Local Economic and Employment Development (LEED Programme)

New Forms of Governance for Economic Development


In this context, regional strategic platforms are emerging as the main instrument for coherent planning and organisation of the economic development activities of an area.  While these platforms focus on fostering endogenous development, based on local competitive advantages, assets, skills and knowledge, their critical mass may allow them to take up a role in inward investment and industrial infrastructure activities, subject to the institutional context and the will to participate of their membership.  Depending on their membership, they may be able to extend their strategic approach to solve socio-economic problems of their areas and to take a genuinely integrated approach to economic and employment development. 

While sufficient critical mass is necessary for the effective pursuit of an economic development strategy, innovative and effective platforms in smaller or predominantly rural regions may have a considerable role to play in their area if they concentrate on endogenous development.  Smaller partnerships have advantages with regard to addressing socio-economic problems as they usually have closer relationships with the relevant local actors, including representatives of community-based groups and employer associations.  Indeed, the main strength of these area-based partnerships lies in this closeness.  Though these partnerships may not have the most appropriate structure for driving economic development in their area, this aspect can make them a major source of expertise for identifying opportunities for local development, and enable them to make a key contribution to the solution of difficult issues.  There may even be some degree of complementarity and an optimal distribution of tasks between larger strategic platforms, at the level of regions, and smaller area-based partnerships at a more local level.  Such regional/local articulation may be the way to tap the input provided by civil society while driving economic development most effectively. 

Whatever arrangement is deemed best, it will have to address the lack of co-ordination between economic development activities and labour market policy, a critical governance failure which impedes local development.  The work confirmed the need to identify optimum ways to co-ordinate labour market policy with economic development strategies designed at the local and regional levels.  Clearly, human resource and skills development is a key area to be dealt with in partnerships at local and regional level:  Business needs change constantly, and local prosperity is built on knowledge and skills. 

Regional governments can help in this process of co-ordination.  Recent innovations suggest that they can reinvent themselves as co-ordinators for the economic and social development of their area and tailor national policies more closely to local needs.  There is an opportunity for them to play a role as a regional catalyst for innovation, with potentially significant impacts on the lives of their citizens.

Thus there is a rich menu of new but tried and tested forms of governance to address economic development in optimum fashion.   Some of the new forms will suit a given governance framework better than others, in the light of the characteristics of the region or the country.  Some may also be combined to become mutually reinforcing, for maximum impact on local prosperity and the quality of life. 

Between 1999 and 2003, the OECD conducted an in-depth study of area-based partnerships in which it examined the experience of 14 countries.  The first results, released in 2001 with the publication Local Partnerships for Better Governance, which includes the experiences in seven countries: Austria, Belgium, Denmark, Finland, Ireland, Italy and the United States. A second round of analysis was released in 2004 with the publication New Forms of Governance for Economic Development which includes the results of some of the ambitious initiatives taken by Belgium, the Czech Republic, Mexico, Norway, Slovenia, Spain and Sweden.

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