Unexplored synergies between the Capability Approach and the local development perspective

Following on from Alfred Marshall's (1890) conceptualization of "industrial atmosphere” and "external and agglomeration economies”, the academic debate has devoted increasing attention to understanding local development processes and institutional mechanisms.

The starting point for this stream of work is the idea - as previously stressed for individuals and their eco-system (see Introduction) - that it is not possible to clearly separate firms from multiple settings. They are invariably imbedded in numerous geographical, relational, cognitive, organizational, institutional, social and cultural spaces. It follows that the capacities, profits and growth of firms do not simply depend on the firm itself, but on the way they interact with their diverse settings, from the local to the global level (Becattini, 1990).

In this sense, mechanisms of cooperation and trust between economic actors, enlarged participation, the rooting of enterprises in local social reality, the dissemination and accumulation of know-how and the contin­uous upgrading of workers' skills represent leading factor in the evolution of territorial development, which are often - although not always appropri­ately - fostered through "cluster-based” strategies² (Volpi, 2002; Nadvi and Barrientos, 2004; Asheim et al., 2006). For instance, the potential leverage effect of diffused and hidden endogenous resources and potentialities, such as entrepreneurial capacities laid in the informal sector of many developing countries (ILO, 2004; Guha-Khasnobis et al., 2006; Mehrotra and Biggeri, 2007; Pavanello et al., 2008; Basile, 2013), represents an expanding area for research and policy.

Furthermore, it is important to recall the renewed attention devoted to evidence-based theoretical approaches to territorial development. For example, impact evaluation methodologies (Stern et al., 2012) and applied research to analyse local systems through diagnostic lens (Crescenzi and Rodriguez-Pose, 2011) have stressed the importance of integrating different perspectives (e.g. top-down and bottom-up) and methodologies (e.g. quan­titative and qualitative) for these units of analysis.

In the last 30 years, scholars from different intellectual disciplines (Pike et al., 2011; Lazzeretti et al., 2014) have revitalized the local develop­ment perspective within the field of socio-economic research. The defining features of the local development perspective can be summarized as follows:

• Specificity - The “place-based” emphasis relies on the concept of “terri­tory” as a distinctive eco-system (Rullani, 2014), with its complex array of history, culture, geography, resources, knowledge and institutions.

• Inter-sectoral - The local context is analysed as an integrated system and seen as a unique assembly where economic, social and political processes interrelate with each other and involve the whole community.³

• Cross-disciplinarity⁴ - In contrast to mainstream economics (which is firmly rooted in a single discipline), this approach requires the simul­taneous contribution of productive and social, cultural and technologi­cal, geographical and environmental, and political and anthropological perspectives, avoiding a rigid separation of disciplines, which can be misleading in terms of formulating policy.

• Dynamism - Change, adaptation, resilience and innovation⁵ represent the enabling processes and conditions for local systems to evolve (Schumpeter, 1934 and 1975; Nelson and Winter, 1982; Becattini, 1989; Dei Ottati, 1996).

These arguments involve neither a unique focus on geographical proximity nor active local government as sufficient conditions for systemic competitiveness at the local level. On the one hand, the strengthened rele­vance of proximity for interactive learning and innovation refers not only to the geographical dimension but also to cognitive, organizational, social and institutional interaction (Boschma, 2005), the merits or detriments of which have to be assessed in accordance with local conditions. On the other hand, local public and private stakeholders from different sectors have resumed a crucial role in planning and in ensuring development strate­gies that favour endogenous potentialities (Martinez-Fernandez et al., 2011). As Sforzi (2005) has pointed out, local development is mostly conceived of as a “strategy for territorial policy”, which seeks to alleviate the most binding structural constraints - which are experienced locally - to economic activity and community well-being (Barca et al., 2012). In this respect, the social empowerment of territorial communities is strengthened, which sharply contrasts with the tendency to “globalise” cultural norms, social behaviours and development models.

However, within the literature on local economic development and territorial systems, a crucial limitation seems to characterize many con­tributions to this field. This limitation involves an unbalanced analytical focus on competitiveness factors and growth processes, along with a corre­sponding vacuum regarding any kind of systemic analysis that integrates economic and social aspects of development. On one hand, although there is wide evidence that growth alone is not a sufficient condition to sustain long-standing development goals⁶ and the expansion of people's well-being (especially for the most vulnerable social groups), attention is mostly devoted to economic factors that represent only part of the picture. On the other hand, the social dimensions and factors (including social cap­ital, education and health, and participation), as well as institutional and governance mechanisms, are often reduced entirely to their instrumental role in promoting growth processes, rather than representing fundamental dimensions of development themselves with intrinsic value for individuals and communities as a whole.⁷

In this regard, the people-centred human development paradigm appears to provide fundamental insights, derived from the core conceptualization of the capability approach (see also chapter 2). According to Sen (2009, p.

