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  • Writer's pictureVijay Krishnarayan

Local Economic Development – a Lightbulb Moment for post-Pandemic Recovery

A government official from the capital ventured to find out more about the way LED had changed the lives of local people. He met with the programme coordinator who described the transformative developmental impact of an inclusive strategy focused on local needs. He was impressed but confessed that he hadn’t really appreciated the difference that switching to LED street lights could make.

I came across this story during my research for a paper on Local Economic Development (also LED) for the Commonwealth Local Government Forum (CLGF). The report takes stock of CLGF’s substantive work in this field and builds on this to identify ways in which LED can broaden participation in international trade and localise delivery of the Sustainable Development Goals (SDGs).

I started writing the paper on the eve of the COVID19 lockdown in the United Kingdom. As the restrictions on movement began to lift 12 weeks later, the public discussion on economic pathways out of the crisis intensified. I had my own lightbulb moment.

The slowdown in global trade started before the onset of the pandemic but coronavirus really put the brakes on with the World Trade Organization expecting global trade to drop by as much as 32% this year as a consequence.

The way we were...

Does this mean that the lights are going out for globalisation? While it has brought growth in absolute levels of international trade and wider participation in trade flows by more countries than ever, the critique of globalisation has moved from margin to mainstream. Will business as usual, with its intricately dispersed global value chains be able to deliver recovery – and does recovery mean restoring the world to what it looked like in December 2019?

One thing we can say about 2019 is that voices were raised against the global, indelible nature of inequality. At the 74th UN General Assembly, 13 member states, international organisations and civil society (The Pathfinder Group) committed to a “Grand Challenge on Inequality and Exclusion”. They described the multiple ways in which inequality is experienced, including through political participation, spatial disparity and access to social protection. They observed that manifestations of globalisation such as precarious and informal employment and wage stagnation have profound effects that extend beyond the economy and impact on society. With ten years to go before the deadline for Agenda 2030 The Pathfinder Group was clearly lighting the way ahead.

The need to localise global commitments has been a part of the development discourse since the 1992 Earth Summit. The SDGs provide a focus at the local level for combining social, economic and governance issues. This combines well with LED, which is a catalyst for the participation of stakeholders as they identify the most pertinent development challenges and formulate strategies to address them.

But what is LED? In general terms it refers to strategies and approaches that are attuned to both the needs and endogenous resources of a defined locale. It galvanises diverse stakeholders as they focus on strengthening residual development potential.

Central Market, Kuala Lumpur

Local government is key to institutionalising LED. Whether as a convener, facilitator or implementing partner, local government underwrites LED. It is an active agent of LED by virtue of its landholdings and responsibilities for local utilities and infrastructure. Local government also: provides leadership; shapes institutional arrangements; makes policy; coordinates development planning; and helps create an enabling environment for business.

But local government can’t do the job in isolation. National governments have an essential role to play in creating the conditions for local government to foster LED. For example, in Botswana, the Ministry of Local Government and Rural Development, and the Local Authorities Association developed and rolled out an LED Framework and Decentralisation Policy. This kind of intra-governmental cooperation has had a number of benefits. It has enabled consensus among diverse stakeholders on what LED is and can deliver within a national framework; it has fostered broad engagement with key institutions. None of this is possible without an empowered local government with a mandate to make decisions and allocate resources at the local level - decentralisation via devolved powers.

There is common agreement that the road to recovery from coronavirus will be built on public spending – the debate continues as to who should determine the priorities and how that money should be spent. The demand for economic democracy is strong following the experience of the post 2007-8 financial crisis.

LED is not some new snake oil – but an approach that has worked and delivered sustained economic outcomes. The market in Chaguanas, the town where my parents grew up in Trinidad has long been regulated and managed by the local council. The market was originally limited to the sale of fruit and vegetables but over time informal traders started to operate in the neighbouring streets. The market expanded organically as boundaries were tested and contested. Chaguanas is now the fastest growing borough in Trinidad and Tobago and the market has incubated several businesses that took advantage of low overheads in a start-up phase and are now successful corporations.

The President of the World Bank has said that the bank expects global economic growth to shrink by 5% this year as we deal with COVID19. He went further to make the point that up to 60 million people will be pushed into "extreme poverty." With millions already losing their jobs, businesses failing, and poorer countries feeling the brunt the need for answers is pressing. One of those lights at the end of the tunnel could be LED.

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