Exploring the territorial dynamics of SHD processes through the STEHD framework

Building on the previous section, an analytical framework for breaking down the dynamics related to the creation of the enabling and disabling factors that characterize and shape different pathways to development in a territo­rial society is presented.

In order to capture the complexity of evolutionary paths, the territo­rial focus of the STEHD framework again stresses the role of feedback loops among the constituent elements in fostering development dynamics, including institutional changes and governance mechanisms. It is framed within an evolutionary economic geography discourse, as most of the ele­ments are dynamic and produced by different systemic, interactive and non-linear forces within place-based and path-dependent processes. The STEHD framework embraces three characteristics of evolutionary models identified by Boschma and Martin (2007): it is dynamic, it deals with historically determined processes and it emphasizes the impact of novel factors on economic - as well as social, political, institutional and legal - transformation based on ongoing cognitive, creative and learning processes (Storper, 1997).

The STEHD framework is also conceived as a multilevel, multidimensional diagnostic tool, able to identify tailored policy options and locally suited solutions (Crescenzi and Rodriguez-Pose, 2011; Martinez-Fernandez et al., 2011) consistent with the expansion of agency, empowerment and capa­bilities, both individual and collective. In addition, the STEHD framework is adaptable to different territorial systems and contexts with distinctive social, economic and cultural features, including different institutional settings and geographical characteristics, notwithstanding the connections to micro and macro processes. The territorial dynamics of SHD are presented in Figure 2.4. The diagram develops the left part of Figure 2.3, placing at the centre an ideal type of LDS or territory within a certain region. It is necessary to start with local communities in order to explain their evolution and impact on the socio-economic structure (Sforzi, 2010). For theoretical and explanatory purposes, however, it is not necessary to focus on a specific territorial level (region, province, county, etc.) or to strictly define an LDS in terms of precise functional boundaries. Instead, LDSs can be regarded as complex population systems where multiple entities: (i) interact with their environment and each other (Ceriani Sebregondi, 1953a); (ii) face resource constraints and seek to survive through conflict or cooperation; and (iii) adapt and pass on infor­mation to others, through replication or imitation (Hodgson and Knudsen, 2010, p. 26). What is important is to embrace the complexity of the sys­tem under analysis together with its time-dependent parameters (i.e. the combination of agents, values, properties, functions, flows, activities) and to position it within a broader general context, in order to integrate horizontal and vertical perspectives of multilevel governance.

The process of SHD at the LDS is characterized by enabling (e.g. trust, con­sensus, dialogue and cooperation between agents) and disabling (e.g.

Secondly, the left-hand side of the diagram points to the role of extra-local interconnections and governance levels¹¹ in terms of political influence, institutional structure and resources flows, which add to local endowments and barriers. Nowadays, local systems cannot be isolated from the rest of the world.¹² Places evolve due to the continuous dynamic interaction of local features characterizing the uniqueness of each territory with a multi­plicity of external structures (e.g. markets, institutions, social spaces) (Sforzi, 2005; Goldin and Mariathasan, 2014). Recognizing this fact implies that

Figure 2.4 The STEHD framework: The territorial dynamics of SHD processes Source: Authors.

connections with other territories and levels facilitate processes of dialogue, (dis)articulation and capacity building, which impacts upon the internal interactive evolution of the LDS.

Thirdly, such dynamics refer to systemic and non-linear relationships between local stakeholders, which can be based on different kinds of proximity (cognitive, organizational, social, institutional or geographical) and different levels of frequency and institutionalization (occasional, sta­ble, informal, personal, contractual, formalized, etc.).

Finally, individual agents' and social groups' abilities and skills constitute an evolving territorial capacity to function and realize valuable potential functionings, adding value to the other elements of the framework.

Overall, an LDS, given its resources, barriers, institutions, relations and capacities (as well as the interaction among these and their distribution among different stakeholders) can function in different ways. The "work­ing potential performances” of LDSs can be represented through a vector of achievable functionings or opportunities to function.¹³ This is the oppor­tunity set from which potential functionings at the LDS level (not directly observable) and achieved functionings (observable, measurable and compa­rable) will be determined in light of collective choices, policy processes and LDS performance. Collective choice, based on local and shared visions of development (if there are shared visions), is crucial at this stage. For instance, the selection of valuable functionings to be attained through dedicated efforts should be based on a collective decision, which is influenced by a wide range of factors including political commitment, the participation of civil society in public scrutiny and debate, the lobbying power of social groups and economic agents, and international development debates. Often the shared capacity (or incapacity) to imagine and pursue feasible paths of local SHD through "conscious governance” can make a decisive difference to the relative performance of LDSs.

It is important to recall that from an SHD perspective at the local level, the final outcomes of an LDS correspond to potential goods and services as well as to conversion factors at the individual level (as conceived of in the standard CA). In other words, territorial achieved functionings (e.g. equal access to social services and credit opportunities, a pollution-free environ­ment) are seen as conditions that enable the expansion of individual and collective capabilities.

The creation and enhancement of enabling and disabling factors is sus­tained by several dynamic processes. Feedback loops show the non-linearity of path-dependent evolution, and how structural change or inertia influ­ences economic and social transformation (i.e. path creation and path destruction), which in turn affects the dynamics of the whole territorial system.

For instance, some processes can polarize horizontal inequalities and class struggle, although conflicts are related not only to distributional mechanisms but also to procedural aspects of social justice (Stewart, 2001),¹⁴ which cannot be bypassed at the territorial level of analysis. However, if the local system functions effectively, facilitating access to services and resources and reducing barriers to participation in decision-making processes, it will increase individuals' well-being through the expansion of their opportuni­ties and capacities. In this case, the procedural feedback loops would lead to an increase in stakeholders' commitment to territorial development and promote "agency at the local level”, seen as the social capacity to affect the processes at work in the territory or the formation of rules in the national and international arena through dialogue, cooperation and alliances.

In general terms, the evolution of an LDS along SHD trajectories entails the transformation of its parameters (e.g. shared values), replacing some old characteristics with new ones and reproducing different local enabling fac­tors. The existence of multiple potential trajectories for local development and the fact that no unique or ideal pathway is readily identifiable relates to the many possible combinations and dynamic forms through which orga­nizational arrangements, tacit and codified knowledge and policy actions affect local capacities and values (Sforzi, 2005).

These arguments also apply to processes of technological change and their ‘uncertain, groping, disorderly, and error-ridden character' (Nelson and Winter, 1982, p. vii), particularly in the current Global Digital Age. Today, several policy areas with central importance for SHD at the local level are continuously affected by the opening of new opportunities, as well as the emergence of new threats, derived from ICT applications. These policy areas include strategic planning, service provision, management of local public goods, community empowerment, social media, public infor­mation, data collection and monitoring. Thus, the overall capacity of an LDS and of its strategic players to take advantage of ICT as a concrete tool for integrated territorial development (Bass et al., 2013) is essential in order to nurture local creative intelligence, and to encourage the LDS to evolve along paths characterized by greater voice, accountability and transparency capacities.

To conclude, the STEHD framework embraces the essence and complex­ity of development and its multidimensional and evolutionary character, while maintaining a constant reference to capability expansion and reduc­tion processes at the individual level. The next step is to discuss the scope for potential applications, taking into account its boundaries and flexibility as a tool for research and policy purposes.

2.4