Nonetheless, within the theoretical and empirical literature on HD, the meso level and its corresponding features have still not received sufficient attention (Deneulin, 2008; Mehrotra, 2008; Stewart, 2013)¹⁰: opportunities and achieved functionings at the local level have been almost neglected compared to the capabilities of individuals. In this regard, it is not sufficient to link the expansion of individual freedoms and agency to collectives and groups through forms of collective action and membership (Anand, 2007), and to social and environmental conversion factors. Individuals, families and communities are inexorably embedded in institutional, cultural, social, geographical and economic terms within their territorial society, which can lead to the adaptation of values and preferences (Clark, 2012a). Indeed, ‘a basic observation of sociology and psychology is that the individual and the community “penetrate” one another and require one another, and that indi­viduals are not able to function without deep links to others' (Etzioni, 1993, p. 65). This entails the evolution of territories and the expansion of agents' freedoms with mutual feedbacks. Following Polanyi (1974), this view stresses the embeddedness of the economy in social relations, overturning the idea of social relations being embedded in the economic system.

According to Mehrotra (2008, p. 389), ‘Sen's formulation of the capability approach focuses exclusively on the individual, ignoring the collective capa­bility' of groups. Moreover, ‘Sen's articulation of democracy as a desirable condition for enhancing human capabilities is mistakenly conceived only at the national level, when what matters most for genuine participation is local participation, realised only through deep democratic decentralisa­tion' (ibid.). It follows that the interconnections among polity, politics and policymaking - whose strength at the local level is undeniable - constitutes an area for research and discussion not fully explored with regard to the expansion (or reduction) of capability. These processes do not take place in a vacuum, but rather within an institutionally organized society (polity), with dynamic power relations and political mobilization (politics) shap­ing collective arrangements for decision-making (policy) transforming the local society. In short, history and context matter for SHD and capability expansion processes. The evolutionary dynamics among these elements is thus boosted by continuous (un)predictable feedback loops, which shape the trajectories of participation, democratization, distribution and the vision of development within the territorial community.

Scholars have not yet fully captured the evolutionary and institutional processes behind SHD at the local level. Nor have they adequately appreciated the relevance of territorial dynamics or procedures behind indi­vidual and collective capabilities. For instance, the incorporation within the CA of evolutionary paths of adaptation to changing conditions through learning processes, knowledge generation and enhancement of organiza­tional capabilities and behaviour (Nelson and Winter, 1982; Hodgson, 2007a) is an important unexplored area of research. In addition, the com­plexity of multi-stakeholder and multilevel institutional processes and their socio-economic impacts in terms of the enhancement of organizations and expansion of people's capabilities are rarely framed together in theory.

Similar benefits can be derived from the "beyond GDP” debate stimulated by the Sarkoky's Commission on the Measurement of Economic Perfor­mance and Social Progress (Stiglitz et al., 2010);¹¹ the OECD Global Project on Measuring the Progress of Societies; the Oxford Poverty and Human Development Initiative (OPHI) and its elaboration of the Multidimensional Poverty Index (MPI); the global debate on the measurement of subjec­tive well-being, quality of life and happiness.¹² The animated debate on alternative measures to overcome weaknesses of traditional indicators of development based on GDP or growth (Seers, 1969) has often focused on the global or national level, at the expense of lower scales and units of analysis. This has limited the development and application of alternative integrated indexes for local development accounts, despite their high relevance and feasibility.

In summary, the arguments discussed so far regarding the local development perspective and the CA indicates that, apart from their respective centrality in enriching the current international debate on devel­opment and well-being, there are unexplored synergies that overlap between the respective core conceptualizations.

When the fundamental meaning of “development” is conceptualized as ‘the establishment of conditions and institutions that foster the realization of the potential of the capacities and faculties of the human mind in people, communities and, in turn, in places' (Pike et al., 2007, p. 1263), it seems clear that the potential for using the CA alongside the analysis of territorial development dynamics, requires us - as argued by Robeyns (2005, p. 110) - ‘to reach out into disciplinary terrains that are so far under-explored'.

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