of economic development agency,
followed by units of local government.
Between them these two types of agency accounted for almost three
quarters of responses. Public utilities
were responsible for a further seven percent of responses. Local government based units dominated with
56 per cent of responses, followed by 12 per cent for regional development
boards and 14 per cent Business Enterprise Centres (BECs). Northern Ireland had a more complex pattern
of responses with 47per cent of responses coming from community based
organisations, ten per cent from local government, 4 per cent from agencies of
the Northern Ireland government, 13 per cent from Chambers of Commerce or other
business associations, and fourteen per cent from regeneration
partnerships. Local government
dominated in England with 61 per cent of responses, followed by 19 per cent for
Local Learning and Skills Councils, eight per cent for Business Link/Small
Business Services and 8 per cent Local Regeneration/Strategic
Partnerships.
The type of organisation does not inform us fully of the key legal and financial relationships that support economic development initiatives. The title of an organisation is often less important than its legal status and the financial relationships embedded within that status. Respondents were asked about the legal status of their organisation (Table 2.). Not-for-profit companies were the dominant legal structure in the USA with almost 30 per cent of responses, followed by part of local government at 26 per cent and statutory authorities at 15 per cent. In Australia 63 per cent of organisations were part of local government and a further 17 per cent were constituted as part of a charity. These data underline the central role of local government in economic development activities in Australia. Some 33 per cent of respondents in Northern Ireland were not-for-profit companies, 20 per cent were registered associations and 11 per cent were part of local government. A further 11 per cent were part of local government. These data, in combination with the data presented in Table 1, suggest a relatively complex framework of economic and community development in Northern Ireland. Finally, 54 per cent of English respondents were legally part of local government while 14 per cent were statutory authorities. This was the second highest proportion in this category for any of the nations covered in this study.
|
USA |
AUSTRALIA |
NORTHERN IRELAND |
ENGLAND |
||||
|
TYPE |
% |
TYPE |
% |
TYPE |
% |
TYPE |
% |
|
Regional
Dev. Board |
40 |
Regional
Dev. Board |
12 |
Community
Organisation |
47.1 |
Branch of
Local Govt. |
61 |
|
Branch of
Local Govt. |
32 |
Branch of
Local Govt. |
56 |
Branch of
Local Govt. |
10.1 |
Local
Learn-ing and Skills Council |
19 |
|
Public
Utility |
7 |
BEC |
14 |
NI
Government |
4.2 |
Business
Link/Small Bus Service |
8 |
|
BEC |
3 |
Main St |
2 |
Chamber of
Commerce or other Business |
13.4 |
Local Regen- eration/ Strategic
Partnership |
8 |
|
Other |
18 |
Other |
10 |
Educational
Organisation |
13.8 |
Chamber of
Commerce |
2 |
|
|
|
|
|
Regeneration
Partnership |
14.3 |
Other |
3 |
|
|
|
|
|
Other |
5 |
|
|
|
USA |
AUSTRALIA |
NORTHERN IRELAND |
ENGLAND |
||||
|
TYPE |
% |
TYPE |
% |
TYPE |
% |
TYPE |
% |
|
Not for
Profit Company |
29 |
Part of
Local Govt. |
63 |
Non-Profit
Company |
33 |
Part of
Local Govt |
54 |
|
Part of
Local Govt. |
26 |
Part of
Charity |
17 |
Registered
Association |
20 |
Statutory
Authority |
14 |
|
Statutory
Authority |
15 |
Statutory
Authority |
3 |
Informal Group |
11 |
Govt.
Established Body |
4 |
|
State Govt.
Agency |
2.5 |
State Govt.
Agency |
2 |
Part of
Local Govt. |
11 |
Non Profit
Company |
12 |
|
|
|
|
|
Part of
Central Govt |
2 |
For Profit
Company |
3 |
|
|
|
|
|
|
|
Informal
Group |
3 |
Table
3. Area Served by Jurisdiction
|
|
England |
Northern Ireland |
Australia |
United States |
|
Predominantly Rural |
29% |
40% |
40% |
33% |
|
Predominantly Urban |
23% |
21% |
20% |
30% |
|
Mixed |
50% |
37% |
40% |
35% |
As Table 3 demonstrates economic development organisations in Northern Ireland and Australia were most likely to serve a rural region, while those in England were more likely to serve a mixed or urban population. Economic development agencies in the USA were relatively evenly distributed between the three types of location. However in all instances, there were more economic development agencies in rural areas than population shares would indicate. This probably reflects the depth of economic difficulty confronting most rural regions, the policies of central governments and the presence of fewer but larger organisations in the cities.
A number of questions were asked about the funding of economic development organisations. Agencies were asked to indicate their total budget for economic development activities and this data has been translated into multiples of