LEDAs' main features and operational issues

The resurgence of regional economies (Storper, 1997) and the need to develop place-based development policy intervention (Barca et al., 2012) have recently boosted the rise of bottom-up initiatives conducted from within the regions as well as the role of meso-institutions,² and the global popularity of local development agencies.

The rising relevance of LEDAs (not just in lagging regions but also in better-performing local economies) goes hand in hand with the grow­ing responsibilities and functions these organized territorial structures administer (Blakely and Leigh, 2009; Clark et al., 2010). In other words, LEDAs have the potential to make the forms of "associational gover­nance" and "conscious governance" emphasized by Cooke and Morgan (1998) and Dei Ottati (2005) operational within an evolving global policy environment.

Nonetheless, the academic literature seems to have paid limited attention to these organizations⁴ (Yuill, 1982; Halkier and Danson, 1997; Morgan, 1997; Halkier et al., 1998; Bellini et al., 2012), largely due to the lack of a common understanding or model⁵ embedded in distinctive and constantly evolving national and local governance settings (Halkier and Danson, 1997; Clark et al., 2010). In addition, mixed evidence from across the world pro­vides an unclear picture of the relevance, effectiveness and sustainability of such organizations.

This book embraces the comprehensive definition of Local Economic Development Agencies developed by ILS LEDA⁶ (2009, p.

In addition, LEDAs in emerging countries or peripheral territories usually rely more heavily on integrated notions of development, which embrace social and environmental factors along with economic dimensions, in order to focus on the reduction of multidimensional poverty, vulnerability and cultural fragility (Canzanelli, 2001; Nadvi and Barrientos, 2004; ILS LEDA, 2009; Clark et al., 2010). According to Canzanelli (2001) and the World Bank (2006), LEDAs pay special attention to supporting the access of the most vulnerable social groups (the unemployed, the displaced or refugees, micro entrepreneurs, farmers, women, etc.) to regular political, economic and social arenas. In this regard, LEDAs' actions aim to create decent and sustainable jobs through the promotion of local SMEs and social enterprises, and the diffusion of entrepreneurial culture in the priority territorial value chains and market niches, safeguarding the environment and improving the capacities for participating, planning and realizing complex develop­ment initiatives and partnerships (ILS LEDA, 2009). Overall, it can be argued that LEDAs have the potential to integrate governance, planning for strategy building, human development, territorial promotion and services provision (Canzanelli, 2010), through tasks of representation, facilitation, territo­rial diagnosis, direct delivery, capacity building and internationalization (Osborne, 1999).

However, we should also take into account some notable critiques of regional institutions, advocated particularly by Lovering (1999 and 2011),

Table 5.1 The main features of LEDAs

especially regarding political economy and governance issues and nega­tive social capital networks. In particular, Lovering points out that their inclination towards symbolic and highly visible activities and performative governance, while inoffensive to any major vested interest, and implicitly directed at consolidating a professional political class (the "Regional Service Class”) could lead to elitism and exclusion instead of social inclusiveness and political regeneration.

Yet these arguments⁸ do not seem to be fully supported by a detailed comparative analysis of a range of different case studies from across the globe; instead, they are derived from the relatively controversial experi­ence of Regional Development Agencies (RDAs) in the United Kingdom that is arguably a special case.⁹ Three surveys of cross-country comparative analysis have provided more generalizable insights on LEDAs' characteristics and role.

Firstly, Halkier and Danson (1997) scrutinize the key characteristics and trends of RDAs in Western Europe utilizing a sample of 30 Agencies belonging to EURADA. They found that the overwhelming majority are, to various extents, involved in activities aimed at strengthening the competi­tiveness of local firms (e.g. through management support and information on market opportunities), although they rely primarily on the sponsoring political authority for finance.

Secondly, despite different contexts and histories, Clark et al. (2010) analyses 16 different local development agencies in OECD countries from a comparative perspective. They find that both the agency model and the cor­porate structure - constituting a kind of "quasi-governance vehicle” (ibid., p. 152) - appear to be appropriate channels for combining resources and managing economic development activities, overcoming weaknesses in the local institutional structure and sustaining political co-investment between different actors.

Thirdly, Canzanelli (2011) explores the contribution of different models of LEDAs with regard to several dimensions of HD, particularly in emerging countries. These empirical accounts lead to the identification of ten good principles for the success of a LEDA (discussed later in section 5.3), relating to its governance, management, mission, integrated development perspective, HD focus, self-sustainability and multi-scalar network relations (Canzanelli, 2010).

Some common problems and risks have also emerged from such studies (Halkier and Danson, 1997; Blakely and Leigh, 2009; ILS LEDA, 2009; Clark et al., 2010; Canzanelli, 2011). These include the following issues:

• Financial accountability and transparency in budget management;

• Potentially fragile justifications - and therefore support - for their establishment, sometimes pushed by the tendency for replication and emulation;

• Overlap and functional competition with other similar agencies operating in the same territory;

• Recurring bypassing and/or substitution of their role by external actors operating in the territory (e.g. multinational corporations (MNCs), bilateral cooperation), and low coordination with decisions taken at upper levels;

• In-ward-looking perspectives, mostly focused on internal factors without paying sufficient attention to the broader picture of multilevel and trans­territorial processes;

• Weaknesses in terms of staff capacities and financial diversification (espe­cially in emerging countries), due to their frequent dependence on international cooperation funding;

• Risk of public or private sector interference and collusion with particular­istic interests;

• Impact on local democracy and on social inclusion policies¹⁰;

• Difficulties in terms of balancing rapid-impact initiatives to galvanize stakeholders' participation and longer-term strategic actions.

Each of these issues deserves detailed cross-country comparative analysis, in order to provide empirical evidence regarding the structural constraints hampering LEDAs' role and effectiveness. Many of these issues are related to the extent to which the participation of local social groups is directed to preserve perverse mechanisms of rent-seeking, legitimate power relations, or to promote inclusive trajectories.

In sum, reflecting upon systemic and dynamic factors appears to be of cru­cial importance for exploring the contribution of LEDAs to economic evo­lution at the local level, focusing on the boosted processes to expand local endowments, strengthen territorial enabling factors and sustain "conscious governance” for the achievement of territorial and individual functionings of value.

5.3